David Cummings on Startups

Local Angel / VC Investing for Returns or as Civic Duty

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David Cummings

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A few days ago I was part of a number of discussions around angel / VC investing and supporting local entrepreneurs. One of the recurring themes was between the desire to generate risk-adjusted returns vs investing as a civic duty to help grow the local economy with an understanding that returns might not be strong.

Here are a few ideas on angel / VC investing for returns vs civic duty:

  • Generating market-rate returns with angel investing, regardless of scale, is difficult
  • One idea is to do a fund of funds where money is invested in angel funds as well as VC funds to diversify the money by spreading it across a much larger number of investments
  • Local economies with successful startups benefit from more high paying jobs, diversification of employment base, and wealth creation
  • Foundations, which usually can’t invest in startups with their grant making money, can invest their endowments in funds, which could be locally focused

There’s no clear answer as it’s up to the goals of the investor. Regardless, investment returns and civic duty should be allowed parts of the conversation.

What else? What are your thoughts on local angel / VC investing for returns or as civic duty?

Comments

2 responses to “Local Angel / VC Investing for Returns or as Civic Duty”

  1. Raymond King Avatar
    Raymond King

    This is obviously a personal decision. Having said that, it seems that what success many entrepreneurs have had is due to those willing to make these high-risk investments. Accordingly, I would like to think that some of these same people would want to “pay it forward” and give back in that same way as a piece of their overall civic/philanthropic strategy. After all, they also are often the ones most likely to be successful doing it. But I am giving that view from “the cheap seats” and hope I have not offended anyone.

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  2. Paul Nichols Avatar
    Paul Nichols

    Investing out of civic duty is a worthy concept to be sure. However, with all of the talent in the current Atlanta startup landscape there’s really no need. The local companies that have traction and huge earning potential in addition to being involved in the community and providing local jobs need to be given their fair shake first. There are plenty of unfunded, game-changing concepts slipping through the cracks in this city. I’ve seen it… I’ve experienced it (still am). I’m seeing interest from places like New York, but not much from my home base of Atlanta. If the money in this town were channeled to the right places, the Atlanta startup scene would blow up and the talent export to other hotbeds would end.

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