Techstars findings about Knoxville innovation and entrepreneurial ecosystem revealed in town hall event

(Originally posted on Teknovation.biz)

By Tom Ballard

The final report, including gaps and recommendations that were identified in the recently completed Techstars assessment of the Knoxville area innovation and entrepreneurial ecosystem, is now pubic, and the hard work is just beginning to ensure the region capitalizes on the effort.

As TVA Chief Executive Officer (CEO) Jeff Lyash told the slightly more than 100 attendees at yesterday morning’s virtual town hall, “It’s our job to take this Techstars assessment and operationalize it.” The full report can be downloaded at this link. If you were not able to view the town hall, you can watch it here (page down to “Report Out” section).

In a rapid-fire overview of the report, Rhett Morris, a Consultant who talked with many in the community on one or more occasions, outlined the regional strengths that the Techstars assessment identified and the gaps that need to be addressed.

“I heard that this was a unique moment for the Knoxville community,” Morris said, adding that he concluded the community was performing “far below its actual potential.” Those comments echoed opening remarks by Jeff Smith, Deputy Director for Operations at Oak Ridge National Laboratory, who said it this way: “The region punches below its weight in innovation.”

For those who are intimately involved in the local innovation and entrepreneurial ecosystem, none of the findings that Morris outlined should be surprising nor should the proposed recommendations. They are as follows:

  • Strengths – the vibrant research community, regional quality of life, low cost of living, deep technology talent, and existing support organizations for start-ups.
  • Gaps – perception of the region, locally and more broadly; funding for start-ups, frequently referred to as access to capital; insufficient support in ways such as mentoring; easier access to the bigger public and private enterprises; lower levels of participation by minorities; and absence of defined goals with appropriate metrics and regular reporting.

After Morris’ presentation, representatives of the Innov865 Alliance discussed how the Alliance, as a group, and also as individual members will take leadership responsibility for addressing the gaps and specific ways in which that will occur.

  • Grady Vanderhoofven, President and CEO of Three Roots Capital, said his firm will lead “a shared initiative to address capital” that includes: (1) expanding on efforts such as the TennesSeed Fund launched in 2019; and (2) working closely with the Knoxville Chamber on the latter’s access to capital initiative that is a component of its broader “Path to Prosperity” plan.
  • Jim Biggs, Executive Director of the Knoxville Entrepreneur Center (KEC), spotlighted activities that cover several of the gaps through: (1) its “Made for Knoxville” initiative; (2) a collaboration with the City of Knoxville to launch a Mayor’s Entrepreneurship Council patterned after the well-established Mayor’s Maker Council; (3) the recently revamped and renamed “Inflection Point” initiative; and (4) new efforts focused on underrepresented populations like the upcoming “100Knoxville Launch Event.”
  • I had the privilege of addressing three topics – perception, access and measurement. The points that I made included: (1) the Alliance will create and coordinate an ongoing, integrated public relations and marketing campaign to showcase our regional successes, both historical and current, as well as assets that will focus locally, regionally and nationally; (2) PYA, the power behind teknovation.biz, has added an additional writer with part of her role being to help expand on what we are already doing to tell the community story; (3) Alliance members will continue their individual regional promotional efforts in various ways such as KEC’s “Made for Knoxville” initiative and the “Startup Knox” podcast series that will feature Randy Boyd as of today; (4) the Alliance will take leadership for developing a set of metrics to show our progress and produce a report card that will be routinely updated and spotlighted in teknovation.biz; and (5) the Alliance will work to identify and/or recruit “Navigators” to help facilitate access to and connectivity between entrepreneurs and the region’s assets – from big enterprises like ORNL, TVA and University of Tennessee (UT) to private companies like PYA and others that can and should help local entrepreneurs.

The 90-minute session also featured the leaders of the three sponsoring organizations – UT President Randy Boyd; Thomas Zacharia, Director of Oak Ridge National Laboratory (ORNL); and Lyash – along with their key representatives on the Techstars Steering Committee – Joe Hoagland, TVA’s Vice President of Enterprise Relations and Innovation; Stacey Patterson, UT’s Vice President for Research, Economic Development and Outreach; and ORNL’s Smith.

Boyd, Lyash and Zacharia separately noted the significance of the region’s largest employers coming together to collaborate on the Techstars effort and the potential benefits that will derive from it.

Zacharia talked about likely new federal initiatives in the R&D/innovation space and said that East Tennessee is “positioned perfectly” for significant investment. In the case of Boyd, one of the region’s most recognized and very successful entrepreneurs, the emphasis was on what he called “an historic partnership” and an important message for those who are starting or those who are supporting entrepreneurs who are starting new businesses.

“Entrepreneurship is not a zero-sum game,” he said. “There is a catalytic or compounding effect” that comes from working collaboratively.

