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Welcome to SL #38! In our first broadcast from our new recording home in the plush new offices of HA&W (a staunch sponsor and advocate of our efforts here at StartupLounge), we sat down and a fantastic chat with John Glushik of Intersouth Partners.  In addition to the staple series of questions we ask of every investor that appears on the show, we also had a very interesting discussion comparing the similarities and differences of the startup scenes in North Carolina and Georgia.  We hit a number of other topics as well, including Intersouth’s investment in Atlanta-based Purewire, and some of the ramifications of cloud-computing and SaaS models.

The bus is back, and man is the driver upset.  Scott brings the hammer down on another misguided service provider who recently took advantage of a local entrepreneur. Another great selection of listener emails and a dash of StartupLounge humor to top it all off. Enjoy!

Sponsors for this episode:
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Shownotes and Interview Questions:

As usual, we had lots of related follow-up questions and side discussions, but here is a good sampling of the questions we asked on the show:

• Give us the 30-second elevator pitch on Intersouth Partners
• Why does Intersouth have a large geographic investing area (primarily the Southeast U.S)?
• What are the challenges of investing out-of-state for Intersouth, and how do they impact how you do business?
• Why do more early-stage investors seem to be more comfortable with investing outside their immediate area?
• What is attractive about Georgia to Intersouth, and what types of deal flow do you see here?
• How does the deal flow you see in North Carolina contrast to that coming from Georgia?
• How does the general preparedness of entrepreneurs in North Carolina contrast to that of Georgia?
• Where do most of your investment opportunities come from, and what is the best way to get a deal in front of you?
• In which Atlanta-area companies has Intersouth made investments?
• What is Intersouth doing to establish a name or presence in the local market?
• Why is it that a number of North Carolina venture capital firms appear to be actively developing a presence in Georgia?
• Do you see any Georgia investors doing deals in North Carolina?
• How active or strong is the angel investment community in North Carolina and Georgia?
• Do you any regional or local trends in deal valuations?
• Do terms and valuations for investments in Georgia differ significantly from those in the other states where you operate?
• Do you agree with the common perception that there is insufficient capital available in Georgia to fund good opportunities?
• What are some characteristics in our market that make Georgia more challenging than other states? Are there things we can do better?
• Are there certain business models that you see evolving within the technology space that are of interest to you right now?
• What mistakes do you see entrepreneurs with SaaS deals make?
• How do taking advantage of things like cloud-computing factor into deal quality?
• Can you walk us through your investment in Atlanta-based Purewire?
• Tell us one mistake that entrepreneurs make that is an instant turn-off?
• How is Intersouth responding to the current economic environment?
• What are you advising entrepreneurs to do as they react to the economy?
• What is the one piece of advice you’d like to leave with entrepreneurs listening to this show ?

Listener Emails Read and Answered on the Show:

Kevin (from Michigan): I am loving the show and think you guys are doing an awesome job. I stumbled across your Podcast a few weeks ago while searching for an entrepreneur/venture capital educational program. The first show I listened to was Angels in Atlanta, from then on I was hooked. I then started listening from the beginning – I am currently on #23 and listen to at least one show every 1-2 days while driving back and forth to work.

I have always had the entrepreneur spirit but it really caught on fire a few years ago with some consumer product inventions we developed. My recent interest in learning how to raise capital is due to a new venture my partners and myself are taking on, a high performance, high tech, electric motorcycle. It is very exciting and everyone we end up working with is just as passionate about it as we are.

We have completed the bike design and almost finished with our business plan. It appears our seed capital will at least need to be $1M for the R&D phase. This would give us all engineering, tooling and prototypes where we can go into production.

I think the capital lounge is an awesome opportunity for start-ups and I wish we had a connection like that up here in Michigan. Do you think entrepreneurs from outside the Atlanta area could benefit from this event? What areas of the country do the attending investors like to play in? Would a EV start-up from Michigan be considered? Thanks again for the education guys!

Danna: If I were interested in funding a start-up…what is the initial range of buy-in and then return on investment?

David: Just found you last week and listening to your podcast – In the Pandora episode you slammed the slime who prey on start-ups – I actually did a “wahoo!” at J. Christopher’s in Midtown to a series of strange stares. I have recently started focusing on the new venture area and I am disappointed at how far some people justify taking advantage of those who are at maximum flexibility.  When someone has a concept – so often they are willing to do almost anything to see that realized – often to their own detriment.  Not only in the financing arena – but on our side too – the technology side.  U guys rock!  Thanks for doing what you are doing – it is badly needed!

