INVESTMENT OUTLOOK #2: How was the deal flow?

(EDITOR’S NOTE: This is the second article in our six-part investment outlook series.)

We asked the region’s leaders in angel and venture capital for their thoughts about the outlook for investment capital in 2014. In the second of a six-part series, we posed the question: “Have you seen more or fewer opportunities? Are they better opportunities than in the past?”

  • David Belitz, Chief Executive Officer (CEO) of The Lupton Company, LLC, and Partner, The Chattanooga Renaissance Fund. I would say that we saw more opportunities this year than last.  I did notice that on the margin, we did see an increase in quantity and a decrease in quality of the opportunities over the last half of the year.
  • Eric Dobson, CEO, Angel Capital Group. More and better; the educational processes are clearly working around the nation and locally.  The accelerator programs of Tech 20/20, UT Research Foundation, Knoxville Entrepreneur Center, Anderson Center for Entrepreneurship and Innovation, and Entrepreneurs of Knoxville are definitely building better entrepreneurs. Now, we need to educate the community.
  • Scott Ewing, CEO, Venture Incite, Inc. Regarding deal-flow, the number of prospect companies or ideas seeking funding seems consistent with prior years.  The “quality spread” seems about the same:  a relatively small number of laboratory technologies that are actually ready to be developed into commercial products; no shortage of clever albeit unfundable ideas.
  • Tony Lettich, Chair and Managing Director, The Angel Roundtable. Overall we see the market improving.  We are seeing increasing numbers of opportunities both in Tennessee and in the Southeast. The breadth of the opportunities appears to be growing and the quality of the opportunities gradually strengthening.  The improvement in the quantity and quality of opportunities in this region is notable.  This results from the higher level of visibility and educational opportunities available to regional entrepreneurs.
  • Ken Woody, President, Innova. Innova only invests in early-stage technology companies in Tennessee. With the strong proliferation of incubators throughout the state, we have seen more opportunities in the last 18 months. The quality of the ideas is about the same, but the value proposition and company leadership is stronger than we have seen in the past.
  • Grady Vanderhoofven, Co-Manager, Meritus Ventures and Southern Appalachian Fund. I have observed an overall maturation of the entrepreneurial community and the investment community within Tennessee over the course of the past 20 plus years.  I don’t know that I see more total investment opportunities today than I did 10 years ago, but I definitely see more high-quality opportunities today than I used to see.  We have always had successful entrepreneurs and investors in Tennessee, but I have observed an increasing breadth and depth of knowledge, capacity, and capability within the entrepreneurial and investment communities in the state.

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