TNInvestco: Goldrush underway to fund TN ventures
By Milt Capps Last updated 10:29 a.m. Nov. 5, 2009
Published Thursday, November 5, 2009 10:30 am
L-R: Kisber and Farr
The State of Tennessee today announced plans to divide $120 million in tax credits among six new TNInvestco investment firms, to spur venture investment in dozens of high-potential Tennessee firms.
State officials also said they will reapproach the General Assembly in January to seek an additional $40 million for funding $20 million allocations to each of two alternates that were not funded in the action announced this morning.
The winning venture-capital firms were announced today by the Bredesen Administration's Matt Kisber and Reagan Farr, who are respectively Gov. Phil Bredesen's commissioners of economic-community development and revenue.
The six chosen firms are listed below – please click on each firm's name for its profile:
The State also announced that two firms will stand ready as alternates to step in and take the place of any of the winners who were announced today, but which prove unable to meet TNInvestco requirements. The two alternates may also receiving funding in 2010, if the General Assembly concurs. The two designated back-ups are:
The commissioners revealed that Solidus plans to create new Solidus-TNInvestco offices in Memphis, Chattanooga and Oak Ridge, in addition to Nashville, if it receives TNInvestco funding through the current round by default of a primary firm, or in the next round.
Two other firms were among ten finalists, but did not make the cut announced this morning. The unfunded finalists were
- Memphis Biomed Ventures Tennessee I LLC (Memphis)
- NEST-TN, LLC (Tullahoma)
The TNInvestco program is designed to inject at least $84 million into seed- or early-stage businesses based in Tennessee, with an eye toward generating new jobs, with particular emphasis on employment in knowledge-intensive and rapidly growing sectors, ranging from digital technologies and disruptive service models, to life sciences.
The TNInvestco program functions by awarding tax-credit allocations to certified TNInvestco companies, which then essentially swap the credits to insurance companies in exchange for cash investment participation in the TNInvestco venture funds. The funds are free to invest in qualified Tennessee businesses via purchases of debt, equity or hybrid security of, as stated in state law authorizing the TNInvestco program, "any nature and description whatsoever..."
Today's announcement brought to a close competition among an original pool of 25 certified TNInvestco applicants. Dozens of other instate and out-of-state investors had monitored the emerging program closely for months, as reflected in the roster of registrants for one or more of the state's TNInvestco briefings.
Next, winning firms must demonstrate they have secured participation from insurance companies eligible to participate in the TNInvestco program.
State officials intend to convey monetizable tax credits to the winning firms announced today by early January 2010, after which the newly minted TNInvestco programs will begin examining candidate portfolio companies, the performance of which they, state officials and members of the General Assembly will monitor closely for up to ten years.
State officials are also now obliged to convey to the newly certified TNInvestco companies the names of entrepreneurs who have expressed interest in being considering for investment by the new investment companies.
Meanwhile, leadership of Tennessee Technology Development Corporation (TTDC), which has supported the TNInvestco efforts of five key state officials, recently announced it is considering whether or not to create a pipeline of potentially fundable companies for TNInvestco firms' consideration.
Please click on these links for earlier coverage of TNInvestco, earlier stories about a CAPCO bill, and related reports about capital-formation issues. The State's TNInvestco site is here. ♦