summer 2012
Building Nashville’s
Entrepreneurial
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2 | Summer2012
Letter from Dr. Michael Burcham President and CEO, The Entrepreneur Center
Letter from Governor bill haslam The State of Tennessee
This city has the talent, the tools, and the generosity required to help one another achieve their American Dream. From our city’s first settlers to our latest healthcare systems, Nashville is a city founded and fueled by the entrepreneurial spirit. The Entrepreneur Center is a non-profit organization established by entrepreneurs - for entrepreneurs. When we came together to launch the Center in the fall of 2009, our vision was simple yet powerful—make Nashville the number one place in America to start a business. Although we’ve operated from a temporary space over the past year and a half, the Entrepreneur Center has successfully launched over 39 new businesses. We are well on our way towards meeting that vision! Success is driven by individuals like you – leaders who are not only influential in your industry, but have helped weave the fabric of our incredible city. By working together, we help launch companies that build businesses and create jobs. We hope you will join the outstanding group of successful business and philanthropic leaders coming together to ensure the future of entrepreneurship in Nashville by creating our permanent new home. Our intention is for our city to become the finest entrepreneurial ecosystem in the country. Please join us on this journey as we dare to dream—for our nation, our city, and for the next great Nashville entrepreneurs. They are in our midst, and together we can ensure that they have everything they need to achieve their great American Dream.
Business startups are a critical generator of new jobs in Tennessee. Because of this my administration is committed to supporting its entrepreneurs and entrepreneurial activity. Through Startup Tennessee, entrepreneurs in Knoxville, Chattanooga, Memphis, Nashville and every county and city in between have the opportunity to connect with the people and resources that can help them successfully launch their companies. Entrepreneurs can access the Startup Tennessee Resource Network through StartupTN.com. This network links each of the regions to each other and helps to accelerate startup activity by connecting entrepreneurs with mentors, investors and business partners. Tennessee was the second of 27 states to launch as a startup region in the National Startup America Partnership, and the state is a leading example of cooperation and coordinated efforts occurring to promote entrepreneurship. By supporting Tennessee’s entrepreneurial ecosystem, we prime our economy for growth for companies to want to relocate and for businesses to launch as we continue our effort to make Tennessee the No. 1 location in the Southeast for high quality jobs.
Letter from RALPH SCHULTZ
Letter from The honorable karl dean
The Nashville Area Chamber of Commerce’s research shows that the sole proprietor share of total employment in our region is 23.4 percent and many of our businesses started as sole proprietorships. The flexibility and resourcefulness of those entrepreneurs has helped solidify Middle Tennessee’s reputation as an entrepreneurial hotbed and haven for the creative class. The Chamber recognizes that small businesses are the backbone of our local economy and these entrepreneurial startup companies can become major drivers of our region’s job growth and prosperity when they are provided support and an environment where they can be successful. Identified as a need in the Chamber’s Partnership 2010 initiative, the Nashville Area Chamber of Commerce launched the community-based Nashville Entrepreneur Center (EC) in 2009 with a vision to enable current and next- generation Middle Tennessee entrepreneurs to create industry-changing, dominant companies. The goal of the EC is to offer resources for nurturing early-stage entrepreneurs to help them launch and grow their businesses, and to increase the success rate and retention of early-stage, high–growth ventures. As the Center continues to grow, it will help launch new businesses that can energize our communities. By supporting the EC, we can strengthen the growth, retention, and attraction of high growth, fundable entrepreneurial ventures to Middle Tennessee to help our region prosper. Business is good!
Nashville has long been a hub of creative energy and entrepreneurial activity – from the music and healthcare industries to the great colleges and universities here. The Nashville Entrepreneur Center is playing an important role in helping the next generation of entrepreneurs more successfully navigate the startup process. Supporting startup businesses builds our local economy, links us to the global marketplace and creates jobs for Nashvillians. By leveraging the resources of the public and private sectors, the Entrepreneur Center is making Nashville one of the best cities in America to start a business. Nashville’s business leaders are volunteering their time through the Center to help entrepreneurs refine and execute their strategic plans, and Nashville businesses are donating their services to help these startups launch. As a community resource, the Center is connecting the best of our city’s deep volunteer spirit and putting the force of that goodwill behind Nashville’s startup ecosystem. In the two years since its launch, the Center has proven its strategic value to the city and gained a national reputation for its success. The Metro Government arranged for the Entrepreneur Center to be in the Trolley Barn development on Rolling Mill Hill under a 45-year lease because supporting entrepreneurial activity is a priority for our city today and should be for the generations to come. It’s a priority because the entrepreneurs who are attracted to Nashville because of the Entrepreneur Center will create and drive growth in our city in ways that we can’t imagine today. We should all be excited about the opportunity and impact that will be created.
