Tennessee start-ups see uptick in venture capital

There are a lot of ways to measure progress and success of a state’s entrepreneurial landscape. What’s the biggest? Money. And in Tennessee these days, there’s more venture capital finding its way to entrepreneurs than ever before.

To be specific, over $645 million has made its way into the Volunteer State since 2012, money that has helped propel early-stage companies through the various stages of development. Best of all, the money’s not coming in one or two huge packages, but in many smaller deals with investors from around the state, region and nation.

Here’s how it breaks down:

•In 2012, more than $179 million was raised in 160 deals of $25 million or less.

•In 2013, $190 million was raised in 139 deals of $25 million or less, a 6 percent increase from 2012.

•In 2014, over $276 million has been raised in 169 deals of $25 million or less, a 45 percent jump from last year.

When we added a research coordinator to our team last August, we set out to look at how investment numbers were being reported. The end result of our analysis showed significantly higher investment activity than had previously been reported. This has allowed us to restate our venture-capital success more accurately. What’s more, these numbers fueled some rethinking on our end of just how high we should set the bar.

Moving the goalposts — in a good way

We at LaunchTN set a goal of bringing in $1 billion in venture capital from 2014 to 2017. Obviously, the 2014 total of $276 million is a terrific jump-start in reaching this goal.

Considering that we’ll end the 2012-2014 period with close to $650 million raised, we feel that while our $1 billion goal is lofty, it is definitely attainable. And if achieved, it will be something for everyone in Tennessee’s entrepreneurial and investment community to be quite proud of.

So what’s behind Tennessee’s current success? For one, we now have more private capital flowing throughout the state. Additionally, government supported programs like TNInvestco and INCITE have helped, particularly providing much-needed fuel a few years back when private capital was still on the sidelines following the recession. Also, our accelerator network has played an important role, not only through the companies that graduate through the cohort programs, but also by being the “front door” for entrepreneurship in their region and being a place where entrepreneurs and investors connect on a regular basis.

So how do we continue to build on this success? In addition to our extensive research efforts, we look to increase investor outreach and education for 2015. We want to educate the entire investor community on the importance of publicizing all deal flow. We want people, both in and out of the state, to see where the money is going. The more visible our success, the more other people are going to want to get on board with what we’re doing in Tennessee.

All these efforts snowball. The more sharp, aggressive start-ups we bring into our network, the more we have to show investors. The more investors we bring in, and the better we highlight their involvement, the more entrepreneurs we attract. Entrepreneurs follow money and money follows entrepreneurs. Tennessee is on a forward trajectory towards sustained success and being the No. 1 place in the Southeast for not only high-growth companies, but also high-quality investments.

Charlie Brock is CEO of Launch Tennessee (www.launchtn.org), a public-private partnership focused on supporting the development of high-growth companies in Tennessee with the ultimate goal of making Tennessee the No. 1 place in the Southeast for entrepreneurs to start and grow a company. For more information on 36|86, visit www.thirtysixeightysix.com.