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:

Local Motors’ Olli to make its debut in September during Innov865 Week

April’s Innov865 Happy Hour sponsored by Three Roots Capital welcomed a special announcement from Knoxville Mayor Madeline Rogero, telling a hefty crowd at Scruffy City Hall that Local Motors’ self-driving electric vehicle Olli will soon be making its debut this September during Innov865 Week.

Olli was created at Local Motors’s micro factory in Hardin Valley using 3D printing technology.

Add that to the many reasons you should attend the Innov865 Alliance’s Signature Week celebrating entrepreneurship and the Knoxville startup community.

This comes after a series of technology announcements in East Tennessee. In Market Square earlier Thursday, Olli was unveiled for the public to get an up-close look at the innovation happening in Knoxville.

Knoxville Mayor Rogero announcing self-driving vehicle Olli will soon be taking over City streets.

It’s important to mention, Visit Knoxville is going to roll an Olli out on a test basis this fall at some events in places like World’s Fair Park and Chilhowee Park and Exposition Center.

The longer-term goal is to have Olli running on city streets, by the end of next year, for Visit Knoxville events and giving tours of the city following pre-programmed maps.

There was also a separate announcement on Tuesday from Knoxville entrepreneur Bill Malkes, founder of GRIDSMART.

The company has donated some of its new STREETSMART Wi-Fi data cameras for the City of Knoxville to pilot at some of the busiest intersections along Kingston Pike, specifically the intersection of Kingston Pike and Northshore Drive.

These cameras collect real-time traffic information on traffic flow and congestion, which City engineers can use to get better information about how and when traffic backs up on that corridor.

This will help the City make better adjustments to signal timing and eventually to respond immediately to changing conditions so that they can reduce congestion, reduce vehicle emissions, and get everybody where they’re going faster.

These two technologies combined could eventually become a fully connected smart transportation system, where you have vehicles like Local Motors’ Olli sending and receiving information to infrastructure like GRIDSMART’s cameras, allowing everything to move much more efficiently.

With both of these announcements and the work going on at Oak Ridge National Laboratory and across the Innovation Valley, Knoxville is well positioned to be on the forefront of smart transportation technology.

(L to R) Grady Vanderhoofven of Three Roots Capital, Bill Malkes of GRIDSMART, and Tom Ballard of PYA & Teknovation.biz

During the April Innov865 Happy Hour sponsored by Three Roots Capital, there was also a featured fireside chat with GRIDSMART Founder Bill Malkes and Three Roots Capital CEO & Meritus Capital Management Managing Partner Grady Vanderhoofven. The two, along with moderator Tom Ballard of PYA and Teknovation.biz, discussed the founding and growth of GRIDSMART and the role the company is playing in the intelligent transportation industry.

Bill and Grady talked about how the company was founded, raised capital, staffed the business, developed its product, established and expanded production in East Tennessee, and what the future holds for GRIDSMART.

April Innov865 Happy Hour hosted by Three Roots Capital

Special announcement from Knoxville mayor, featured fireside chat

The Innov865 Alliance invites you to join the entrepreneur and startup community in another engaging Innov865 Happy Hour, hosted by Three Roots Capital.

An evening of networking awaits you, Thursday, April 20, 2017 at Scruffy City Hall in Market Square from 5:30 p.m. to 7 p.m.

During this time, there will be a special announcement from Knoxville Mayor Madeline Rogero followed by a featured fireside chat with Bill Malkes, founder and CEO of GRIDSMART and Grady Vanderhoofven, Managing Partner of Meritus Capital Management and CEO of Three Roots Capital.

The fireside chat will be moderated by Tom Ballard of PYA and Teknovation.biz, where discussions will range from the founding and growth of GRIDSMART and the role the company is playing in the intelligent transportation industry.

GRIDSMART has evolved from a concept to the fastest growing company in its industry.

GRIDSMART, a company founded in Oak Ridge and based in Knoxville, provides technology that monitors and controls traffic at intersections and on roadways in 22 countries on five continents around the world.

Their products reduce congestion, increase efficiency, and reduce environmental impact. As the dawn of a new world of autonomous vehicles brightens, cars and traffic management systems will share information. Companies like GRIDSMART are leading the way.

Meritus was one of GRIDSMART’s early investors and has held a position on the company’s Board of Directors for years.  Bill and Grady will talk about how the company raised capital, staffed the business, developed its product (software and hardware), established and expanded production in East Tennessee, and what the future holds for GRIDSMART and intelligent transportation.

Knoxville Showcases its Entrepreneurial Spirit at Startup Day 2016

East Tennessee’s leading investors, innovators, entrepreneurs and business leaders convened at the U.S. Cellular Stage at The Bijou Theatre in Downtown Knoxville on Thursday, September 22, 2016 for the fourth annual Startup Day. The event is part of Innov865 Week, which celebrates and showcases Knoxville as a great place to start and grow businesses.

Graham Taylor, T&T Scientific won the pitch competition and was awarded $5,000 from sponsors Three Roots Capital and SouthEast Bank. T&T Scientific was one of six startups participating in the pitch competition this year.

Graham Taylor, co-founder of T&T Scientific, created LipX, a time-saving, single use extrusion device that researchers can use to prepare liposomes for use in a wide range of research applications. Unlike the gold standard device which requires 45-60 minutes to assemble and clean with each use, LipX is ready to use out of the package and does not require the use of harsh chemicals for cleaning.

Bob Bradley, President and CEO of NewsBreak and Startup Day 2014 alum, received the second annual Traction Award, presented by UT Federal Credit Union. The Traction Award is given to a Startup alum who has gained the most momentum in the past three years. Launched in 2009, NewsBreak is a programmatic merchandising platform that converts fuel-only customers to multi-product purchasers.

Startup Day also featured Paul Singh, nationally recognized serial entrepreneur and seed stage investor, who came to Knoxville as part of his North American Tech Tour. Aside from being a featured guest at Startup Day, Paul held one-on-one consultations with a lucky few Knoxville-area startups to gain a better understanding of Knoxville’s entrepreneurial landscape and identify potential investment opportunities.

“I continue to be amazed and inspired by the entrepreneurial talent we have here in Knoxville,” said Stacey Patterson, Vice President of the University of Tennessee Research Foundation and founding member of the Innov865 Alliance, which hosts Innov865 Week. “Our region has a rich tradition of innovation, and Startup Day gives our entrepreneurs a platform to share their hard work and grow their businesses. The award winners and startup pitchers truly exemplify Knoxville’s entrepreneurial spirit.”

Startup Day was just one in a series of events held during Innov865 Week, which wraps up today. Throughout the week more than one thousand entrepreneurs, investors, business leaders, students and the East Tennessee community participated in educational panels, investor roundtables and social events that promoted entrepreneurship in Knoxville and the surrounding area.

About Startup Day

Startup Day is an annual event that showcases Knoxville as a destination for startups and entrepreneurs. The event is part of Innov865 Week which is organized by the members of the Innov865 Alliance: The University of Tennessee Research Foundation, Oak Ridge National Lab, Launch Tennessee, PYA, Knoxville Entrepreneur Center, and The Anderson Center for Entrepreneurship & Innovation at The University of Tennessee, Knoxville. http://innov865.com/