President and CEO, Nashville Area Chamber of Commerce
Mayor of Nashville
Summer2012 | 3
Connecting Critical Resources Needed to Successfully Launch Businesses
Entrepreneur Center Fuels American Dreams THE HISTORY “Having a ‘front door’ for aspiring entrepreneurs increases the quality and success rates of entrepreneurial activity in Tennessee,” stated Clayton McWhorter, Chairman of the Board. “It is the mission of the Entrepreneur Center to serve this vital purpose.” The Entrepreneur Center started out of the Nashville Area Chamber of Commerce’s Partnership for 2010 Initiative. Beginning in 2007, the Nashville Area Chamber and many of Nashville’s business leaders evaluated the state of entrepreneurial activity and available funding for startups in Middle Tennessee. Through research analysis, Partnership 2010 found three key takeaways. In the Nashville investment community, deal flow was comparatively low to other major cities and investors in many cases were withholding investment funding while looking for better quality companies (many from outside of Nashville). Second, Nashville has one of the largest “Creative Class” communities per capita in the world. The “Creative Class” is the demographic of individuals that launch companies. They include individuals with backgrounds in science, engineering, education, computer programming, research, arts, design, and media. Third, there wasn’t a central resource to connect Nashville entrepreneurs or people interested in starting businesses. The result of these combined takeaways was reduced entrepreneurial activity. The city had an active base of entrepreneurial talent that was working disparately and often unconnected to either the people in the community who want to help them succeed or the investors that would want to fund them.
The Mission To meet this problem, the center was founded to “Connect Entrepreneurs with the critical resources they need to launch companies.” The critical resources are the investors, mentors, tools and business partners that help entrepreneurs succeed. With a mission and a clearly identified problem, the Chamber hired Joe Kustelski, a Nashville digital media entrepreneur, to build a virtual
Board Members Clayton McWhorter, Chairman of the Board Michael Burcham, President & CEO Alan Bentley
Mark Montgomery
Jim Bradford*
Alexia Poe*
Mike Cain
Christopher Rand
Chris Calton
Linda Rebrovick
Dr. Jeff Cornwall
Ronald Samuels*
Townes Duncan
Ralph Schulz
Tod Fetherling
Mike Shmerling
Darrell Freeman*
Luke Simons*
Bobby Frist
Byron Smith*
Joe Galante
Turney Stevens
John Ingram
Jack Waddey
Melvin Johnson*
Leigh Walton
Matt Kisber
Matt Wiltshire
Jim Lackey*
Dr. Leslie Wisner-Lynch
Liza Massey
Steve Wood
Rob McCabe
Caroline Young
* Board Members with an asterisk served on the founding board of directors and have rotated off.
presence for the entrepreneurial community. The first iteration of entrepreneurcenter.com was born and Nashville had a virtual destination for its entrepreneurial community. The goal for the project was to see if there was enough traffic and perceived need to support a physical location. In May 2010, Michael Burcham, a serial healthcare entrepreneur, was tapped to build out the physical location and launch the Entrepreneur Center in its temporary space at 105 Broadway, across from the Hard Rock Café. The current space is roughly 7,000 sq. ft. with 18 accelerator seats, meeting rooms, a board room and training facilities for pitch sessions, workshops and seminars. The center currently shares space with the Nashville Technology Council. In Q1 2013, the Center will move to its new home at the Rolling Mill Hill Trolley Barns, growing from 7,000 to 22,000 sq. ft. and becoming the true front door for Nashville’s entrepreneurs.
