Four players in the East Tennessee start-up scene shared their ideas about increasing capital availability in the region during yesterday’s latest offering in the periodic “Innov865 Investor Series.”
Moderated by Chris Miller of Three Roots Capital, the nearly 90-minute event featured Brandon Bruce and John Bruck, Co-Founders of “Startup Knox” among many other roles; Tony Lettich, Managing Director of The Angel Roundtable; and Grady Vanderhoofven, President and Chief Executive Officer of Three Roots Capital.
As might be expected at any event focused on investing in start-ups, the early discussion started with an assessment of capital availability but quickly took an important turn. Each panelist agreed that there is not enough capital available, both in terms of amounts generally and at various stages as companies grow.
“Accessing capital is always hard wherever you are,” Bruce said, drawing on his experience as Co-Founder and Chief Operating Officer of Cirrus Insight. Noting that both start-ups and investors in the Southeast generally and the region specifically are spread across a much larger geographic area than in places like the Bay Area of California, he teed-up one idea for achieving greater density and achieving more collaboration among funders.
That’s the purpose of the “East Tennessee Capital Call” that “Startup Knox” first announced in this July 2 teknovation.biz article, and most of the discussion that followed yesterday focused on overcoming the lack of density through what Lettich characterized as “engagement and collaboration.”
As envisaged, “Capital Call” would be a quarterly series of candid discussions that brought together formal investors to discuss deal opportunities. Our take on the idea is simply this: you create a flywheel. It starts with more people from outside the local region looking at deals in the region. As more deals are actually executed, more momentum is created which begins to feed on itself.
Bruck is also a long-time member of Queen City Angels based in Cincinnati, so he brings a unique perspective to the table in terms of other communities compared to Knoxville. “Our ecosystem is institutionally heavy,” he observed, so “Capital Call” is designed to not only open lines of communication on investment opportunities that might not otherwise occur but also to help get more investors involved.
“A prerequisite to collaboration is openness . . . increasing lines of communication,” Bruce added.
Vanderhoofven used a great metaphor to emphasize the points about collaboration. Drawing on the term “hot coals” and how they can spark a fire, he says efforts like “Capital Call” can “motivate and mobilize capital that’s already in the region. We need to get them (local investors) next to each other,” while also pulling outside capital into the area.