| TNInvestco program provides critical funding to plant entrepreneurial growth |
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by James Dowd Nov 20, 2009
A new program to jump-start entrepreneurship in Tennessee features roots in Memphis, and supporters expect substantial gains for some area startups. Finalists in the program were recently announced, including Memphis-based Innova Fund II, the only one from West Tennessee. The other recipients are in Nashville and Chattanooga. Innova is a pre-seed, seed and early-stage investor focused on starting and funding high-growth companies in the bioscience, technology and agbio industries. The TNInvestco program will provide $120 million in gross premium tax credits to insurance companies investing in state-certified companies. In turn, that will create a pool of venture-capital funds targeting early- and midstage businesses. Initially, the money will be equally divided among six venture-capital firms, or TNInvestco funds, with each receiving $20 million. Lawmakers will be asked to approve an additional $40 million in tax credits next year for two additional venture capital firms. "In assembling the pieces, one piece that's critical is early-stage startup capital," said Ken Woody, president of Innova. "The TNInvestco piece is unique because other states have done similar programs, but they were highly inefficient. This one won't be. This fund has players who truly understand early-stage startup markets and how to get them working." The program was born when state lawmakers passed the Tennessee Small Business Investment Company Credit Act earlier this year. The tax credits will be awarded by the state Department of Economic and Community Development, the state Department of Revenue and the Tennessee Technology Development Corp. by the end of the year. The impact on Memphis startups will be far-reaching, said Gwin Scott, president of EmergeMemphis, a business and technology accelerator for high-growth, early-stage companies. "It's very significant for the local entrepreneurial community," Scott said. "TNInvestco is so important because this is money that will stay in the state. "It's a long-term project, and we have to view it in terms of how to best leverage our dollars. The funding piece is vital in getting good ideas to market and this will help early-stage companies get there. Then we must look for good exits and recycled entrepreneurship where those successful startup leaders come back to do it all over again." Jan Bouten, executive director of TECworks, agreed. "For us, it's finding entrepreneurs and finding opportunities," Bouten said. "People are looking at what's happening in Memphis and asking how to replicate it across the state. A big part is people working together." About 25 companies applied for the program and of those, 10 early-round finalists were selected. That number was whittled to six, with most being based in Middle Tennessee. "In selecting finalists we were looking for a combination of investment return and the development of strategic opportunities," said state Economic and Community Development Commissioner Matt Kisber. "This program will bring high-skill, high-wage jobs to the state and broaden our economic diversification. "Innova offered unique strategies and they have extensive connections to medical device research and agbio companies," he said. "They also have access to impressive incubator facilities and a cadre of seasoned executives." Innova's commitment to reinvest in Memphis Bioworks was also a deciding factor, Kisber said, and that was encouraging news for the leader of that organization. "The existence of Innova makes this community stand apart," said Steven Bares, president of Memphis Bioworks Foundation. "We're focused on expanding the entrepreneurial ecosystem in Memphis and across the state, and this program will go a long way in helping us achieve that goal." For more information, go online to tnecd.gov. -- James Dowd: 529-2737 TNInvestco Requirements for TNInvestco business applicants include: Independently owned and operated Based in Tennessee with principal business operations in state No more than 100 employees, 60 percent of whom must live in Tennessee Demonstrate high-growth potential Source: The Commercial Appeal
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