By Tom Ballard, Chief Alliance Officer, PYA
Almost three years after its launch, The Lighthouse Fund has invested in seven portfolio companies with plans to add several in the year ahead.
That’s the word from Geoff Robson and John Morris, the Knoxville-based organization’s Fund Managers. Both were instrumental in the creation of the fund that announced its first investment in this December 2015 article from teknovation.biz.
“We have made very positive progress,” Robson says. “We set-out to put together a $3 million fund, and that’s what we are executing against.”
At the time of its launch, Robson said the organizers did some strategic planning and tested their theories with the investor base during the fundraising phase.
“Most of it was accurate,” he noted.
Over the next year, The Lighthouse Fund could add as many two new companies to the portfolio and have follow-on investments in existing companies. “We have three companies raising follow on rounds right now and are reviewing those as we speak,” Robson says.
The combined new and follow-on deals could amount to another one million dollars of investments.
The initial six portfolio companies are DataFlyte, PriceWaiter, RootsRated, Canopy, Arkis BioSciences, and Vendor Registry. Three of the companies – DataFlyte, Arkis BioSciences, and Vendor Registry – are Knoxville-based, while two – PriceWaiter and RootsRated – are located in Chattanooga. Canopy is North Carolina-based.
The geography reflects the vision for The Lighthouse Fund.
“We’re focused on the natural division of East Tennessee,” Robson said in reference to the historical designation of the state’s three grand divisions, but added that the Fund is not limited as evidenced by Canopy.
“Our drivers are the investment profile and the investors from elsewhere who refer deals to us,” he said. “We’re a value-added investor.”
Morris amplified on the latter point.
“One of our criteria is that the company leverages other investments,” he explained. Noting that partnering with other funds on investments has been common for years, Morris said it is more noticeable today because of the rise of angel funds.
Both Robson and Morris have played key roles in the Knoxville-Oak Ridge ecosystem for years, so we asked for their thoughts on the evolution of the local start-up community.
“It’s hard to put a qualitative measure on the start-ups today compared to the past,” Morris said. “To me, the level of activity is better. We don’t have a hard time finding deals to invest in.”
Robson said it is important to understand where you started and what the endgame is.
“We see the maturation process occurring with better management teams pushing forward,” he observed. This growth manifests itself in the ability of leaders to sell their vision to different constituencies – investors, clients and team members.
“It does take time,” Robson said, reflecting on the fact that he and Morris have been leading their own start-up – The Lighthouse Fund.
“We have also begun getting returns from one portfolio company, meaning we will be sending distributions to investors this year,” Robson added. “At 3.5 years in, we are ahead of schedule on that front as our investment profile is normally a five- to seven-year return horizon. That’s good news for the region as all of our investors except one are local.”