Innov865 Investor Series: East Tennessee Capital Call

Join us to discuss the launch of a regional sub-group focused on East Tennessee investment via the East Tennessee Capital Call! RSVP here

About this Event

Building on the momentum established during the July 28th launch event for the Southeast Capital Call, we will be launching a regional sub-group focused on East Tennessee investment via the East Tennessee Capital Call.

Please join Brandon Bruce and John Bruck from Startup Knox, Grady Vanderhoofven from Three Roots Capital, and Tony Lettich from The Angel Roundtable to discuss our regional collaboration to attract and develop relationships with financial and strategic investors to source capital for our region’s start-ups and growing companies.

This event will take place via LunchPool and the event login information will be shared closer to the event.

Teknovation.biz’s “Investor Outlook” series interviews local investors, highlights value of Tennessee’s entrepreneurial ecosystem

A recent multi-part “Investor Outlook” series from Teknovation.biz featured panel interviews with local investors, where they assess the “then” and “now” of a variety of topics, including the overall quality of startups and the availability of early stage capital.

According to Tom Ballard, PYA’s Chief Alliance Officer and Editor of Teknovation.biz, “We’ve just entered a new decade with arguably some of the most sustained economic growth and lowest unemployment rates in our nation’s history. An important part of that growth has come from new startups, and the state of Tennessee has clearly been part of that entrepreneurial wave over the last 10 years.”

Panelists include: Eric Dobson, Chief Executive Officer of Angel Capital Group; Tony Lettich, Managing Director of The Angel Roundtable; Charlie Brock, Partner of Chattanooga Renaissance Fund; Brandon Bruce, Entrepreneur-in-Residence with Greater Sum Ventures; Ken Woody, President and Partner of Innova Memphis; Kristina Montague, Managing Partner of The JumpFund; John Morris and Geoff Robson, Fund Managers at The Lighthouse Fund; John Bruck, Knoxville-based Member, and Scott Jacobs, Executive Director, of Queen City Angels (QCA); and Grady Vanderhoofven, Founder, President and Chief Executive Officer of Three Roots Capital. 

Read each part in the series here:

As the Innov865 Alliance develops, supports, and promotes the Knoxville region’s entrepreneurial ecosystem, we champion Knoxville as a great place for entrepreneurs to start and grow businesses and increase access to capital. The work of investors featured in this series reaffirms this mission.

TennesSeed Fund, a new evergreen, seed-stage venture capital fund, seeks to invest in Tennessee startups

The TennesSeed Fund, an evergreen, seed-stage, proof of concept venture capital fund has launched to invest in companies throughout Tennessee. The Fund is managed by TennesSeed Partners, which is a collaboration of Three Roots Capital, Meritus Capital, and Innova Memphis, Inc. To date, the Fund has made three investments in Active Energy Systems (Oak Ridge), Entac Medical (Memphis) and SmartRIA (Knoxville).

The Fund’s unique model — consisting of for-profit (“TennesSeed Partners, LLC”) and nonprofit (“TennesSeed Funders 501(c)3”) entities — allows it to operate as an evergreen investor to sustain ongoing investment activity and lasting economic impact within the state. Grady Vanderhoofven, the founder, president and chief executive officer of Three Roots Capital, and Ken Woody, the president, partner and founder of Innova Memphis, serve as the Fund’s co-managers, directors and investment team members.

With more than 18 years of investment experience in the state and region, Vanderhoofven and Woody formed the TennesSeed Fund to address a growing need for seed-stage capital in the region. In addition to forming and partially capitalizing the Fund, the duo have engaged several noteworthy and successful Tennessee entrepreneurs to serve as mentors for TennesSeed portfoliocompanies; Bill Malkes, co-founder and former CEO of GRIDSMART Technologies, Chad Seaver, founder and CEO of Arkis Biosciences, and Brandon Bruce, co-founder and former COO of Cirrus Insight. Each of the executives recently led his respective company through a successful acquisition by a larger company.

“Tennessee is home to world-renowned technology resources and research institutions, as well as numerous entrepreneurs who have created businesses in their basements and garages,” said Vanderhoofven. “In our early research and planning to launch the TennesSeed Fund, we surveyed stakeholders statewide and confirmed a dire and chronic need for more capital to support young, small, and start-up companies. TennesSeed Fund is an answer to the question of how do we increase entrepreneurial activity and capital attraction in the state.” 

“Our evergreen structure allows for the permanent, ongoing cycle of fundraising, investments, and successful investment outcomes, which hopefully will have direct and lasting economic benefits throughout the state,” said Woody. He added, “Anyone who wants to support entrepreneurship, technology commercialization, and access to capital for young companies in Tennessee should find the TennesSeed model innovative and compelling.”

