The Southeastern U.S. is an excellent market for venture investmentand one that remains under-served by venture capital firms. EGLs general partners have been investing here for a long time, and we have built an enviable network of entrepreneurs, investors, and service providers. We have also worked with many of the major universities, business incubators, and angel investors in the Southeast.
Geographical proximity is important in the ongoing management of portfolio investments. In growth companies, especially in the earlier stages, board members are often called on to give advice or counsel on a moments noticeand face-to-face discussions are always best. That can be very difficult when the board member lives three time zones away.
Historically, a local lead has been a critical element of venture capital investing. At EGL, we believe that at least one syndicate partner needs to be able to build informal relationships across multiple layers of management at our portfolio companies, helping to spot potential problems before they escalate. Some of the largest funds in the U.S. have abandoned this practice, sending junior members of fund management on frequent trips across the country. Smaller venture funds, however, including some of the smartest sector specialists, are philosophically opposed to and cant afford this practice, and therefore wont invest without a local lead.
We expect to continue our historical practice of leading deals in the Southeast, with possible extension into adjacent states. A certain number of investments may be made out of the region as part of our strong syndicate relationships.