Part #7: What is your overall outlook for investment capital nationally and, more important, for starting and not only growing but also retaining these new ventures in Tennessee?
- Jack Studer, General Partner, and Courtney Watson, Partner, Chattanooga Renaissance Fund: There continues to be more and more capital pouring into the venture class nationally. Simultaneously, the definition of venture has expanded, as companies are staying private longer and later stage private capital is more than glad to invest in that space. It will be interesting to see what happens as that late stage capital either returns great profits or fails to generate risk adjusted returns in comparison to other asset classes. There has been ample discussion around the late stage down rounds of unicorns and what that does to the Series F investor, but we still haven’t seen what that will mean up funnel for Series A, B, etc. I believe the pendulum will swing back in the next decade, and the IPO window will creep back open for the $100 million revenue, profitable companies. Maybe (that will occur) through increased liquidity models such as ICOs (which I think are still mostly scams, but there’s promise in the underlying BlockChain), or maybe through decreased compliance costs (either through deregulation or technology driving costs of compliance lower).
- Eric Dobson, Chief Executive Officer, Angel Capital Group: We remain bullish on the market. We are making changes to our operations and expanding in the Appalachian Region and nationally in 2018. We believe in the premise of Case’s Rise of the Rest and are focused on creating new angels in the Heartland. Based on the microventure starts in our pipeline now, the outlook appears positive for 2018.
- Tony Lettich, Managing Director, The Angel Roundtable: It is our belief that with the financial markets strengthening, an improving regulatory environment and the possibility of an improving tax environment, optimism is improving, and we expect investment capital to become more available nationally during 2018. In the State of Tennessee, we expect to see an increase in the capital invested in start-ups. However, retaining these new ventures in Tennessee will remain a difficult challenge.
- Kristina Montague, Managing Partner, The JumpFund: The JumpFund has recently helped launch a Growing Women’s Capital Collaborative under the auspices of the Angel Capital Association (ACA) which brings together funds and networks focused on investing in women for deal syndication and resource sharing. The ACA also now hosts an annual Women Angel Investor Forum each year (this year in Boston) as the number of female angels is rapidly growing. The JumpFund attempts to serve as a gateway to women-led deals in the Southeast for many of these groups, including Golden Seeds, Next Wave Ventures, and Belle Michigan. Our fund was recently featured in a national scan of “gender lens” venture firms by the Wharton School titled Project Sage, and it the only one listed in the Southeast. LaunchTN is also positioning the state as the “best place for women entrepreneurs” and has made great strides to include more women on its demo stages, accelerator programs, and help them gain greater access to capital (see article here).
- John Morris, Fund Manager, The Lighthouse Fund: Our outlook is optimistic because of the strength and growth of the companies in our portfolio. Their eventual exits will provide significant economic and financial dividends. Traction and market share are the keys to retention.
- Grady Vanderhoofven, President and Chief Executive Officer, Three Roots Capital, and Managing Partner, Meritus Capital Management: I think the environment for starting and growing new ventures in Tennessee may be the best I’ve ever seen in the state. I do believe when we look back at 2017, we may see that less capital was invested in new and young Tennessee companies in 2017 than in the past several annual periods before 2017. I think those two factors together could contribute to creating a scenario that is attractive to investors in 2018: increasing number and quality of companies (demand), coupled with decreasing supply of capital, which in turn can be attractive to capital.
- Ken Woody, President of Innova Memphis: As always, it can be challenging to separate hype from emerging tech. There are some very exciting new technologies emerging. Are they real? How long will it take to find applications? Can they replace existing products or services? I think the key is to focus on areas of synergy for Tennessee where smart developers and key leaders can work together to find “sweet spots” for growth.