The Fund does not have a specific industry or technology focus, allowing it to invest in a variety of Tennessee-based companies and help them achieve specific, well-defined milestones to substantially de-risk future investment and increase the value of the company.

“Our relationship with the TennesSeed Fund has been great timing for us. They provided the right advice at the right time and funds just when we needed them to secure our intellectual property claims,” said Active Energy Systems Co-Founder Mitchell Ishmael. “This investment and relationship has been immensely valuable for us.”

“As a startup in Tennessee, we’re delighted that they put the TennesSeed Fund together for Tennessee startups because access to capital is our primary issue in the region,” said Chief Executive Officer and Founder of Entac Medical Buddy Lyons. “There are great ideas and technology here, but it’s all about finding access to the right capital to move companies forward. The TennesSeed Fund is going to be part of the solution.”

“There has been a lack of capital in the Knoxville region for software companies like ours, which is why the TennesSeed Fund coming in and being willing to provide capital is a pretty big deal,”said SmartRIA CEO Mac Bartine. “The entire team at the TennesSeed Fund was excellent and easy to work with. The capital they provided was a large part of the growth capital that we have used this year, and we’ve used it to grow almost 10 percent month over month so far.”

Innov865 Investor Series with Bill Malkes

The Innov865 Alliance has created the Innov865 Investor Series – powered by Three Roots Capital – to give Knoxville’s entrepreneurs more opportunities to hear from and interact with investors in our region.

The next event in the series will be September 26, 2019 at The Square Room inside Café 4.

Register here!

Join us for an engaging discussion with Bill Malkes, co-founder and former CEO of GRIDSMART Technologies, Inc. and Grady Vanderhoofven, CEO of Three Roots Capital and Managing Partner of Meritus Capital, the lead investor in GRIDSMART. Bill and Grady will have a “fireside chat” as they discuss the founding, growth and evolution of GRIDSMART, and the acquisition of the company by a $2 billion publicly-traded corporation.

The discussion will be relevant for entrepreneurs and investors alike and will address community and social impact in addition to the financial impact of a successful business.  The session will include time for Q&A from the audience.  https://gridsmart.com/about/gridsmart-story/

 

Innov865 Investor Series, Powered by Three Roots Capital

When: Thursday, August 22, 2019

Beginning at 5PM ET

 

Where: The Square Room inside Café 4

4 Market Square

Knoxville, TN 37902

 

RSVP Here!

Join us at The Square Room inside Café 4 for an engaging discussion with former COO Brandon Bruce of Cirrus Insight and former President and CEO Terry Edwards of PerfectServe as they discuss the growth and evolution of their companies and how that helped guide them to successful exits.

Happy hour and networking opportunities to follow.

Carson’s research shows relationship factors very important in VC, angel decisions

(Originally published on Teknovation.biz)

By Tom Ballard, Chief Alliance Officer, PYA

Shawn Carson says the research conducted for his recently completed dissertation on the critical risk factors considered by angel and venture capitalists confirmed some things he expected, but also held a big surprise.

“What I expected was the importance of the ‘Big 4,’ what surprised me were the relationship factors,” the Lecturer in the Haslam College of Business at the University of Tennessee Knoxville and Consultant with Three Roots Capital says.

The ‘Big 4,” as he describes them, are execution – can the management team execute the business plan, market – is there a viable market for the product or service, technology – does it work, and funding – can the start-up secure the necessary capital.

“Those are fairly objective measures that are commonly accepted,” Carson says. Yet, when he asked nine venture capitalists and nine angel investors for their list of all critical factors considered in making investment decisions, they collectively identified 82 unique ones.

Carson lumped those into seven categories like founders and management team, relationship, intellectual property, competitive factors, value proposition, scalability, and exit.

“By far, the number one category of factors was around relationships,” Carson said. “Six of the top 10 were about relationships.”

You might ask, “What are those six?” Survey says, in order, trustworthiness, ethics and honesty, integrity, coachability, character, and passion. Two others were in the top 20 – management ‘skin in the game’ and transparency.

Read more here.

Click below to view a summary of Carson’s research in this PDF document.

Carson Dissertation Summary – Executive Summary – For Distribution

Carson to share interesting insights into VCs, angels at Innov865 Investor Series forum

Originally published on Teknovation.biz

By: Tom Ballard, Chief Alliance Officer, PYA

“The numbers have to be there, and they also have to like you,” Shawn Carson says in succinctly capturing the results of the research undertaken on investment strategies for his recently completed dissertation at the University of Tennessee (UT).

