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January 12, 2014 | Tom Ballard

INVESTMENT OUTLOOK #1: How did we do in 2013?

2014 Outlook(EDITOR’S NOTE: This is the first article in a six-part series that features the views of our region’s leading angel and venture capitalists.)

As we did in 2013, asked the region’s leaders in angel and venture capital for their thoughts about the outlook for investment capital in 2014. In the first of a six-part series, we posed the question: “How would you describe the angel and/or venture market nationally, in Tennessee and in this region in 2013?”

  • David Belitz, Chief Executive Officer (CEO) of The Lupton Company, LLC, and Partner, The Chattanooga Renaissance Fund. The angel market continues to grow and evolve.  The introduction of the Angel List Syndicates has created a new tool for angels to invest in companies alongside, what is hopefully an experienced investor.  This is an interesting tool that has already had an impact on how angels can complete investment rounds.  With tools like Angel List, Gust and others the overall markets appears to have remained strong throughout 2013.  Here in TN I think the continued operation of the regional accelerators, LaunchTN’s Southland Conference and start up promoting events like Will This Float and 48 Hour Launch here in Chattanooga provided for an active pipeline of startups throughout the year.
  • Eric Dobson, CEO, Angel Capital Group. The bar has never been lower, but the competition has never been higher. There is a good deal of both enthusiasm and dismay over the Securities and Exchange Commission rules for crowdfunding. There are lots of deals looking for capital. While capital flowed this year, the average investment in companies was down.  This region was starved for seed and angel capital.
  • Scott Ewing, CEO, Venture Incite, Inc. Venture Incite has been regionally focused, so I won’t attempt to comment on the national venture market.  In our region, and for the industries that our firm is interested in – mainly chemical specialty, medical devices, sensors, and IT – we are witnessing a slowdown upstream in the availability of capital.  Firms that we deal with are reporting challenges or delays in raising new investment capital, which is having a decided effect on the time it is taking to secure A-stage funding.
  • Tony Lettich, Chair and Managing Director, The Angel Roundtable. The market in this region and in Tennessee is improving due in large part to the vibrant approach LaunchTN has brought to the state’s entrepreneurial ecosystem.   Southland and “The TENN” are outstanding examples of programs they have sponsored which are highly visible, educating potential entrepreneurs as to the opportunities and processes, and facilitating networking opportunities for both the entrepreneurial and investment communities.
  • Ken Woody, President, Innova. Nationally, I see the Venture Model evolving. The huge VCs are raising billions of dollars again, but that is mainly a vehicle for major institutional investments. For early stage companies, fewer VCs are investing and when they are, they look for very specific opportunities. More early-stage VCs are looking for incubator graduates hoping to find opportunities and teams who have worked out the bugs.
  • Grady Vanderhoofven, Co-Manager, Meritus Ventures and Southern Appalachian Fund. I believe the economic climate in Tennessee has benefited from a number of positive initiatives within the state in the past few years.  The list includes LaunchTN’s support of business incubation and acceleration, the establishment of the INCITE Co-Investment Fund, and the continuing investment activity of the TNInvestcos. These initiatives have contributed to an environment in which young companies in Tennessee have access to relatively more support and relatively more capital than most young companies in the country and particularly in this region of the country.  Clearly, this has been extremely positive for young companies in Tennessee.  Frankly, the scenario has been so good in Tennessee lately that I think many people in our state have a distorted perception of what things are like in most of the rest of the country, outside of traditional hot spots like Silicon Valley.

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