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Three Roots Capital roundtable reviews challenges, opportunities for region

three-roots-capitalBy Tom Ballard, Chief Alliance Officer, PYA

The final event of the first day of Knoxville’s “Innov865 Week” was a Monday evening roundtable hosted by Three Roots Capital, the newest player in the region’s access to capital sector. It was held in the Mill Room at Cherokee Mills.

About three dozen people participated in the discussion that featured a diverse panel of individuals, all involved in some aspect of entrepreneurship in East Tennessee. They ranged from the Co-Founder and Chief Executive Officer (CEO) of one of the portfolio companies in the region’s oldest venture fund to a State Senator who was the prime sponsor of the TNInvestco legislation.

“A lot is going on now, and it seems well-coordinated,” Stephen Culp of Chattanooga’s Smart Furniture said. “It’s different from 10 years ago.” That was a reference to starting the company in Chattanooga, but securing his initial venture capital from the Southern Appalachian Fund (SAF) based in Oak Ridge.

The situation is much different these days in his hometown, and Culp said the “Create Here” initiative launched 10 years ago with funding from the Lyndhurst Foundation was the catalyst. Two of the results are the Chattanooga Renaissance Fund, now investing across the region with its second fund, and CO.LAB.

Culp’s points struck a chord with the event’s host.

“Capital is a tool,” Grady Vanderhoofven, President and CEO of Three Roots, said. “Entrepreneurs are the critical ingredient.”

As noted in this teknovation.biz post from earlier this week, Vanderhoofven has been a senior executive in two other regionally-based funds – SAF, which invested in Smart Furniture, and Meritus Ventures.

Over the course of about 45 minutes, Vanderhoofven, Culp and their fellow panelists discussed a variety of challenges and opportunities for entrepreneurs in the region. Others participating were State Senator Doug Overbey; Terrence (TC) Carter, Director of Economic and Business Development for the Knoxville Area Urban League (see this recent teknovation.biz post); and Herc Ligdis, Senior Vice President of SouthEast Bank.

Overbey reminded attendees that “government doesn’t create jobs and wealth. It needs to get out of the way most times.” Yet, he added that “from time to time, we can do what we did in 2009.” This was a reference to a severe economic downturn when the TNInvestco program was launched, and it did bring much needed capital to the start-up sector.

Attendees were reminded of the continuum of capital and the importance of matching entrepreneurs at whatever stage their start-up is to the appropriate source of funding. One of those tools is the Urban League’s Community Development Financial Institutions (CDFI) Fund and another one operated by Pathway Lending based in Nashville.

“CDFIs try to make it (an opportunity) work when it does not seem it can work,” Carter said of the program designed for higher risk investments.

Ligdis offered two important points.

“If you create the environment, the entrepreneurs will come,” he said. “If we are willing to invest in ourselves, others will take note.”


Tom Ballard

By Tom Ballard, Chief Alliance Officer,
Pershing Yoakley & Associates. P.C.

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