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September 05, 2022 | Tom Ballard

Sheltowee Angel Network announces new $25 million tech-based fund

By Tom Ballard, Chief Alliance Officer, PYA

There’s a new fund being launched with a focus on technology-based start-ups located in the heartland, and it will be based in Knoxville.

Eric Dobson, Chief Executive Officer of the Sheltowee Angel Network, says the goal for the new Sheltowee Venture Fund II is to raise $25 million, and he has soft-circled $2 to $3 million of the funds already for the initial close. Funding will be allocated to start-ups in four key areas:

  • HealthTech, MedTech and medical devices (40 percent);
  • Downstream applications for sheet graphene (20 percent);
  • Revenue Sharing (20 percent); and
  • General technology (20 percent).

The existing Sheltowee Medical Device Fund, launched in December 2020, will be rolled into the new fund. “Despite the fact we have two outstanding portfolio companies and a robust pipeline, we never found a big lead investor for that fund,” Dobson told us.

Sheltowee is partnering with several other funds and individuals on the new initiative. They include the Global Capital Division of Allura and Kurt Davis, a well-known blogger (KD who is a technology entrepreneur, well-being fan, and an aspiring social impact worker. The first 20 years of his career were spent between Silicon Valley and Asia, working with technology start-ups in finance and business development roles.

Sheltowee Venture fund II’s primary focus is great companies in the “heartland,” which Dobson defines as Appalachia and states that boarder the region. “Kurt is convinced that Silicon Valley is coming to the heartland,” Dobson said. “If they are coming, we can lead them to great deals. There are more great companies than we (Sheltowee Angel Network) have capital to invest.”

The network includes Marble City Angels in Knoxville as well as chapters in Nashville (Music City Angels), and Louisville, KY (Derby City Angels).

“Our angel groups will be a feeder to the larger fund,” Dobson explained, noting two additional points. “We needed a vehicle that allows us to lead rounds. And, we have four start-ups in diligence right now and four more behind them. That’s double the number at anytime in the past.”

Sheltowee, then known as Angel Capital Group, led a late 2015 round for Knoxville-based General Graphene that raised $8.7 million (see article here). Angel Capital Group was the lead investor in ReviewBox’s seed round, which exited in 2021 to TalkWalker (see article here), and a major investor in Arkis BioSciences, which exited to Integra LifeSciences in 2019 (see article here).  Sheltowee has also invested in other local start-ups such as SPARKZ Inc., EDP Biotech Corporation, and Lirio.

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