Lipscomb Center for Entrepreneurship For students who see business a little differently… by making it their own. Take an important step to being your own boss. For more information contact: Joe Ivey at joe.ivey@lipscomb.edu
entrepreneurship.lipscomb.edu
# | Summer2012 4
Creating new jobs and opportunities
The Next Generation of Entrepreneurs
“ I believe that Middle Tennessee and our business community will reap the benefits for years to come as we now have a formal, well-resourced hub for budding entrepreneurs to receive the support they need to excel.”
– Robert A. Frist, Jr.
Chief Executive Officer for HealthStream
The spirit of innovation is alive and well in Nashville as the city’s dense creative class continues to be a driving force in the economy. Thanks to the burgeoning Nashville Entrepreneur Center, that creative class now has a springboard to create new jobs and opportunities. In August of 2010, Nashville’s flagship Entrepreneur Center opened its doors as the hub of entrepreneurial activity in the area. Since then, the organization – which is itself a new venture – has outpaced even the most optimistic expectations funneling through over 1,000 new ideas for startup companies and facilitating 39 official launches totaling more than $9.3 Million in seed stage funding. “I am so excited about the success of our entrepreneur center,” said Leigh Walton, from Bass, Berry & Sims, PLC, who was instrumental in the founding of the Entrepreneur Center and currently serves the center as a board member. “Nashville has always had a wealth of resources for entrepreneurs; there was just no focal point. What we did when we created the Entrepreneur Center was provide that focal point. I cannot believe how quickly it has grown and the impact it is already having. It is astounding.” “I believe that Middle Tennessee and our business community will reap the benefits for years to come as we now have a formal, well-resourced hub for budding entrepreneurs to receive the support they need to excel,” said Robert A. Frist, Jr., Chief Executive Officer for HealthStream. “The Entrepreneur Center is an incredible resource for our community,” said Bert Mathews, President of the Mathews Company. “The ability to foster ideas and provide experience for people who are starting a business; we’ve never really had that opportunity before. This initiative is growing the entire community.” Michael Burcham, President and CEO of the Nashville Entrepreneur Center, understands the impact it is having better than anyone. He has not held back in setting the standards and vision that have already made the center one of the leading business accelerators in the southeast. Burcham is turning the national spotlight on Nashville. “My personal goal is for Nashville to become the number one city in America to start a business,” said Burcham. “We serve daily as the front door for all the people visiting our city who are interested in creating business here. We take our role as ambassadors very seriously. We want to welcome their ideas and connect them to the people and resources that can help them be successful.”
The network of people and resources the Entrepreneur Center facilitates is nothing short of an entire ecosystem that spans the region. That ecosystem is made up of the entrepreneurs, mentors, business partners and investors who come together to create a pipeline for growth of the economy. “It is critical to support entrepreneurial activity in the community,” said Clayton McWhorter, Chairman of the Board of Directors for the Entrepreneur Center and Chairman of Clayton Associates. “By increasing the activity and support network available to Nashville’s entrepreneurs, the Entrepreneur Center can significantly affect and increase the economic success of the entire region. The result of that work is booming businesses, stable jobs and job creation.” “The faster we can connect entrepreneurs and their ideas to the funding and critical resources they need, the faster we can create businesses and new jobs,” said Clay Jackson, Director of Marketing and Business Development for the Nashville Entrepreneur Center. “Just increasing the activity of entrepreneurship is hugely impactful. We connect teams of people learning from each other’s experiences. When we increase the level and depth of that experience in our community, it becomes immeasurable to its success.” What Nashville’s Entrepreneur Center represents most of all is the American Dream. The American Dream is what originally brought Burcham, who grew up in Mississippi, to Nashville. Burcham purposefully sought out the city’s burgeoning healthcare industry and successfully launched several companies after getting his first break with a chance to work for Hospital Corporation of America (HCA). “I realized there are so many people who want to start businesses in this new technology age,” said Burcham. “I talk about the American Dream every day. I do believe that in every person’s heart there is this notion that they would love to have the opportunity to own their own business. I know firsthand how beneficial this entrepreneur center can be because I started my own companies without such a resource. Now, because of what Nashville’s Entrepreneur Center means to this city, people who didn’t think they would ever have a shot at doing their own thing are getting a shot; we’re giving them that. The Entrepreneur Center is the American Dream in action.”
