Monday, March 31, 2008

Venture Notes

Vic Gatto (at left), a partner in Solidus Company, responded to Bruce Lynskey this morning. Gatto is, as is Lynskey, a participant in the Chamber Entrepreneur Project. He said, "I basically agree with Bruce, with [differing views on] a couple of subtle issues. There is no question that there is a scarcity of Seed/Early stage capital in Nashville. However, zero seems to be inaccurate. Solidus [VC player] invested in seven new companies last year (5 in Nashville) -- that is not zero. What I tell people is that there is not enough capital by a factor of 3-4X. This doesn’t mean that there is 'zero'. It does mean that many exciting companies with strong management teams should get funding, but do not. Additionally, I do not agree that 'it’s a culture thing.' In my opinion, this is inaccurate and wrongly suggests that the city will not be able to foster a strong venture presence. I believe there is a strong culture of entrepreneurship and early stage (angel) investors to finance them. For multiple reasons, these people, successful former start-ups and investment firms have never organized them into a venture community like occurred in Boston and Silicon Valley."

Sunday, March 30, 2008

Venture Notes

As posted here in Venture Notes (March 27), Tim Estes' tough-love presentation to the NTC's Innovation Conference March 25 may have raised some eyebrows, but, based on e-mail I've received, Estes is not alone in his thinking. Bruce Lynskey of the VU Owen GSM said, "I completely agree." Lynskey (above) told us he has advised the Chamber's Entrepreneur Project that Nashville has, in his estimation, zero seed-stage VC firms. So, local startups are "most likely to depart and relocate to the source of that seed funding." Lynskey said there's been some discussion in the Entrepreneur task force about "the value of developing a network of non-Nashville seed-stage funding sources." Lynskey acknowledged that tactic comes with some risk the companies will move away toward the source of the funding -- "Well, that is what is happening anyway!" he insisted. Echoing Estes' comments, Lynskey said that in addition to seed-stage cash, itself, "you also need the folks handling the money who are comfortable making seed-stage investments with that money. Nashville does not have this. It's a culture thing." He also said Nashville's lifestyle strengths cannot offset the area's short supply of "highly skilled engineers and scientists...the folks who come up with the original concepts." Nashville, he concluded, is woefully short on capital, workforce and key support firms professionals who understand the startup's "space and market."

Friday, March 28, 2008

IP Commercialization

NIH? Kauffman Foundation VP Lesa Mitchell told me recently she doesn't expect much interest from Nashvillians in KF's "Proof of Concept" model for seed-stage investing and technology commercialization. Seems she's talked with folks here. My own checking at key Vanderbilt listening-posts suggests that, at first blush, she's probably right. The people I spoke with felt said they're doing fine without POC. They have access to IP, University funds, angel-investor networks, advisors and all the rest (although oversight of these activities is concentrated in a tech transfer unit of the administration, rather than in sci-tech research-oriented schools, themselves).


The Entrepreneur Task Force of the Nashville Area Chamber is likely to produce a stir when it releases the findings of its research, sometime in the next 60 days. Then begins the hard work of allocating resources to tackle priorities.'s earlier report. Related Chamber release six months ago. CNN's recent Top 100 rankings of best places to live and launch a business put Bellevue, Wash., first, Nashville 79th. Atlanta satellite community Buford was 3rd, just after Austin suburb Georgetown.

Tennessee Technology Development Corporation's board meets April 3 at Oak Ridge. Among likely topics: Progress in its pre-seed grants program, filling open board slots, conflict-of-interest policy, strategic planning, results of initial PR work. Addressing state advantages and deficiencies (including pockets of 'parochialism') outlined in a consultant's assessment will be an ongoing topic of discussion.

Angels Among Us: Nashville Capital Network (Sid Chambless), which recently launched a $5 million-plus venture fund to complement its investor-networking activity, just announced NCN angels' participation in a Knoxville deal, Protein Discovery [Originally mistakenly referred to here as Protherics, a different deal]. Meanwhile, the fledgling Angel Capital Group that's trying to reach into Nashville, Knoxville, Memphis from its base in Sumner County has not announced the rescheduled date of its first Nashville offering, due in part to arrival of CEO Rachel Qualls' second child. The two angel nets are not yet actively collaborating.

Farther afield, the Knoxville News Sentinel says Gov. Bredesen heads to Eastate next week to push rural investment.

Thursday, March 27, 2008


Vandy's Biomedical Engineering department is now led by Chair Todd Giorgio, who said in today's release he'll push to create businesses powered by VU Biomed intellectual property.

Venture Notes

A couple days ago, Brentwood-based Digital Reasoning CEO Tim Estes told the NTC Innovation Conference that Nashville needs some 'big boys' to overcome their risk aversion and step up to fund disruptive technologies. That's Music City's only hope of seizing the lead in healthcare informatics and e-discovery, he argued. He said Nashville's concentration of healthcare information and publishing and entertainment content represents a deep reserve of data analogous to petroleum reserves. Move aggressively now, he warned, or risk the "refinery" being located somewhere else. He spoke in generalities about a planned DRS spin-off and signalled he'd probably raise the money outside Nashville. Note: A 2001 Petra Capital report suggested momentum in key industries like IT, but said most deals are financed outside Nashville.

AT&T, which has a huge and growing footprint in Tennessee, announced earlier this month it has joined a Web 3.0 investment fund focusing on So. Cal. deals. AT&T and State government are in league on broadband, video franchise reform, telehealth and many other initiatives (for hire, of course). Maybe AT&T could be persuaded to bring a little Web 3.0 money and acumen to Middle Tennessee?