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Venture Notes -- July 16, 2019
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Today: 2 items: The Moneytree update and notes from the [Updated] Opportunity Zone front.

MONEYTREE: LATEST Venture Data for 2Q19 out today from PwC and CBinsights shows Tennessee missed top 10 ranks, with Internet plays besting Healthcare, but Healthcare on the uptick. In 2Q 2019, both Georgia and Kentucky investment totals beat Tennessee's. The full PwC/CBinsights 2Q19 report is here. Related here. More: On July 17, The Tennessean reported that for full-year 2018, "Venture investment in 35 Nashville companies reached $733 million last year -- the most ever in a single year by far. That amount is nearly double the second-largest year ever of Nashville venture investment, which was $411 million in 2016. Tennessee companies outside Nashville raised $86 million in venture funding last year, making the total statewide $819 million. In comparison, Georgia received $782 million and Florida raised $1.1 billion." An earlier PwC/CBInsights report shows the largest share of Tennessee funding in 2018 came in 4Q18 and, as The Tennessean emphasizes, was largely attributable to Nashville-based SmileDirectClub, which has drawn much of its capital from such firms as Kleiner Perkins and Clayton Dubilier.

Matt Pierce JD
Anchor Investments

OPPORTUNITIES: First: Take a look at McGuire Woods' update on Opportunity Zone Fundraising here. UPDATED 22 Jan. 2020 - Claritas Ozone Partners et al placeholder filing for Claritas OZone Fund II. As originally reported in July 2019: CLARITAS OZone East Nashville LP raised $10.9MM for Opportunity Zone bets, according to its SEC filing earlier this month. There were 23 investors onboard, then. Associated with the filing were Don McLemore and Kali Huff of Claritas Capital, as well as the issuing fund's parent, Claritas OZone Partners I and Partners' parent co Claritas Capital LLC. VNC has not yet been able to schedule an interview with a Claritas executive authorized to speak on the matter. This story will be updated, as warranted. Though lack of clarity on some trailing federal OpportunityZone rules and regs seems to have produced lingering caution among some actors, things are happening: For example, Matt Pierce, director of acquisitions and GC for Nashville Anchor Investments Nashville, pointed us to Anchor's 23-unit boutique hotel development -- The Russell -- in East Nashville, formerly the site of Cumberland Presbyterian Church. They paid $1.875MM for the property and the buildout cost a reported $7MM. Meanwhile, Chattanooga can point to a planned $10MM OZ raise signaled earlier this year by Hillstone Opportunity Zone Fund I, managed by Hillstone Advantage Partners and Jacob Hill. Yet another OZ entrant, Road Ammons of ECD Capital Partners said he's currently looking at a pipeline of prospective projects representing about $900MM equity, with about $350MM of that "actionable" within 18 months, the spread attributable to projected diligence requiremtns. Ammons explains that he sources LPs and co-manages an OZ fund with Virtua Partners (Scottsdale). In the OZ context, his activity is entirely around pure real-estate deals in Texas, Arizona, Atlanta, Baltimore and elsewhere where the company has previously amassed market intel and potential targets. When he turns to operating companies, he's likely to look at more mature businesses, not startups. Ammons declined to discuss the fund he is co-managing, except to say, "We are ahead of the market in fundraising." Ammons said his legal counsel is Waller Lansden. Launch Tennessee CEO Margaret Dolan told VNC that she views the OZ opportunity not as a silver bullet, but as another useful asset in the state's economic development and capital formation toolbox. Among her cautionary notes, Dolan said all parties should keep in mind that, first, the OZ program "won't make a bad deal a good deal", but if it could make an inherently good deal "a great deal." Secondly, Dolan cautioned that people with interest in the OZ program should not underestimate the complexities and inherent risks of such undertakings. "Don't 'try this at home'," Dolan added. VNC

. last edited 0538 17 July 2017

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Tags: Anchor Investments, ECD Capital Partners, Launch Tennessee, LaunchTN, Margaret Dolan, Matt Pierce, Opportunity Zones, Road Ammons, TTDC, Venture Notes

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