Jon-Michial Carter said he had many reasons to move his healthcare data company from Houston to Greenville a few months ago — love for the community, the pro-business environment, and the NEXT Innovation Center were just a few.
But a clincher for the founder and CEO of ChartSpan Medical Technologies was the tax credit of 35 percent that South Carolina now offers affluent so-called “angel investors” who put their money in early-stage, high-growth businesses.
“We were a Texas-based company. We looked at the entire landscape of whether to stay in Texas or move to South Carolina,” said Carter.
“We’re proud to say we’re a South Carolina-based company and one of the biggest reasons was that tax break and the future investment we’ll be able to raise.
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“Being able to go to an investor and say, ‘Here’s a 35 percent return on your money,’ is one helluva carrot. It not only puts South Carolina in a great position to recruit businesses, but it puts us, the businesses, in a great position to recruit investment. We’re big fans of this incentive and it is certainly substantial and meaningful.”
The tax credit is part of the High Growth Small Business Job Creation Act passed by the Legislature last June to support economic growth in the state. The act is intended to not only encourage investment in qualified businesses, but to also help grow the number of good, high-paying jobs in the state.
ChartSpan, which operates in the NEXT Center across from County Square, has technology enabling consumers to convert paper healthcare records into electronic records with no manual data entry. The company has been working in “stealth-mode” on its product for about two and a half years, Carter said. The product is expected to be released in three weeks.
In the next five years, the company also expects to grow from its current staff of 10 to a headcount of more 85 over the next five years.
“So, in the next two to three years, you’ll see dozens of new employees who will move to the Greenville area and work for ChartSpan,” he said. “We expect to see explosive growth.”
The state, and Greenville in particular, is also seeing growth because of the High Growth Small Business Job Creation Act.
Since the act’s inception, the South Carolina Secretary of State’s Office said it has registered 29 qualified businesses ranging from software developers and research and development companies to manufacturers.
Sixteen of those companies are based in the Greenville area and six are in Charleston. Spartanburg and Columbia each had two, while Cayce, Sullivan’s Island and Graniteville each had one.
Selah Genomics is among the 16 in Greenville. It is a clinical diagnostics company that does genetic testing to help doctors get more information to improve outcomes of their patients, said Michel Bolick, the company’s chairman and CEO.
The company’s main lab is in the Next Center and it also has a clinical genomic center inside the Greenville Health System, as well as one at Innovista Research Campus at the University of South Carolina in Columbia, he said.
Bolick said when an angel investor is sitting down and looking at a business opportunity the most important thing they want to know is, “How am I going to get my money back? How am I going to make money?”
“The really great thing about being in this community is most of the angel investors look at that return on the investment but they also take into consideration other factors. This tax credit is one of the factors that an angel investor would want to take into consideration,” he said.
“Nobody invests wanting to lose money, but as a risk mitigator, having the tax credit there in the event that there was a loss buffets some of risk that an angel investor might have to consider in the value equation,” Bolick said.
He said if you think about South Carolina versus other states that might want to attract a company like Selah Genomics, the tax credit shows that “we get it. It’s one more box that needs to be checked to show that this type of company is attractive to the folks in charge in the state and the economic development community,” he said.
“If you didn’t have it, it would be seen as if we’re not in the game. I think it’s a ticket to ride,” he said.
Bolick said the next step needed is to build on the momentum of having the tax credit and encourage additional formation of venture capital activity in the state.
“As the entrepreneurs, we have to do our job, grow our businesses intelligently and be good stewards of those opportunities,” he said.
“But the leadership in the Legislature and in the administration should be able to say to the venture capitalists, ‘We get it and we’re going to check the boxes that need to be checked at that next, more mature level of capital formation for companies like Selah, Gnoso, or several others.’ It’s a mindset that says there’s a continuum of access to capital that has to be considered.”
Greenville businessman Jack Stone said the High Growth Small Business Job Creation Act is the renamed Bill Wylie Entrepreneurship Act, named in honor of its “driving force,” the late former state Rep. Bill Wylie of Greenville.
Stone is the former CEO of Stone Manufacturing and Umbro International. Wylie, who died in September 2012, served as Stone’s executive assistant there for 32 years, Stone said.
“We had operated a number of apparel plants in South Carolina, in the rural communities, and understood that the need for capital investment to encourage Greenville to grow was for real,” Stone said. So, when Wylie went to Columbia, one of his highest priorities was “to see if he could develop this real interest in a way to incentify people who had capital to place that capital to work on behalf of small businesses.”
The capital investment in North Carolina exceeds South Carolina by great numbers, and “also Georgia attracts more investment capital than we do in South Carolina,” Stone said. “Businesses cannot function without adequate capital so it has held South Carolina back. Companies that were poised to grow were not able to because the capital was not available.”
The secretary of state reported that the 26 businesses that had filed under the act from June to January reported creating more than 100 full-time, part-time, and temporary jobs, and had raised nearly $20 million in capital at the time of registration, and categorized over $7 million of this capital as qualified investments.
Stone said it was a result of working closely with Wylie on the act and the work in the rural areas that Stone Manufacturing operated in that led to the formation of a company that aims to help the state’s 26,000 farms.
Agrimax, a software system created by Bytech Technologies, brings farmers up to date with technology to aid them in their record-keeping and farm management. The system also provides farmers with information to plan crops and schedule work, while collecting data they may need to prepare reports for customers, government agencies and international records. It also serves to better connect farmers with distributors and customers.
Stone is the executive director of Trusted Farms, the non-profit arm of the business.
Agrimax is a more than $1 million system that took three years to build, Stone said. The system, he said, will enhance the the productivity of the farm and increase their income and incentive to continue to farm. The system is at work in 10 farms.
“We are just at the point where we are ready to begin to accelerate the growth of the business. In order to be able to grow we’re going to need capital and we’re going to need people. We expect to be adding significantly to both of those shortly.”