A nonprofit business accelerator is showing its willingness to sue to recoup loans it offers startup companies to help get them off the ground.
S.C. Launch, an incubator program at the South Carolina Research Authority, filed a lawsuit in Charleston County this week to collect about $333,760 from locally based Moondog Animation under a 2014 financing agreement.
S.C. Launch portfolio companies can qualify for early-stage capital and advisory services to help them secure follow-on funding. The program also seeks seats on the boards of companies it works with.
At least a half dozen companies have received investments so far this year.
But 2019 appears to be the first time S.C. Launch has sued some of its portfolio businesses for repayment, a review of court records shows.In addition to Moondog Animation, the financier sued Upstate-based PinPoint Geotech last month over a 10-year-old debt.
Mary Caskey, S.C. Launch's attorney in both complaints, said the organization has tried to work with the companies and hasn't been able to reach a resolution. As a nonprofit, it has obligations to its donors, she said.
"The loans that are at issue are very delinquent," Caskey said. "S.C. Launch has exhausted all of its options."
S.C. Launch lost money in 2018, according to forms filed with the Internal Revenue Service. This was attributed to the accounting of an investment that has fluctuated in value over the last couple of years.
"This loss is unrelated to trying to collect on the funds, which are used to re-invest in other startups across the state," a spokeswoman for S.C. Launch said. "Our goal is to be good stewards of the dollars we invest and prudent with our agreements."
S.C. Launch's parent, the South Carolina Research Authority, also reported a $3.4 million loss last year.
A representative for PinPoint Geotech did not respond to a phone call and email seeking comment. Moondog said it could not comment on pending litigation.
Moondog, which is based in Mount Pleasant, creates original animations for advertisements. It has operated in South Carolina for about six years. The company has produced ads for Roper St. Francis, the South Carolina Aquarium and Seacoast Church, as well as other clients around the country.
S.C. Launch provided Moondog with a $250,000 three-year loan in 2014. Earlier this year, S.C. Launch and the company struck a deal to extend the deal for three months, according to court documents.
In PinPoint Geotech's case, S.C. Launch provided it with $175,000 in financing in 2008. The loan balance has nearly doubled as interest on the unpaid debt has accrued.
The Pendleton-based company makes software used as a data collection and dispatching tool for public works agencies. Its website says it is still a client company of S.C. Launch.