Rivals in basketball but not in business, the Triangle’s three major research universities are allies in the entrepreneurial ecosystem.
UNC (Carolina Angel Network, or CAN), NC State (Wolfpack Investor Network, or WIN) and Duke (Duke Angel Network, or DAN) have collectively invested a total of $42M since they launched in 2015, starting with DAN.
While they operate as independent networks, they also collaborate as the Triangle Venture Alliance, or TVA, to make the process easier for both themselves and entrepreneurs and to pool connections and capital for their portfolio companies, including many tech startups.
What does it take to get in front of these investors? Have a connection to Carolina, State, Duke or NC Central. Or, like Kyle Chenet, have a connection to three of them.
The CEO of Durham’s 410 Medical, Chenet presented in 2017 to the first-ever joint meeting of CAN and WIN, just after the startup’s primary product, Life Flow, received FDA clearance. He says one major hook for any investor is 410 Medical’s mission.
Life Flow decreases the risk of sepsis, a potentially life-threatening condition in response to infection, by redesigning the use of IV fluids.
Chenet says Life Flow “looks like a medical squirt gun.” The product allows healthcare providers to deliver fluids to critically ill patients much more quickly than hanging IV bags.
Brett Danforth, who is currently WIN’s Managing Director, easily recalls the emotional impact of the pitch.
“I think a lot of our members learned about sepsis in that first meeting and the killer that it is in hospitals,” said Danforth. “I think people were maybe a little bit overwhelmed by some of those statistics and the opportunity to solve such a huge issue there.”
Chenet was brought on as CEO of 410 Medical about four years ago, when the medical device company was anticipating Life Flow’s FDA clearance.
Mark Piehl co-founded 410 Medical with Luke Roush in 2013. Piehl attended the UNC School of Medicine and the UNC School of Public Health, and he is on faculty at both UNC and Duke. NC State came into the mix early on, when a group of students asked to work with Piehl as part of a senior engineering project.
DAN met separately with 410 Medical, but helped lead the due diligence effort for all three groups.
Forming the Alliance
DAN was the first university-affiliated angel network to launch in the Triangle, in 2015. The others used it as a model.
TVA was formed as a partnership between DAN, CAN, WIN, and NC Central’s Eagle Angel Network (EAN).
The Duke Innovation & Entrepreneurship Initiative received a $250K grant from the Economic Development Administration, which the four Alliance groups divided equally starting in 2016, to help build out TVA and its individual angel networks.
TVA also received a $150K ECOSYSTEM grant from NC IDEA, which was divided equally among WIN, DAN and EAN; CAN did not receive funds because CAN’s Executive Director, Randy Myer, was Chair of NC IDEA’s board at the time.
While DAN, CAN and WIN continue to work closely together, that has not been the case with NC Central’s EAN.
EAN’s Managing Director, Henry McKoy, said that it’s been challenging to get the school’s program fully off the ground despite the grants, because as an HBCU (Historically Black College and University), NC Central has significantly fewer resources than schools like Duke, UNC and NC State.
For instance, the other TVA members all have the budget for full-time directors: Myer at CAN, WIN’s Danforth, and DAN’s Kurt Schmidt. But McKoy is a full-time professor leading NCCU’s entrepreneurship efforts along with his role as Managing Director of EAN.
In addition, NCCU has been slower to bring in alumni as members of the network because of the steep joining fee as well as the ongoing ability to write hefty checks, which feeds into the wider societal context of socioeconomic conditions and access, McKoy said.
“In the broadest sense,” McKoy said, “you have things like the angel networks in the Triangle and different angel networks that, say, white entrepreneurs are privy to. Minorities and others aren’t necessarily pulled into those networks.”
Landing a deal
To qualify for an investment from TVA or its individual networks, founders must work for the company full-time and have some sort of connection with one of the universities. Most often, that’s because they are alumni.
If a company comes to one member of TVA but doesn’t qualify, any of the Managing Directors will pass them along to another network who may be a better fit.
TVA does not limit its investments to certain industries, but each university tends to rely on the particular strengths and industry knowledge of its individual members. DAN’s portfolio includes Durham-based Teamworks; WIN has invested in Raleigh’s Reveal Mobile; and CAN supports InHerSight.
Myer says of CAN’s 19 deals, six have been with DAN, five with WIN, and one between all three of them—410 Medical.
When 410 Medical presented to CAN and WIN, the company had already gotten early seed investing, but Chenet said at that point, the company had zero customers or brand recognition.
TVA’s Series A1 investment allowed 410 Medical to launch Life Flow, which Chenet says is now used regularly in 35 hospital systems across the country, from New York to Los Angeles to Miami.
TVA makes the process easier for founders by streamlining the investing process. Potential portfolio companies can receive the benefits getting in front of three investing networks without having to triple their efforts.
“The pitch to an entrepreneur of coming to present to one of our networks is really enhanced if there are connections to multiple universities,” Danforth said, “because we will partner on diligence, or sometimes even on meetings, so it reduces the burden for them a little bit.”
Beyond that, TVA members enjoy helping people tied to their respective universities. Myer says when looking at potential investments that are too early for the angel networks, he feels “a little bit of responsibility to the university.”
“You just don’t want to say, ‘Too bad,’ or not return a phone call,” Myer said, “which can often happen in the venture capital world. I think we take it more seriously to help them because we are part of the university, and they are too.”
Part of that responsibility is staying in touch with companies, even after they’ve made the initial investment. Chenet says he talks to Myer at least quarterly, and early in the pandemic, Myer recognized that Life Flow demand could increase.
“One of the beautiful things about TVA is their interest in helping their portfolio companies,” Chenet said. “They do a great job of reaching out to us and inviting us to participate in their meetings, inviting us to meet their investors, and sharing our updates with their investors.”
Schmidt says it’s a privilege to work with the founders and see what they’re doing on a daily basis.
“There are some remarkable founders who have come out of these universities trying to build bold, transformative companies that just don’t get built every day,” he said.
No talk on game day, though
Myer says he seriously doubts other university alumni networks have the same level of collaboration as TVA, which leverages its heavily overlapping networks for founders.
If anyone from the Alliance takes a meeting with a company that turns out to have connections to one of the other universities, they won’t hesitate to connect them.
But they don’t talk to each other about college sports.
Schmidt says the three directors are not friends for two or three days out of the year, with Myer adding that they avoid talking about specifics.
“We don’t talk to each other on game days,” Myer said, “and we certainly don’t call each other the day after to talk about who did what.”