Large crowd turns out for Tuesday’s “Fund Tennessee” briefing in Knoxville
Stuart McWhorter, ECD Commissioner and Launch Tennessee Board Chair, explains the program is not yet up and running, but two of three components have been approved.
About 100 people turned out Tuesday morning at Lighthouse Knoxville to learn more about “Fund Tennessee” and its various components.
The event was the seventh of nine 90-minute briefings that the Tennessee Department of Economic and Community Development (TN ECD) and Launch Tennessee hosted to explain the $116.9 million federally-funded program, officially known as the State Small Business Credit Initiative, that will bring much-needed capital to the state’s start-up community. The eighth session was Tuesday afternoon in Kingsport.
“It’s not up and running yet,” TN ECD Commissioner Stuart McWhorter (pictured left) told the attendees, directing them to signup for information updates on the “Fund Tennessee” website. He’s also Chair of the Launch Tennessee Board of Directors.
In his brief comments that opened the session, McWhorter said that the purpose of the program is to support and expand an inclusive continuum of access to capital for small businesses and entrepreneurs throughout the Volunteer State. The three components, noted in previous articles in teknovation.biz, are:
- “LendTN,” a $47 million loan or debt fund that will work with the state’s Community Development Financial Institutions (CDFIs);
- “InvestTN,” a $70 million dollar equity fund that is divided into three sub-funds – a $28 million regional seed component, a $30 million technology fund, and a $12 million “fund-to-funds” component; and
- “AssistTN,” a component not yet approved by the U.S. Department of the Treasury that would provide technical assistance to start-ups through the Tennessee Small Business Development Center network.
An important point that was emphasized by Lamont Price, TN ECD’s Innovation Director, is that 52 percent of the $116.9 million must go to those defined as socially and economically disadvantaged individuals (SEDIs). He also said that Tennessee has an ambitious goal to leverage $10 in matching funds for every $1 of the $116.9 million in federal funds. It is required to secure a 1:1 match at a minimum.
The two program components that have been approved were reviewed in some detail. First up was Wisty Pender, TN ECD’s State Director of the Business Enterprise Resource Office, who discussed the two parts of “LendTN.” One is direct loans which have a cap of $5 million, and purchase loans which are capped at $1.25 million for a 25 percent share of the deal or $1.5 million for a 30 percent role in a transaction for a SEDI-qualified individual.
Monique Villa, Chief Investment Officer at Launch Tennessee, provided an extensive review of “InvestTN” (see photo at right).
- The $28 million earmarked for regional seed funds will at least initially make up to $4 million available to each of the seven entrepreneur centers that Launch supports. Once the program is operational, those seeking funding under this component will apply through one of the seven centers. Check size is expected to be between $25,000 and $250,000, and those receiving funds would be pre-seed or seed-stage start-ups.
- The $30 million technology fund expects to write 20 checks from $250,000 to $3 million for companies in the seed or Series A or B category. “We can lead deals” with these dollars, Villa said. Applications for those monies would be submitted directly to Launch Tennessee.
- The third component is the multi-fund portion which has $12 million to invest in four to six deals that could range from $1 to $3 million. A goal of this component is to “seed the creation of additional venture funds in Tennessee,” Villa explained.