Chattanooga Times Free Press

VentureSou­th official ‘a champion for founders’

- BY BOB GARY

When Jay Shaffer counsels founders of startup businesses, he knows what he’s talking about.

Having “been there and launched that” earlier in his career, Shaffer now advises startup founders as Chattanoog­a market director for VentureSou­th. Based in Greenville, South Carolina, the early-stage venture firm’s angel investment network has invested more than $80 million in more than 100 companies.

“This is a great fit for me at this point in my career,” Shaffer says. “Wisdom comes from scar tissue. I’ve got the scar tissue from the startups I’ve been in, and I want to share that with founders. Hopefully I can impart some wisdom to start them on their path.”

Charlie Banks, a managing director for VentureSou­th, says he and his colleagues are “huge fans” of Shaffer.

“Jay has energy, enthusiasm and is very much a champion for founders,” Banks says. “We’re very much returnfocu­sed — we have to be — and Jay has a great understand­ing of how that impacts founders. He’s incredibly smart and been a great resource.”

An Oklahoma City native, Shaffer says he did his undergradu­ate work at Washington & Lee University in Lexington, Virginia. As a science major, his studies included geology, which led him to the oil industry, including three years on and off rigs.

“It was a great experience for a 21-year-old,” he says, “but it dawned on me that, while I was out there on the rig at 4 a.m., the finance guys were at home, asleep.”

Shaffer says he went back to school and earned an MBA from the University of North Carolina. He went from Chapel Hill to New York City, where he worked first in the newly formed energy group at Manufactur­ers Hanover and later at Standard & Poor’s.

“Five years in New York was about my limit,” he says, adding that a highlight of his run in the Big Apple was that

he met his future wife, Hope Flammer. Shaffer says they went to California and were married in 1991. Three years later, in 1994, working for different companies, they engineered transfers to Atlanta.

Shaffer said he and Flammer came up with an idea for a startup in 2005. The next year, he says, they launched VoiceQuilt, a company that made “customizab­le music boxes.”

“It was a gift you’d give someone who didn’t need anything,” he says. “Anyone in the world with a phone could record a voice message to celebrate a special occasion or memory — birthdays, graduation­s, weddings. Those messages go into an online playlist, which is uploaded onto a playback device — a music box.”

Shaffer says VoiceQuilt “built a great product, did some things right (and) made some mistakes.” He adds that he and his partners in that business learned a hard lesson.

“What we didn’t realize was how hard it is to sell to people,” he says. “Selling to individual customers over the internet is handto-hand combat.

“People told us it was a great gift,” he says, “but it was just really hard to make it a business, doing the volume you need getting customers one at a time.”

That’s the experience­based wisdom Shaffer says he’s sought to share with founders over the last few years — first, as a board member of Atlanta TechAngels (ATA), and now with VentureSou­th as well. He says that in early 2020, looking to shake things up after their daughter went to college on the West Coast, he and Flammer looked at Chattanoog­a and “fell in love.”

“The beauty (of Chattanoog­a) was No. 1,” he says. “We wanted walkabilit­y, and we live now very near the Riverwalk. UTC’s been a wonderful surprise, and there’s a growing tech community here.”

Even after moving to Chattanoog­a, Shaffer stayed on with ATA. VentureSou­th’s Banks says that’s where he and his colleagues first noticed Shaffer.

“We were looking to expand into Atlanta, and Jay stood out as a leader in that ecosystem,” Banks says. “He was very much aware of our methodolog­y and goals, and Jay brought (Chattanoog­a) to our attention.

“Chattanoog­a was on our radar, but we didn’t have a presence in Tennessee,” Banks adds. “We typically don’t open a new market until we have a Jay Shaffer to be the face of that market.”

Shaffer says that once Banks had reached out, he consulted first with his wife and then with Charlie Brock, a longtime Chattanoog­a-based investor. Shaffer recalls that Brock was enthusiast­ic about the prospect of VentureSou­th setting up shop in Chattanoog­a — so much so that he signed on.

“Charlie was our very first member. That was a huge boost,” says Shaffer, adding that he’d recruited two dozen new members to the VentureSou­th network by the end of last year.

Shaffer says that when he talks to founders seeking capital, he often quotes famed venture capitalist John Doerr: “Ideas are easy. Execution is everything. It takes a team to win.”

“I tell founders all the time that their most important business is customers,” Shaffer says. “If you don’t have customers, you don’t have a business — you have a hobby. And the best place for a startup to get money is customers — you don’t have to give up a piece of equity for that.”

Shaffer says the odds are stacked against startups. He cites a rule of thumb which holds that, out of 10 companies, five will make nothing. Four will return something, he says, and that last one will return enough to pay for the other nine.

“I ask founders if they have any idea what they’re getting into,” he says. “Anyone who thinks being a founder or investor is a way to get rich quick is delusional.”

 ?? PHOTO BY MATT HAMILTON ?? Jay Shaffer is the Chattanoog­a market director for VentureSou­th.
PHOTO BY MATT HAMILTON Jay Shaffer is the Chattanoog­a market director for VentureSou­th.

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