By Tom Ballard, Chief Alliance Officer, PYA
One way to gauge the growth of the Knoxville region’s entrepreneurial ecosystem is the person who came here last week to keynote the sixth annual “Startup Day.”
Amy Nelson is Chief Executive Officer for Venture For America (VFA), a non-profit that places about 200 college graduates annually as Fellows for two years in start-ups where they gain insights into and experience in entrepreneurship. She came to Knoxville to learn more about the city and its emerging entrepreneurial ecosystem.
“I was curious, I’ve never been to Knoxville,” the native of St. Louis told us in an interview ahead of her keynote address a week ago. “I’m always interested in people taking a proactive stance on building their ecosystem. We are looking for cities that need to attract more talent. Is this a city that needs more talent but also has a critical mass?”
At a reception for Nelson on Monday night ahead of the sixth annual “Startup Day,” her message was well-aligned with a separate conversation we had with new Knox County Mayor Glenn Jacobs during the reception. He told us a top priority for his administration would be attracting and retaining top talent.
Nelson’s appearance was orchestrated by the team at Launch Tennessee who encouraged her to make the trip.
“I was told Knoxville has some cool stuff going on,” she said. “I said I’ll come and check it out. Is there an appetite for VFA?” From all indications, she was pleased with her experience that included interaction with entrepreneurs and business leaders as well as separate meetings with both Knoxville Mayor Madeline Rogero and Jacobs.
“It’s the first time I’ve met two Mayors on the same day,” she told attendees at “Startup Day.”
As a member of the “Innov865 Alliance,” I used the interview as an opportunity to better understand what it would take for Knoxville to become a VFA city. In answering my question, Nelson shared a story of one of the newest entrants – Birmingham, a city that has about 30,000 more citizens than Knoxville. The Alabama entrepreneurial hotspot was smaller than the typical VFA city, so there were some risks.
“When I visited, it became obvious a lot of people there were rowing together,” she said, adding there was clearly a lack of territorial issues among the various players. That made the community very attractive to VFA. It also helped that Alabama Power, a subsidiary of the Southern Company, was willing to step-up as a major sponsor just like the Third Frontier organization did for two Ohio cities.
Yes, becoming a VFA city involves a significant financial commitment over three years. The costs include recruitment, training, placement and ongoing local management as well as stipends for the Fellows.
“We want to see demand in a city,” Nelson explained. “A community needs to raise $1 million philanthropically over three years.” A good portion of those funds is targeted at direct costs for the Fellows along with ongoing mentoring and monitoring. Here’s how it breaks down.
- VFA requires a minimum two-year commitment from each participating start-up and a minimum of five Fellows per community.
- Each Fellow is paid a minimum of $38,000 annually by the participating start-ups plus benefits.
- There’s also a one-time $5,000 placement fee per Fellow.
- Finally, VFA hires a full-time person in each city to handle on-going mentoring and program management at a cost of about $25,000 per Fellow per year.
VFA is active in 15 communities. Besides Birmingham, the closest to Knoxville are Charlotte, Cincinnati and Columbus.
“We are industry agnostic, but most of the participating start-ups are tech or tech-enabled,” Nelson says. As far as the characteristics of the Fellows, some are tech-focused but most fall into the project management mode.
The typical start-ups that sign-up for the VFA program fall into the high-growth category, have already generated between $1 and $5 million in revenue, and have 10 to 30 employees.