To increase available capital for Tennessee companies, we conducted a survey from June-August 2020 to capture information and insight for three primary groups: Investors, Founders, and Ecosystem Builders.
Tennessee is one of the few states in the nation that coordinates resources on a statewide basis. LaunchTN connects investors from around the world to our Network Partners and other resources most suitable for their investment interests. Well-versed in each area of Tennessee’s strengths and specialties, LaunchTN enables investors to make well-informed investment decisions and greatly reduces the time and effort they would otherwise need to invest in research.
To better define our strategy to increase available capital for Tennessee companies, a survey was conducted from June-August 2020 and focused on capturing information and insight for three primary groups: Investors, Founders, and Ecosystem Builders. The survey was sent to approximately 5,000 recipients, with approximately 2,000 opening the email (a 40% open rate). We received over 200 unique, completed responses from Investors, Lenders, Startup Founders and Employees, and Ecosystem Builders. Although 87.3% of respondents were Tennessee-based, we received responses from innovation hubs across the country including Massachusetts, Georgia, Texas, Utah, and California.
We asked respondents to share their knowledge and sentiments about the availability of capital and other resources for startups. The objectives of this assessment were to:
● Identify existing sources of capital for each stage of investment to build a comprehensive view of available capital across the capital continuum
● Identify gaps in the capital continuum for Tennessee-based companies
● Identify areas of interest by industry and by region
In general, the results of this assessment affirm some of the long-known gaps in the capital landscape for Tennessee, while also highlighting some new opportunities relative to our survey objectives:
Existing Capital
We received responses from a variety of funders (VCs, Angels, Lenders, etc.), yet, the majority of this group appears to focus primarily on B2B Technology and Healthcare, leaving fewer options for startups outside of those sectors. We also asked all respondents about their knowledge of the most active Angel Investors in their communities. More than half of the respondents left this blank or said they did not know.
Gaps in Capital
The broad disparity in knowledge among those surveyed seemed to be the pervasive trend in our data. For example, 78% of funders said that Angel Investors are active in their area, while only 19% of startups shared similar sentiments. And although Angel, Friends and Family, and Venture Capital were among the most commonly accessed forms of startup capital, they were only accessed by a minority of the startups who responded. Further, recent data shows traditional pre-seed, and seed-stage funding has declined and continues to trend down due to the Coronavirus Pandemic. That reality, combined with an overwhelming focus on B2B Technology and Healthcare, leaves a relatively significant gap in the capital markets especially as it relates to LaunchTN’s focus in areas like Energy, Automotive, Agriculture, and Life Sciences.
Capital Providers Areas of Interest
With the stated focus on B2B tech and healthcare, there is a tremendous opportunity for LaunchTN to drive resources and attention to other investable industries, maximizing potential and creating robustness in the ecosystem. In terms of geographic preference, 71 out of 106 responses noted that the Southeast is one of their focus areas.
Our plan is to use this information to inform and develop targeted initiatives that will enhance LaunchTN’s strategy to increase available capital for startups in Tennessee and develop pathways to achieve desired outcomes. If you have questions regarding this survey or are interested to learn more about investment opportunities in Tennessee companies, please contact Khrys Hatch, Capital Formation Manager for LaunchTN, at khrys@launchtn.org.
