New TennesSeed Fund launched, first three investments announced

(EDITOR’S NOTE: For the past several years, I have been involved with the organizing group for the new TennesSeed Fund and currently serve on the board of directors of TennesSeed Funders, the non-profit entity referenced below. Because of that role, we are running this announcement for the new fund and its first three investments exactly as submitted, including no edits to conform to the stylebook for teknovation.biz. More information about the TennesSeed Fund will be discussed this evening at the “Innov865 Investor Series” event that begins at 6 p.m. at the Square Room on Market Square in Downtown Knoxville. Click here for more details.)

KNOXVILLE and MEMPHIS, TENN — The TennesSeed Fund, an evergreen, seed-stage, proof of concept venture capital fund has launched to invest in companies throughout Tennessee. The Fund is managed by TennesSeed Partners, which is a collaboration of Three Roots Capital, Meritus Capital, and Innova Memphis, Inc. To date, the Fund has made three investments in Active Energy Systems (Oak Ridge), Entac Medical (Memphis) and Smart RIA (Knoxville).

The Fund’s unique model — consisting of for-profit (“TennesSeed Partners, LLC”) and nonprofit (“TennesSeed Funders 501(c)3”) entities — allows it to operate as an evergreen investor to sustain ongoing investment activity and lasting economic impact within the state. Grady Vanderhoofven, the founder, president and chief executive officer of Three Roots Capital, and Ken Woody, the president, partner and founder of Innova Memphis, serve as the Fund’s co-managers, directors and investment team members.

With more than 18 years of investment experience in the state and region, Vanderhoofven and Woody formed the TennesSeed Fund to address a growing need for seed-stage capital in the region. In addition to forming and partially capitalizing the Fund, the duo have engaged several noteworthy and successful Tennessee entrepreneurs to serve as mentors for TennesSeed portfolio companies; Bill Malkes, co-founder and former CEO of GRIDSMART Technologies, Chad Seaver, founder and CEO of Arkis Biosciences, and Brandon Bruce, co-founder and former COO of Cirrus Insight. Each of the executives recently led his respective company through a successful acquisition by a larger company.

“Tennessee is home to world-renowned technology resources and research institutions, as well as numerous entrepreneurs who have created businesses in their basements and garages,” said Vanderhoofven. “In our early research and planning to launch the TennesSeed Fund, we surveyed stakeholders statewide and confirmed a dire and chronic need for more capital to support young, small, and start-up companies. TennesSeed Fund is an answer to the question of how do we increase entrepreneurial activity and capital attraction in the state.”

“Our evergreen structure allows for the permanent, ongoing cycle of fundraising, investments, and successful investment outcomes, which hopefully will have direct and lasting economic benefits throughout the state,” said Woody. He added, “Anyone who wants to support entrepreneurship, technology commercialization, and access to capital for young companies in Tennessee should find the TennesSeed model innovative and compelling.”

The Fund does not have a specific industry or technology focus, allowing it to invest in a variety of Tennessee-based companies and help them achieve specific, well-defined milestones to substantially de-risk future investment and increase the value of the company.

“Our relationship with the TennesSeed Fund has been great timing for us. They provided the right advice at the right time and funds just when we needed them to secure our intellectual property claims,” said Active Energy Systems Co-Founder Mitchell Ishmael. “This investment and relationship has been immensely valuable for us.”

“As a startup in Tennessee, we’re delighted that they put the TennesSeed Fund together for Tennessee startups because access to capital is our primary issue in the region,” said Chief Executive Officer and Founder of Entac Medical Buddy Lyons. “There are great ideas and technology here, but it’s all about finding access to the right capital to move companies forward. The TennesSeed Fund is going to be part of the solution.”

“There has been a lack of capital in the Knoxville region for software companies like ours, which is why the TennesSeed Fund coming in and being willing to provide capital is a pretty big deal,” said Smart RIA CEO Mac Bartine. “The entire team at the TennesSeed Fund was excellent and easy to work with. The capital they provided was a large part of the growth capital that we have used this year, and we’ve used it to grow almost 10 percent month over month so far.”

About TennesSeed Fund

The TennesSeed Fund is a seed-stage, venture capital fund. The Fund’s unique model consists of for-profit (“TennesSeed Partners, LLC”) and nonprofit (“TennesSeed Funders 501(c)3”) entities to create an “evergreen” structure to seek investment opportunities and support companies throughout Tennessee. Formed by Three Roots Capital, Meritus Capital, and Innova Memphis, the Fund’s goal is to serve as a permanent source of seed-stage capital for Tennessee-based companies. For more information visit: TennesSeedFund.com

Stay connected with us on Twitter and LinkedIn. Article ideas and other suggestions should be sent to tballard@pyapc.com. Include the name and contact information (phone and email) for follow-up.