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LaunchTN WIP: Exploring state Angel network, policy options and rankings
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Charlie Brock

LAUNCH TENNESSEE plans to mobilize more Angel investors, influence public-policy on capital formation and achieve higher economic rankings for Tennessee.

And that's just part of state-sponsored LaunchTN's ambitious workplan for FY2015, which began July 1, according to a report by LaunchTN CEO Charlie Brock and his staff during a meeting of their board of directors, July 17.

ANGELS -- Angel initiatives have been percolating in Tennessee Metro areas for at least a decade. As previously reported by VNC, there is now growing consensus that Tennessee needs to cultivate more Angels, generally, and more deal-leading Angels, in particular.

LaunchTN staff last week said they're taking responsibility for knitting together statewide Angel resources into a cohesive network, and they will host an Angel forum within the next 11 months.

VNC research suggests potential Allies in building the network are likely to include CapitalTN (Nashville), Angel Capital Group (Knoxville), Start.co Angels (Memphis), Lighthouse Fund (closely allied with Tech2020, Knoxville), Nashville Capital Network, Chattanooga Renaissance Fund, and the Angel Roundtable (Johnson City). The network seems unlikely to omit the now-forming and Solidus-driven Selous Venture Society.

Though Angel talk is rampant and actual activity seems to be rising in Tennessee, Lighthouse Fund, in particular, seems to be ramping-up quickly. A few weeks ago, it reported to the state that its members had increased from 1 to 16, according to a filing online. The group is spearheaded by Geoff Robson, formerly Tech2020's director of venture development and capital programs.

In hindsight, the resurgence of such activity out of East Tennessee seems inevitable.

Tom Rogers

One reason: Tech2020 CEO John Morris has more than once declared his group's re-dedication to venture-oriented programs. In addition, Tech2020 is now chaired by Tom Rogers.

Though he has for some years been associated with Oak Ridge National Laboratory, in an earlier 20-year span Rogers served as CEO of first the Oak Ridge Chamber of Commerce and then Tech2020, from which he ran the Tennessee Valley Venture Summit for about a dozen years, during which he often tried to enlist participation statewide by startups and investors. The geography and differing mindsets of the state's three Grand Divides seemed to thwart efforts to make the Summit a statewide nexus.

LaunchTN CEO Brock -- with his own track record as an entrepreneur, advisor and investor -- will doubtless be deeply involved in all this, with staff work led by LaunchTN Capital Formation Director Henry Gindt. Gindt's bailiwick also includes outreach to Corporate venture-capital arms, and supporting ECD's INCITE seed-funding program, in part by helping to identify follow-on investors for companies that win INCITE grants.

RANKINGS -- At the level of the board of directors, as well as staff, LaunchTN has adopted as a priority outreach to publishers of comparative economic rankings of the Fifty States, hoping to convince them to capture in their indices datapoints that LaunchTN believes could produce higher rankings for Tennessee.

The three rankings in LaunchTN's crosshairs are produced by the Information Technology and Innovation Foundation (ITIF), the Milken Institute and the Kauffman Foundation.

These groups most recently ranked Tennessee: 40th by "New Economy" standards by ITIF, details here; 35th in the Milken State Technology and Science Index, details here; and, 18th by the Kauffman Entrepreneurial Index, see state-data link.

LaunchTN Chairman Bill Hagerty, who is also Gov. Bill Haslam's commissioner for economic and community development, said during last week's board meeting that he and other officials of ECD and LaunchTN will look for opportunities to meet personally with those responsible for the rankings, in the course of their travels.

PUBLIC POLICY -- Brock and team told the board they'll soon develop a "proposal for a 2015 Legislative agenda."

Though LaunchTN last week provided no details on its legislative or policy agenda, capital-formation stratagems and other policy tweaks that could make Tennessee more competitive in economic development, per se, as well as in rankings seems likely candidates for that agenda. LaunchTN said it is reviewing other states' capital-formation initiatives.

Achieving other LaunchTN goals might also require at least minimal legislative action. For instance, LaunchTN said last week it plans to breathe new life into its affiliated, but largely inactive, Tennessee Strategic Research Board (TSRB). In 2009, LaunchTN considered spinning-out from committee status to independence. LaunchTN's Commercialization Director is Jim Stefansic.

Even the most casual observer might also wonder whether LaunchTN would consider itself responsible for another round of funding in the model of TNInvestco, the state seed-funding program created in 2009. Interest in such a round, though seldom spoken aloud in public, clearly remains in some quarters, see earlier story here and other coverage here.

The TNInvestco program is widely regarded as having stimulated pockets of venture investing in the state, though whether its returns are those originally envisioned or gains have been realized in other ways are among matters that have yet to be debated in substantive terms.

At one point prior to TNInvestco's enactment, administration of the program seemed destined for LaunchTN (then-TTDC) control, but the program was co-owned by the departments of economic development and, for a while, Revenue. The TNInvestco program is administered today by ECD.

ECD nearly three years ago contracted for administration of its INCITE co-investment program by LaunchTN, but there has been no recent public discussion of transferring TNInvestco to LaunchTN hands, as well.

TNInvestco effectively created 10 small venture-capital firms in Middle and West Tennessee. Betting on-on-the-come, the state essentially funded the program with $200MM in insurance-industry premium tax credits that the ten funds were allowed to monetize. Legislation authorizing the program passed the General Assembly with bipartisan support and was signed into law by then-Gov. Phil Bredesen.

Though LaunchTN had probably considered policy options earlier, its public statement comes in the wake of entrepreneur Steve Case's recent statements in Nashville regarding the urgency of policy reform related to capital, immigration and other issues. VNC

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Tags: Angel Capital Group, Angel Roundtable, Angels, Bill Hagerty, Charlie Brock, Chattanooga Renaissance Fund, economic development, Gov. Bill Haslam, ITIF, LaunchTN, legislation, Lighthouse Fund, Milken Institute, Nashville Capital Network, policy, Selous Venture Society, Start.co Angels, Steve Case, Tech2020m, Tennessee Technology Development Corporation, Tom Rogers, TTDC

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