Stories of Technology, Innovation, & Entrepreneurship in the Southeast

The AI Tennessee Summit recently brought together founders and ecosystem builders at the Country Music Hall of Fame in Nashville to discuss a pivotal question: How can we attract even more innovative businesses to Tennessee?

Moderated by Lindsey Cox, CEO of LaunchTN, the panel featured John Derrick (Authentrics.AI), Wesley Montague (Ship It Pro), and Jian Huang (VisualizAI).

Here is a breakdown of their high-level thoughts.

Q: What makes Tennessee attractive for an AI company, and where are we falling short?

Derrick: “Everything about doing business here is easier. Electricity is cheaper, which is important for any high-computing business. From an economic standpoint, we have great universities. We have the lab. There’s a talent pool to pull from here. As far as challenges go, it’s the capital aspect of it. In the late ’90s, Austin looked a lot like Knoxville does now. The fuel for startups is capital, humans, and attitude. That’s an area that we as a society need to work on. We need to work on promoting not just founders, but also the people willing to take the risk of working for a startup.”

Montague: “For supply chain and logistics, it just makes sense. Memphis has river, road, rail, and air all in one place, and Chattanooga has a great innovation lab called the CO.LAB. Where we fall short is connecting opportunity to execution. We have many manufacturing and third-party logistics companies in this state, and we need those corporate partners to open their doors for pilot programs. With AI now in place, you have to have the time to build that trust during these pilots.”

Huang: “At many research universities, if you start a company, you’re eventually asked to choose between the lab and the business. That’s not the case here. UT has been supportive, almost pushing us to think bigger. Where we can do better is the venture capital side. For tech startups, Tennessee isn’t always the first place investors look. However, organizations like LaunchTN have really changed that scene over the last decade.”

Q: Access to capital is a recurring theme. How has the availability—or lack—of capital shaped your growth?

Montague: “We’ve had to look outside the state—Florida, Georgia, Silicon Valley. I’ve found those ecosystems to be more mature regarding angel groups. I recently attended an event in Florida where the room was packed with government sectors, corporate partners, and investors all looking to help startups. We are starting to see the light at the end of the tunnel in Memphis and Chattanooga, but we need more training for local people who have the funds but might not understand how startup investment works.”

Derrick: “I actually made it a point to raise my initial capital in Tennessee, with groups like Community Equity Partners, Market Square Ventures, Three Roots Capital, Upper Cumberland Investment Alliance, and LaunchTN. While we might not be raising $100 billion for foundational models here, we can absolutely build the applications and tools that leverage AI here. Raising capital here is behind the rest of the country, but it’s building step-by-step.”

Huang: In AI, the first thing you need is a user to figure out which use cases matter. In healthcare, specifically, the data is incredibly sensitive. If no one takes a risk with you, it’s a non-starter. The UT Research Foundation (UTRF) Accelerate Fund was our first investor, which allowed us to become HIPAA-compliant and start pilots. That first leap of faith is hard, but it can happen here.

Key takeaways

Overall, the panel agreed that statewide collaboration, low costs, and a strong talent pool make our state a no-brainer for AI startups, but there remains a critical need to educate local high-net-worth individuals on the value of investing in early-stage venture capital to attract more companies.

Cox used this opportunity to plug InvestTN’s $70 million initiative to help bridge that initial capital gap.

“We are writing checks from $25,000 to $3 million. We look for a one-to-one match, though we’re seeing closer to a five-to-one catalyst effect. For every dollar we invest, we’re seeing four dollars of private capital move off the sidelines. We are especially focused on that pre-seed component—helping startups that are pre-revenue but still need that anchor investment to attract angel investors,” said Cox. 

 

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