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Nashville companies secure more than $1.4 billion in venture capital in last decade

(EDITOR’S NOTE: Two Nashville non-profits collaborated to produce “Nashville Venture Capital Report: 2001-2011” that they released late last week. The news release follows.)

NASHVILLE – Nashville is an active market for venture capital activity with a growing supply of funded companies that contribute to economic growth.

Nashville Capital Network (NCN) and the Nashville Health Care Council today issued a comprehensive report on the local venture capital marketplace, titled “Nashville Venture Capital Report: 2001-2011.” The report investigates venture capital investments in Nashville-based companies over the last decade with a special focus on venture capital investment in Nashville health care companies. The Nashville Venture Capital Report is the first study of its kind on local venture capital investment.

“A vibrant economy like we have in Nashville requires strong capital markets to support the growth of fast moving companies,” said NCN Executive Director Sid Chambless. “Venture capital provides the fuel for new business concepts to take off, grow and become big companies. This report confirms that we have a market that is healthy, active, and growing.”

Key findings in the study include:

  • Since 2001, more than $1.4 billion venture capital dollars have been invested in 215 different Nashville-based companies; over the decade, health care was the most attractive industry for venture capital and new business growth, due to an established market and strong culture of entrepreneurship. More than $950 million, about 65 percent of all venture capital dollars, were invested in health care companies.
  • Exciting new companies are being founded faster now than at any time in the past decade. In 2011 alone, 37 companies received their first venture capital investment.
  • Buoyed by strong interest in the health care industry, venture capital investment trends in Nashville fared better than those of the overall national industry in aggregate since the economic downtown of 2008.
  • Venture capital is fueling the growth of new industries in the community, such as health care information technology, media and Internet.
  • Collaborative efforts by Nashville’s public and private sectors to spur entrepreneurship and nurture an ecosystem to support it appear to be working. The increased number of funded start-ups can be attributed, in some measure, to the State-established TNInvestco program and local initiatives such as Nashville Capital Network, Nashville Entrepreneur Center, Jumpstart Foundry and others that are enhancing the business climate.
  • The report also highlights a widening gap in Nashville’s venture capital market between the capital available to the earliest companies and the capital available to later stage ventures. This gap could become a problem as the number of promising start-ups continues to grow. However, this challenge also presents an interesting opportunity for growth capital venture capital firms who will have numerous attractive high-growth companies to consider for investment.

“The findings underscore the strong role our community plays in creating new innovations and improving patient care,” said Council President Caroline Young. “Our ongoing support for entrepreneurship and commitment to nurturing young ventures is critical as we continue to develop Nashville’s leading health care cluster.”

Said Chambless, “The report indicates that Nashville has seen increases in organized angel and early stage venture investment. But as more companies get first-time financing, they will need capital partners to support their continued growth. As a community, we need to keep developing a healthy continuum of capital so that companies of all stages are able to connect with the resources they need to be successful. NCN and others will continue to address the capital gap that could impact our growing entrepreneurial companies.”

The report was researched by NCN and authored by Chris McGanity, a NCN associate. It is available on the Nashville Capital Network Website or here – Nashville VC Report.

About Nashville Capital Network

Nashville Capital Network accelerates the development of early stage companies by nurturing the most promising entrepreneurs and connecting them with knowledgeable, experienced investors. NCN has cultivated a network of qualified and committed angel investors who have invested more than $33 million in Tennessee-based companies. Additionally, NCN manages the $5.2 million NCN Angel Fund and the TNInvestco Tennessee Angel Fund. Nashville Capital Network is on the web at www.nashvillecapital.com.

About Nashville Health Care Council

The Nashville Health Care Council, founded in 1995 as an initiative of the Nashville Area Chamber of Commerce, is an association of health care industry leaders working together to further establish Nashville’s position as the nation’s health care industry capital. Worldwide, Nashville’s health care industry generates over 400,000 jobs and more than $70 billion in annual revenue, and is Nashville’s largest and fastest growing employer. For more information on the Council, please visit www.healthcarecouncil.com.

Contact:

Sid Chambless – (615) 322-3154 – schambless@nashvillecapital.com
Caroline Young – (615) 743-3140 – cyoung@healthcarecouncil.com

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