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January 17, 2016 | Tom Ballard

PART 6: Additional insights and comments

2016 Outlook(EDITOR’S NOTE: For past three years, we have asked individual fund managers in our East Tennessee region to share with us their thoughts on the year that just ended and the year ahead. This is the final article in a six-part series. We thank the participating individuals for their input.)

TODAY’S QUESTION: What final thoughts do you have?

  • David Belitz, Partner, Chattanooga Renaissance Fund – I think Tennessee is making great progress. We need to keep pushing to create some successes from our region. I am a big fan of collaboration.  The more our state and the region collaborate, the more attention we will bring to the Southeast. We need more entrepreneurs, more ideas, more talent. Let’s create reasons for new businesses to start in East Tennessee.  If we do that and shepherd a few businesses through to either scale or be acquired, the capital will take care of itself.
  • Eric Dobson, Chief Executive Officer, Angel Capital Group – The early stage market is changing rapidly with the advent of new crowdfunding regulations. Communities are awakening to the need for capital to create jobs and retain the creative class in the new economy. We are seeing a strong community-oriented groundswell of interest in creating capital for start-ups. We believe these are all positive indicators of future growth of both investors and start-ups assuming the economy continues to improve. The private equity market is not tied to the stock market, but the mind of the investor is affected by changes in the economic outlook.
  • Geoff Robson, President, The Lighthouse Fund – We are looking forward to continuing to execute on our business model and will complete at least three to four investments this year. We are building a high quality portfolio, and our investors continue to be pleased with the progress those companies are making while looking forward to the next set of companies we will add to the portfolio.
  • Grady Vanderhoofven, Fund Manager, Meritus Ventures – One of the keys to having robust investment activity in the region is having a comprehensive, or wide-ranging, capital continuum. Said differently, companies in this region need to be able to access sources of debt and equity. They need to be able to access seed stage capital and bank loans and venture capital and venture debt and growth capital. Multiple “flavors” of investment capital are required to satisfy the appetites of companies at the various stages of evolution and maturation. If we had 10X more venture capital in the region, but we didn’t have any banks, we would have a problem . . . a gap in the capital continuum. If we have lots of banks, but we don’t have active angel investors and angel groups, we will have a gap in the capital continuum. We perceive gaps in the capital continuum in this region. Those gaps represent challenges for business owners trying to finance and grow their businesses, and the gaps represent opportunities for investors, which is why we are working to establish new later stage and seed stage investment vehicles.
  • Ken Woody, President, Innova Memphis – As we have said for the last few years, TNInvestco coming to an end is a major milestone and change for the state. Other investment groups have entered over the last few years and more continue to emerge. It may take several more years for the real value of the TNInvestco program to be determined, but it’s exciting to see new investors coming to the table. Tennessee is developing a great reputation as a quality state with outstanding companies and investors who do a good job of assessing value.

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