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Eyes on TNInvestco: New funds commit an estimated $30MM+ for TN startups
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The ten Tennessee firms certified to operate TNInvestco funds have thus far committed more than $30.3 million to 53 companies, according to VNC’s informal review of records provided by the Tennessee Department of Economic and Community Development.

It's still early in the life of the state's first round of TNInvestco, but seeds are being sown, using proceeds from the sale of $200 million in state tax credits that were purchased via the TNInvestco's by insurance companies. By one earlier estimate, the TNInvestco program provides about $14 million for fresh investments by each TNInvestco fund. TNInvestco investments, as anticipated, seem heavily weighted toward tech and tech-enabled firms. The TNInvestcos' efforts are regarded as likely to help Tennessee companies attract investment from other funds, based in Tennessee or elsewhere.

Ultimately, the Tennessee General Assembly and then-Gov. Phil Bredesen, who signed the TNInvestco bill into law two years ago, were acting in belief that TNInvestco will help launch and sustain native Tennessee businesses that produce valuable knowledge-intensive jobs; and that, in the longer term, spending by the companies and their workers will help boost state tax revenue. Among other lingering concerns around the TNInvestco program, some observers have begun expressing concern that TNInvestco startups may eventually be lured out of the state by larger private-equity firms and other states' incentives.

Gov. Bill Haslam has said he will await evidence of promised TNInvestco benefits before deciding whether changes to the program or further rounds of tax-credit funding are warranted. The governor's recently announced INCITE innovation program focuses on supporting business accelerators, fostering productive entrepreneurship, commercialization of technologies developed in Tennessee, and other economic-development stratagems.

Eric Satz

Tennessee Community Venture Fund (TCVF) led the platoon of TNInvestco’s on the basis of the total value of its transactions: TCVF has made commitments totaling more than $5.4 million, or about 17.8 percent of all TNInvestco funds invested, thus far.

TCVF also made the largest single commitment to a single firm -- a $2.1 million investment in Vyd.IO, about which TCVF has publicly disclosed no information (Vyd.IO is not listed this morning on TCVF's portfolio page). TCVF was joined by another TNInvestco, Limestone Fund, in investing in Vyd.IO. Vyd.IO’s registrant and chairman is Eric Satz, according to the state documentation and state information online. Satz is co-founder of TCVF. VNC efforts to reach TCVF and Limestone executives for comment about Vyd.IO have thus far been unsuccessful. (It was from TCVF that now-ECD Commissioner Bill Hagerty took leave earlier this year, after being asked to serve in Gov. Haslam's Cabinet.)

As reported yesterday by VNC, Memphis Biomed Ventures Tennessee confirmed its first TNInvestco investment, in a medical-devices manufacturing company. Memphis Biomed was the last TNInvestco fund to report it had begun investing.

The approximate dollar amounts of TNInvestco funds’ commitments (thus far, purchases of shares and-or convertible notes) are ranked below. The dollar-ranking is not offered as a predictor of the funds’ performances. The four funds listed below with asterisks* received their TNInvestco status several months after the original six TNInvestco firms were announced in November 2009.

The information presented on this page and on the accompanying PDF listing 53 portfolio firms by total TNInvestco investment was drawn from copies of investment-notice letters filed by the funds with ECD, which ECD subsequently provided in response to a VNC request. The figures in this article are believed accurate and current as of close of business July 11. Reports of errors, if any, in the presentation of this material are welcomed; this story will be updated, as warranted. The TNInvestco funds are presently required to report their results once each year via ECD.

Tennessee Community Venture Fund (site) - $5.4MM (17.8% of total)
TriStar Technology Fund  (site) - $4.4MM (14.6%)
Solidus-TNInvestco (site) - $3.7MM (12.3%)*
Limestone Fund (site) - $3.5MM (11.8%)
Council & Enhanced Tennessee Fund (site) - $3.5MM (11.6%)
XMi High Growth Development Fund (site) - $3.3MM (11%)
Innova Fund II (site) - $2.4MM (7.9%)
NEST-TN (site) - $1.8MM (6%)*
Tennessee Angel Fund (site) - $1.1MM, (3.6%)*
Memphis Biomed Ventures Tennessee (site) - $1.0MM (3.3%)*

Each of the 53 TNInvestco portfolio firms has received one or more commitments from one or more TNInvestco funds.

On the list available as a pdf here the portfolio firms are ranked by the total TNInvestco commitment that each received. VNC


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Tags: accelerators, Council and Enhanced Tennessee Fund, early stage, entrepreneurs, Eric Satz, Innova Fund, Limestone Fund, Memphis Biomed Ventures Tennessee, NEST-TN, seed stage, Solidus-TNInvestco, Tennessee Community Venture Fund, TNInvestco, TriStar Technology Fund, venture capital, Vyd.IO, XMi High Growth Development Fund

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