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January 24, 2018 | Tom Ballard

2018 OUTLOOK PART 9: Final thoughts from the panelists

2018 Outlook 3We finish our series where Angel and Venture Capitalists in East Tennessee share their thoughts about the past year and their thoughts on the year ahead. Thanks to all who participated and shared their ideas. They are key players in helping to continue growing a more robust entrepreneurial ecosystem.

Part #9: Do you have additional insights you want to share?

  • Eric Dobson, Chief Executive Officer, Angel Capital Group: 2017 was an interesting year. With the election, many folks sat on the sidelines at the end of 2016. We did see an uptick in new applications, but we invested approximately half of our total investments this (past) year in second and third rounds for promising portfolio companies. And, that does not show signs of slowing down. We definitely believe we are seeing an uptick in M&A activity. And, despite the fact that supply-side economics did not work in the 1980’s, there is renewed hope that with corporate tax rates being cut, the M&A market will expand in 2018. Only time will tell.
  • Tony Lettich, Managing Director, The Angel Roundtable: With the strengthening of the entrepreneurial ecosystems across our state, access to capital and support continue to improve. Tennessee is becoming a great place to establish and grow a start-up.
  • Grady Vanderhoofven, President and Chief Executive Officer, Three Roots Capital, and Managing Partner, Meritus Capital Management: I believe the demand for investment capital and (for lack of a better term) “job-creating” capital across the state is widely-recognized. In practice, private investment capital will flow to qualified opportunities if/once they are identified. I have talked to a number of people in state government, some of which are elected, some of which are appointed, and some of which are long-term employees of state agencies. Almost without exception, these people recognize the need for investment of capital outside of the major cities in Tennessee, as a mechanism to drive job creation, wealth creation, and opportunities in the rural areas of the state, or areas that otherwise are not a focus of economic activity. A key to driving capital into companies in those geographies is identifying opportunities in those geographies. Many such opportunities are not “low hanging fruit.” Deals in such areas are harder to find, harder to vet, and generally harder to do than deals in the urban centers of the state. These factors contribute to a scenario in which private capital tends to focus on urban centers, where almost everything is more easily accomplished. If there is a desire within Tennessee state government for private capital to invest in areas outside of the major urban centers, then state government needs to encourage, support, and incentivize the identification of investment opportunities in such areas. Private capital will flow to opportunities once they are identified; sometimes the hardest part is finding the diamonds in the rough.
  • Ken Woody, President of Innova Memphis: Over the last 10 to 12 years, Tennessee has continued to mature as an entrepreneurial hotbed, and I think that will continue. More cities see the value in supporting those efforts and enjoy the benefits of new high growth companies coming to their area and thriving.

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