Note: Reference to Dealerskins sale amended, below, 9 Sept.-Ed.
Nashville-based Angel investor Crom Carmichael is likely to exit several portfolio investments in 2012. Afterward, he plans to "restock my pond" with new ventures, he told VNC.
Until then, Carmichael said he intends to put virtually all of his energy into minding 25 or more current investments and supporting new initiatives with others in his personal network. For example, his sometime co-investors at Spouting Rock Capital, based near Philadelphia, are considering creating a fund that is likely to invest in Nashville-area companies, Carmichael noted.
During a wide-ranging VNC interview, Cromwell seemed brimming with enthusiasm as he hinted at developments likely to come soon from companies in his portfolio.
He offered two examples: Pearescope is a startup founded in Nashville by CEO Whit Schrader, formerly a Vanderbilt University Ph.D. candidate. It will allow its members "to use their Facebook and LinkedIn accounts on-the-go to introduce themselves to nearby mutual friends," according to information about the firm online. Expect news from that quarter, soon.
Carmichael was pumped, also, about the latest efforts of entrepreneur Gabe Krajicek, the former Dealerskins chief who left Nashville and founded PeopleToMySite in Columbus, Ohio. It's an interactive marketing agency serving the franchising industry. Carmichael is close alongside.
Oliver Cromwell 'Crom' Carmichael III is 63 and he is partial to golf shirts and other casual attire. He is often spotted with associates at breakfast in the Noshville restaurant in Green Hills, where he smiles, nods and shakes hands often as friends and colleagues pass by tableside.
"Nashville, to me, is incredibly entrepreneurial for a market of a million people," Cromwell said during a recent morning interview. He singled-out the new-ish Nashville Entrepreneur Center and CEO Michael Burcham among those generating fresh impetus and awareness within Nashville's startup sector.
Cromwell, of course, is one of the Angels frequently cited by others as contributing to a robust Angel-investing scene in middle Tennessee. Possessed of what seems boundless curiosity, Cromwell's instincts have carried him into at least two ventures with China ties -- Nashai and Jinti (more on which, below) -- and scores of other business and venture undertakings, across several decades.
A handful of investment exits lie ahead for Cromwell; for now, he's focusing on supporting his existing portfolio companies. Additional investments in the near term are likely to be limited to opportunities that are synergistic with current holdings; he is actively raising capital for "four or five" companies, he acknowledged.
When asked about his investment criteria, Cromwell quickly recited them: Companies that win investment from him and his co-investors are likely to qualify as "disruptive" by technology and-or business model -- often technologically "leading edge" (but, not bleeding edge and fraught with developmental risk)-- and, they must show strong promise of scalability. A self-described "generalist," Carmichael rules-out investment in such as areas as pharmaceuticals and nanotechnology.
He reviews a couple of business plans each week, he said. The form of his involvement varies from guaranteeing debt or investing, to leading a capital raise. He often serves as a board member and-or advisor.
When Carmichael leads fundraising, the goal for the round is usually in the range of $250,000 to $1 million. His largest cumulative raise for a single company, thus far, was $5.2 million in financings he helped secure for Capital Confirmation, the Brentwood-based audit-confirmations company, said Carmichael.
During capital rounds, Carmichael often allies with members of a core group of about a half-dozen other Angels or high net-worth individuals. When a round requires it, he'll recruit a larger group of investors.
His degree of involvement in portfolio companies varies: Support for companies that are "over the hump" and are well managed may translate into little more than periodically alerting management teams to ideas and opportunities, and reviewing financial reports, he said.
Companies that are not so far along, but which are expected to get over the "hump" milestone within 12 months, get more personal attention "as needed," he said.
In a third category are companies that are still "massaging and tweaking" their business model; they get much closer advisory support from Carmichael. "I can become a real pest and a jerk," he said.
Asked about his previous exits, Carmichael again mentioned Nashville-based Dealerskins, which creates websites for automobile retailers; and, Motricity, now Nasdaq-listed and based in Bellevue, Washinton.
Following his 2002 investment in Dealerskins, Carmichael worked very closely with then-President Krajicek. (According to news reports at the time, Carmichael was joined in that deal by co-investor Lucius Burch.) Corrected: Dealerskins was in 2005 sold to Trader Publishing, now part of Dominion Enterprises. VNC originally reported the sale was to another buyer.
Cromwell and private-equity firm Solidus Co. were among investors in Motricity (NASDAQ:MOTR), which was known as PoweredByHand and PalmGear while it was headquartered in Nashville. (It relocated from Nashville to North Carolina and then to Bellvue, Washington. Former CEO Ryan Wuersch's role with Motricity was recently terminated, and the stock's market cap stood below $100MM at the close, Sept. 2.)
VNC research indicates Cromwell has as many as 30 active investments, including AlphaTheory (portfolio optimization software, based in North Carolina); BancVue (interactive products and marketing for banks; Austin, Texas); Capital Confirmation (electronic audit confirmations, Brentwood); ConduiIT Corporation (a Vanderbilt spin-out that became a business accelerator, Nashville); ConsensusPoint (the predictive markets solutions provider, Nashville); Dataium (Web analytics provider, Nashville); Discovery Sound Technology (ultrasound maintenance tools, Nashville); Endless Analog (analog music recording signal processor, Nashville); Jinti (online social network, China); Nashai Biotech (dietary supplements, US and China; Cromwell is CEO); Pearescope (above); PeopleToMySite (above); PharmMD (medication therapy management, Brentwood); SmartVue (remote internet surveillance, based here); and, Vaco (consulting and staffing, Nashville).
Carmichael's investments are executed directly and personally by him, he explained. He maintains 27-year-old Carmichael & Carmichael, from which he manages a long-term licensing agreement with Blackstone Audio, which licensed his Knowledge Products audio series on philosophy, economics and other subjects.
Asked about earlier business activities, Carmichael recalled that he has owned or co-owned, operated and sold five companies, including the former Nashville-based Tom Baldrige's Sportsman Store (sold to Champs Sporting Goods in the Eighties); and, Sports Industries of America (SIA), a wholesale distributor. He confirmed that he also realized gains from sale of a stake in Converse Inc., the shoe manufacturer later bought by Nike, and was also a Converse distributor.
Long before his Angel-investing and sporting-goods careers, Cromwell was an assistant vice president of First AmTenn Corporation. He earned his bachelor's in business/economics at Vanderbilt University, in 1971. He was also for years an invariably informed and thought-provoking guest -- holding a guest slot reserved for staunch conservatives -- on Teddy Bart's Round Table, a morning radio talk show popular among insiders, which ended its long run in 2005.
Crom's father, Carmichael II, led the formalization of Vanderbilt University's fund-raising and development efforts while serving, 1952-56, within the university's Administration. Among other distinctions, his father was CEO of The Associates, a consumer-finance enterprise; and, served as president of Converse College.
Crom Carmichael's grandfather, a world-travelled native Alabaman, was chancellor of Vanderbilt University, 1937-1946, and later served as president of the Carnegie Endowment for the Advancement of Teaching. VNC