Guest Bio:
John Glushik, Partner, Intersouth Partners

John joined Intersouth in September 1999 and focuses primarily on the technology portfolio. Since joining Intersouth, he has managed the full-cycle venture investment process from deal origination to successful exit, serving as a diligent and respected board member and advisor to management.

John has a background in engineering and consulting within the telecommunications and aerospace industries. His previous experience includes management consulting at Booz-Allen & Hamilton, telecommunications satellite engineering at General Electric and data communications research as a Draper Fellow at the Massachusetts Institute of Technology. He is on the board of five Intersouth companies.

John is an adjunct professor at the UNC Kenan-Flagler School of Business. He sits on the board of VentureSouth, the Southern states task force on venture capital, and serves on the executive committee of the board of directors of the Council for Entrepreneurial Development. He serves on the advisory board of the Entrepreneurs Foundation of the Southeast and is an active member at the Duke University Engineering Council. John holds a B.S. in Mechanical Engineering and Materials Science from Duke University, an M.S. in Aeronautics and Astronautics from the Massachusetts Institute of Technology and an M.B.A. from the J.L. Kellogg Graduate School of Management at Northwestern University.

Comedy Break Lyrics:

Just in time for tax season – enjoy “Kiss This! (Hey IRS)”, by Robert Lund/Michele Davis/Spaff, a parody of Faith Hill’s “This Kiss”:

I don’t want no April 15th
I don’t need another judgment day (no)
Anything the good Lord giveth
Uncle Sam he
Taketh
A-way
‘Cause Big Brother’s got a big debt
Baby, guess who has to pay?

It’s the way you mug me
It’s unspeakable pain
It’s a personal washout
Down a bottomless drain
It’s abhorrently taxing
It’s (uhhnn) believable

KISS THIS! KISS THIS!
Hey IRS -
KISS THIS! KISS THIS!

Doing taxes ain’t so scary
Simply add up what you made (oh)
Take it to the actu-ary
Where he sub-tracts
The tax
You’ve paid
Then you mail in twice the difference
Plus a check for Medicaid

It’s a Form 1040
It’s a penalty clause
It’s inscrutable worksheets
It’s nonsensical laws
It’s unspendable income
It’s (uhhnn) deductible

KISS THIS! KISS THIS!
Hey IRS -
KISS THIS! KISS THIS!

You can tax me on my taxes
Then you tax the funds that remain (oh)
You can tax me on bikini waxes
For a jolt of similar pain (ow)
Slap on sadistic audits
Don’t let anything pass
You’ve bent me over
So kiss – my – assets

It’s the way you mug me
It’s relentlessly lame
It’s aggressively wasteful
This unwinnable game
It’s unsportsmanlike conduct
It’s (uhhnn) depreciable

KISS THIS! KISS THIS!
It’s criminal
KISS THIS! KISS THIS!

Kiss – my bottom line there, baby
Kiss – my bottom line there, darlin’…

Miscellany:

Enjoy! To play it, use the tools at the top of this post – you can play it via the embedded Flash player by pressing the big play button at the top, or download it to play on your computer or MP3 player.  You can also take advantage of our iTunes feed.

Podsafe music used within this episode:

• Underground by Roadside Attraction
• Kiss This! (Hey IRS) by Robert Lund/Michele Davis/Spaff
• All the Money in the World by Hutch

Our format is a little out of the norm as far as podcasts go. We treat our efforts as a true “show” rather than a super-concise (limited) vehicle for delivery of information. Therefore, the podcasts can run a bit long (actually, it is largely driven by the guests and their responses.) While we try to have very substantive discussions, we also try to have a lot of fun along the way (and that tends to elongate the programming a wee bit.) Our theory is that if we are having fun during the show, hopefully, you will be having a little fun listening as well.

Here is the breakdown for the show, in case you want to hop around.

A special thanks to John for coming in and hanging out with us!

We welcome your continued feedback as well! If you have an interest in appearing on the show, becoming a show sponsor (hint, hint), have some suggestions for topics, have feedback, or would just like to email us and tell us to “shove off”, we invite you to contact us.

Enjoy!