The long-time player in the Knoxville region’s entrepreneurial ecosystem will share the results of his research at tonight’s “Innov865 Investor Series” forum, then moderate a panel discussion about the topic. The panel will feature Tony Lettich of The Angel Roundtable, John Morris of The Lighthouse Fund, Grady Vanderhoofven of Three Roots Capital, and Ken Woody of Innova Memphis.

Carson is well-known across East Tennessee for his skills as a workshop leader and effective communicator. As such, it was only natural that the soft-spoken Lecturer in UT Knoxville’s Haslam College of Business would decide to pursue his doctorate. And, it should come as no surprise that his previous ties to the now defunct Technology 2020 and current additional role at Three Roots Capital would lead him to a dissertation topic based on the decision-making process used by angel and venture investors.

“I’ve been studying entrepreneurial risk for a while,” Carson told us in an interview ahead of the forum. We wanted to better understand the methodology that he used and the results that he uncovered.

“Entrepreneurs take risks, investors avoid risks,” Carson explained. “I wanted to know if there was a way to quantify risks beyond the ‘Big 4’ – execution, market, technology, and funding.”

The short answer is “yes,” but it took some work. Carson described his challenge as “developing a process that would get people to explain their individual risk factors in a way I could quantify.” To do it, he selected the Delphi Method developed in the 1950’s to achieve consensus while avoiding biases of those surveyed.

Read more here.

Rise & Grind highlights the importance, financial advantages of leadership diversity in the workforce

Coffee, donuts, and an engaging conversation held at UTRF’s Business Incubator showcased the need for increased flexibility and diversity in the workforce.

On Wednesday’s Rise & Grind event the audience became acquainted with Kim Seals, General Partner of MomSource Network investor The JumpFund and Courtney Jones Startup Day alum & Founder of the MomSource Network.

MomSource Network is a startup focused on seeing women achieve their ideal work/life blend. The company has two separate parts to its business. Part one is a tech platform focused on development and training for women as they navigate their journey in and out of the workforce. MomSource Network also provides a gateway of progressive employers who are willing to use their skill set in a flexible full-time, permanent, or part-time remote capacity.

The other half of the company is providing consulting services to those progressive employers who are mindful about attracting and retaining great female talent.

The JumpFund’s mission is to invest women’s capital in female-led southeastern companies with growth potential in order to generate a strong financial return and elevate the role of women in business.

The JumpFund invested in MomSource Network about two years ago, and Kim Seals along with her sister Pam made a sidecar investment as well.

“There’s a lot of data that supports that there is a need for women to invest in women, and it can produce a good ROI,” said Seals.

During the Rise & Grind event Seals recited striking statistics that highlight the positive financial outcomes from employing a woman within a company’s leadership.

According to a recent MacKenzie survey, companies with at least one female founder are performing 63% better than investments with all male-led companies.

“We want to see diversity in that leadership, and one of the key reasons is that most purchasing decisions made in the household are made by females,” said Seals.

Seals brought up that 80% of all purchasing decisions in the household are made by women. If a company doesn’t have a female in its leadership team helping make product and strategy decisions, that business is missing a key voice of their customer.

“We’re seeing companies with women in the top leadership positions producing 47% higher returns on equity and 55% higher returns on EBIT,” said Seals.

On top of that, Courtney Jones echoed the importance of flexible employment.

“85% of people say they would be more loyal to their current employer if they were offered increased flexibility,” said Jones.

Jones mentioned that in society, women are often pushed into choosing whether to become a full-time working mother or a full-time stay at home mom.

“At the end of the day, it’s really about organizations being progressive enough to say, ‘We’re willing to offer some agile workplace arrangements if we can still get the results that we need for our business,'” said Jones.

Seals reinforced that need for flexibility after describing her background in human resources with Mercer and it’s importance at the time.

“There was a real financial ROI for our companies that we were working with at Mercer about how to keep women in the workforce,” said Seals.

Seals said Mercer quickly discovered that they needed to keep women engaged, figure out how to create that work/life blend for them because it was something their clients were asking for. Ultimately, that’s what led to her interest in MomSource Network.

Rise & Grind was hosted by UTRF, Three Roots Capital, and Best Behavior Creative Club

Rise and Grind, Hosted by Three Roots Capital

Free coffee and donuts! Yum!

If that’s not enough reason to attend, there will be an interview and Q/A session with Courtney Jones, founder of MomSource Network, and Kim Seals, a board member of MomSource Network and general partner of MomSource Network investor The JumpFund. They will be discussing entrepreneurship, raising capital, investor/operator relationships, and… doing those things as women.

RSVP for Rise & Grind Here.

Founded in August 2013, MomSource Network is an online community that provides continuing education, virtual networking and a gateway to progressive employers offering flexible work options. The JumpFund provides necessary capital for women entrepreneurs to ignite growth ventures throughout the Southeast.

Sponsors for Rise & Grind include: