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January 21, 2024 | Tom Ballard

INVESTOR OUTLOOK 5 | How will “InvestTN” impact the start-up scene?

All say it will be positive, but investment decisions must be smart if it is to maximize the full opportunity.

Today’s question as posed to our experts is: “Related to the second question in this series (link here), what impact do you think that the $70 million ‘Invest TN’ program and its three sub-funds will have on drawing in more capital?”

Grady Vanderhoofven, President and Chief Executive Officer, Three Roots Capital: “InvestTN” will have a positive impact on early stage companies in Tennessee. “InvestTN” should positively affect capital attraction in Tennessee. It’s probably worth noting that every state in the country has implemented its own version of the most recent Federal SSBCI (State Small Business Credit Initiative) program, which is the genesis and source of Tennessee’s “FundTN” activity, and “InvestTN” is an element of that initiative. Tennessee is one of 50 states with an SSBCI-funded (federally funded) pool of investment capital. All of our neighboring states have similar initiatives. At the end of the day, a company must be attractive to private capital in order to qualify for “InvestTN” funding.

Ken Woody, President and Partner, Innova Memphis: Fresh money is always good, but it has to be smart. Invest in quality deals, and you’ll find good firms to come alongside, and follow. Reputation is critical. We need some winners, and that will build credibility, but $70 million of capital will definitely draw a lot of attention.

David Adair, Co-Founder and Managing Director, Solas BioVentures: Solas has already had the opportunity to work with the program and found it helpful. As with any program that offers capital, it will be useful, but how it is deployed will ultimately determine its success.

Gene Bressler, Chairman of the Upper Cumberland Investment Alliance: It can only compound our affirmative decisions by creating more opportunity for entrepreneurs and investors to come forward and put ideas forward and money to work. This is leveraged by others through spending less time raising money and more time working on issues and driving the business. Less risk for those who have a solid plan by getting access to more capital quickly.

Eric Dobson, Managing Partner, Community Equity Partners LLC and Sheltowee Venture Fund II: Every state has resources they must deploy on a schedule with the SSBCI program. So, in that sense, there is a level playing field. That should mean states with outstanding dealflow will draw in capital looking to be deployed from the traditional monetary centers. The climate is right. It appears to be a buyer’s market in 2024. I expect to see savvy investors on both coasts start looking for deals in the heartland, which I also believe was one of the goals of the SSBCI program – free up capital to go to small businesses between the coasts. Much will depend on how Launch Tennessee supports/markets the companies in the state that can command capital from the monetary centers. Competition will be fierce.

Tony Lettich, Managing Director, The Angel Roundtable: So long as these funds are invested in strong growing Tennessee companies in a disciplined, focused manner, which we anticipate will be the case, these funds can only have a positive impact on the Tennessee entrepreneurial ecosystem. We are fortunate to have these funds available to support the growth of our ecosystem and are very optimistic these funds will assist in filling some of the gaps in our ecosystem, enabling its continued growth and sustainability.

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