The anticipated news that Imlay Investments will discontinue seeking new deals this August blows a gaping hole in the angel investing community in Atlanta. Sig Mosley and Melanie Leeth have seen just about every deal that has come along for 2 decades, and their importance has been memorialized by the “Sig Said No” shirt from Startup Lounge. Literally it has been hard to show anyone a tech deal without answering the questions as to whether Sig had seen it and whether he liked it. John Imlay is to be thanked both for his vision in returning some of his gains to our technology community and for fielding such a capable team to execute this vision.
Imlay and Mosley have come a long way from the time when John realized that Sig had the best command of the numbers at a faltering MSA when it was in critical condition. They have now worked together for about 40 years, with Sig running Imlay Investments in the post-MSA era. (Neither has aged, I might add.) The addition of Melanie Leeth to the mix enabled the group to examine a wide range of investments and tend an ongoing large stable with all the requisite board meetings and handholding opportunities. They packed enough powder to seed deals and stay with them through subsequent stages, and they wielded enough influence to attract other angels and institutional investors to the table when needed. From my my experiences with them on boards, they are always well prepared and constructive. And, they know the art of the exit, good or bad.
I am struck by the fortuitous timing of Imlay Investments. Their activity started in time to capitalize on the dotcom era with a big win in Tradex and to participate in the rise of our Internet security cluster through ISS and enjoy another great outcome there. In effect they were able to play with house money after a few years and to maintain a shotgun strategy without the burdens of raising a fund and dealing with multiple limited partners. They had the capacity to look at and evaluate just about every deal and to participate in all they found worthy. You likely have read Malcolm Gladwell’s Outliers and are familiar with his theories on timing. Of most relevance is his finding that the computer industry leaders who were at the right age to take advantage of the microcomputer revolution were all born around 1955. They came of age when technology offered the disruptions of a lifetime. Similarly, Imlay Investments came to the table when the Internet era offered a treasure trove of deals.
By no means do I imply that success in this case was simply a matter of lucky timing, but it helped. The more important point is what is next for our startup community. Even if there is a person of similar wealth supported by a similar team ready to jump into this arena, what are the odds of some big hits in the next few years? We are operating in a very difficult economy with more uncertainty than ever. Many make the argument that great businesses have been spawned in down cycles, but this down cycle is much deeper than most and is set against a world economic backdrop filled with unknowns. And, we don’t have a dotcom bubble to ride or an obvious major cluster forming, except possibly in biotech. Who locally has made big bucks in biotech and would have the appetite to redeploy them there? Nor are we equipped to play in the social media universe that seems to have captured the Valley.
For entrepreneurs, Atlanta is a still a real estate town. And, that real estate community is closely tied with many of the banks. Just look at all the real estate developers on bank boards and vice versa. Sure much of this wealth has come crashing down in the last couple of years, and there is more pain ahead, but if our population continues to grow time will take care of that industry. I’ve often felt the best time to have entered that business was the early 60’s, when the city was in a great spurt of growth and modernization under a dynamic mayor, and the foundations of many great fortunes were established. The real estate folks created a fabric of interconnections and did many deals with each other. There was competition on both sides of the table, but cooperation as well. There was no one single source of money or one single influencer who held sway over what could get done here.
Conversely, we developed more of a hub-and-spoke model for early stage technology. All roads eventually led to Imlay Investments, and there was very little commingling and partnering of our small and large technology companies. Each of us operated on our own spoke, including in earlier days my favorite Peachtree Software. We focused on deals across the country and barely knew Dennis Hayes, Les Freed, and other neighbors of our era. We were funded by a Chicago based angel and two very small venture firms in Oklahoma and Florida; there was no Atlanta hub at the time. (Local bankers told us microcomputers were “toys.”) Even our dominant institutional VC Noro-Moseley was not yet birthed. We locals never coalesced into the type of technology start-up ecosystem that worked so well in Silicon Valley in a manner very similar to our aforementioned real estate and banking fabric.
So now our hub is retiring. With 33 companies left in its portfolio, there’s much work ahead for Imlay Investments, but with its money no longer available for new deals, we indeed have a problem. Not that it can’t be solved, but it must be acknowledged.
Comments welcome.
[Photo: fauxto_digit's on Flickr]
