CHARLESTON, SC – Not every venture capital firm is hunkered down and hoarding cash these days. George Magrath, general partner at Palmetto Investments, who attended TechJournal South’s recent Southeast Venture Conference in Atlanta, says, “We are looking to do deals, and we always love to speak with people with a disruptive technology who live and breathe their business.”

Magrath outlined Palmetto’s investing strategy and outlook in a series of questions and answers for us:

1. Who are you?

We are a private partnership devoted to making seed level investments in disruptive technologies in the SE. Our partners are located throughout the southeast, particularly the Carolinas and Georgia, with the majority in the cities of Charleston, Atlanta and Charlotte. Due to the recent success of our fund we are also excited about adding additional partners.

We are specifically talking to individuals with deep technical backgrounds in Web 2.0/3.0 to enhance our abilityto evaluate disruptive tech quickly and accurately.

Overall, our partners bring varied and deeply experienced backgrounds to the fund.

2.What do you do?

We focus on seed investments in disruptive technologies, most notably web 2.0. With the advent of cloud computing, these companies can take game-changing technology and scale it at a very low cost, which is a perfect target for a seed level fund.

We avoid “me-too” products and technologies that have long time-to–exit requirements.

3. What separates you from other funds?

We take pride in our ability to move quickly and decisively on disruptive technologies that will change the atmosphere of the SE. We feel that there is very little financing for true early stage companies in the SE because of a regional and entrenched adversion to risk.

To be funded in the SE, even by angels and other seed stage groups, startups must already have a proven customer pipeline and revenue.

Moreover, technologies founded by individuals not already members of the established SE funding and entrepreneur community face an even steeper battle.

This leaves a huge gap for new, pre-revenue companies to fill on their own or by moving to sources outside the region.

While pre-revenue companies require an increased assumption of risk, we are very picky and selective and only fund DISRUPTIVE technologies, breaking the trend of “me-too” products that currently dominates the SE.

Put simply, big rewards require risks and “sustaining” companies without a high return event on the horizon are not necessarily successful in our view. In fact, one of our mottos is “Go big or Go home.”

4.Tell us about your most recent deal.

In December we invested in BeliefNetworks, Inc., an early stage tech startup based in Charleston, SC. They have the most proven management I have seen in the SE and a very disruptive technology, a game-changer that is a head of the competition, but the thing we admired most about them is their hunger and desire to succeed.

We have several small tests we use to assess an entrepreneur’s dedication; we will call on weekends, early in the morning, or later in the afternoon. Most companies will not be available at that time, which is perfectly fine, but we are looking for entrepreneurs who live and breathe their business, entrepreneurs for whom it is not a job, but a life.

At BN we found that. The management was never more than a phone call away, no matter the time of day or night.

This company is run by top-notch people with decades of experience in the valley, Microsoft, Apple, MongoMusic, and other startups.

We have yet to see a team in the SE with management and technical depth on par with these guys. They have employed a team of engineers and scientists that Googly, Yahoo and others are actively seeking. Once we met the team and saw the engine, we invested in two weeks.

The idea that it takes months to make an angel investment is not practical for the entrepreneur, or for us.

The idea is to grow the business as quickly as possible and be the first to market in the highly competitive world of disruptive technologies.

6. How do you make an informed decision so quickly without being reckless?

Entrepreneurs who truly live and breathe their business can turn around due diligence in a matter of days.

It is amazing how much a dedicated, hard working team can provide within a week. In the companies we fund, they work nights and weekends and as much as necessary to get the job done.

We actually believe that any management team we invest in should be able to give us this information quickly and thoroughly.

We pride ourselves on thoughtful, deliberate, yet quick decisions, and we make it a point to always tell the start-up yes or no as soon as we know to avoid any miscommunication. Given the rate at which these companies must compete, neither of us can afford to delay a decision.

7. Given the recent success of Charles River raising a new $320M fund and August raising $650M in California, do you see similar support for high tech in the SE?

No.

The West, despite a down economy, or rather, because of the down economy, sees this as the perfect time to raise money and invest at very attractive prices.

We would love to see this same thinking and approach in the SE and hope to see SE VCs adopt a similar approach soon while the opportunity exists. Given this leadership position, high tech development in the West will continue to outpace the rest of the country with superior and timely funding.

We would like to work in partnership with West VCs to bring some of this competitiveness into the SE. We feel the SE has much to offer in the way of low burn rates and highly qualified engineers that want this area to succeed.

This is our investment strategy and the type of companies we are looking for. We are starting to find more and more in the SE and feel this strategy could help them and others compete successfully with the West. We are looking to do deals, and we always love to speak with people with a disruptive technology who live and breathe their business.

Online: http://www.palmettoinvestments.com