Summer2012 | 5
Organization committed to helping entrepreneurs take established businesses to the next level
EO Nashville Taps Into Middle Tennessee’s Entrepreneurial Fervor
W
hen Bill Kimberlin started Nashville’s Young Entrepreneurs’ Organization (YEO) chapter in October 1994, he wanted to tap into Nashville’s rising entrepreneurial fervor and create a supportive, confidential space for local business owners to share experiences and learn from one another. In its infancy, Nashville YEO had just nine members. The group later shortened its name to Entrepreneurs’ Organization or EO, growing into a dynamic, global network of more than 8,000 business owners in 40 countries. Today, Kimberlin is thrilled to be part of an organization that has become everything he dreamed about in 1994. “This group has its own life. It’s maintaining and growing. I’m excited to see how all the members benefit from it,” he said after attending an event for new candidates. Since 2008, EO Nashville’s membership has more than doubled. Now at 112 members strong and growing, EO Global recently honored the Nashville chapter with three accolades — Rock Star Award Winner; Highest Percentage Growth (second place globally); Most New Members (third place globally) — placing Nashville within the top tier of the global organization. To join, an entrepreneur must be a founder, co-founder, owner or controlling shareholder of a company with gross annual sales exceeding $1 million. Because EO is an international organization, members have the opportunity to meet and learn from other business owners around the globe. “The best thing about EO is the people you meet and the experiences it creates. EO provides access to people and events that would otherwise be nearly impossible to replicate,” said EO Member Chris Kincade, founder of Bonus Building Care. At the heart of EO membership is ‘forum,’ a monthly workgroup of up to eight business owners from noncompetitive industries who meet confidentiality to discuss issues ranging from funding and human resources, to growing pains and work-life balance. EO forums, and the relationships they create, do more than help existing businesses grow — they make new local businesses, and as a byproduct spawn innovation and generate jobs. Business partners Joe Freedman and Jeff Terry were already owners of a successful party equipment rental company Peachtree Tents & Events in Atlanta. When they wanted to expand regionally into Nashville, they knew that they needed business development and financial partners. Freedman turned to Jeff Bunting and Jerry Bostelman of his EO Nashville forum. Because of their close relationships cemented during forum meetings the partner-
ship happened organically. Freedman, Terry, Bunting and Bostelman decided that rather than start from scratch, they’d identify another rental operation in Nashville to merge with or acquire. Freedman met entrepreneurs James “JT” Terrell and Glenn McConnell from a mutual acquaintance, and in November 2007, Freedman and his partners acquired T&M Rentals from Terrell and McConnell and renamed the company Music City Tents & Events. Terrell and McConnell stayed on as co-founders and managing partners of Music City Tents & Events, and have since joined Nashville’s EO chapter. “EO already does a certain amount of vetting making it easier to do business with EO members,” Freedman said. “Our growth has been exponential given our EO connection.” There’s also a social component to EO membership. The entire organization gets together several times a year for a social outing with spouses, such as the semi-annual progressive restaurant parties, where the group visits several restaurants in one night. The Nashville chapter also offers “once in a lifetime” experiences, such as a planned trip to Cuba after the recent easing of travel restrictions to the communist island. “EO Nashville is a cohesive group and members enjoy social outings with each other as well as very focused business discussions,” said Debbie Gordon, president of EO Nashville and founder of S3 Asset Management and Snappy Auctions. EO regularly hosts members-only educational seminars featuring well-known speakers, such as January’s EO Xpert Series Presents Jack Daly. At a lively sales training course, EO members had exclusive access to the experi-
Entrepreneurs’ Organization
Nashville Chapter Sponsors the Bradford Group Bradley Arant Boult Cummings LLP Capstar Bank Century II KraftCPAs PLLC Hutton Hotel Music City Tents & Events
“EO provides access to people and events that would otherwise be nearly impossible to replicate.” – EO Member Chris Kincade Founder of Bonus Building Care
M Street OZ Pinnacle Financial Partners redpepper Ruby Strategic Hospitality Vaco WC Dillon Company
Entrepreneurs’ Organization
Board of Directors President: Andy Bailey Past President: Debbie Gordon President Elect: Joe Freedman Bryan Ansley John Aron Sonny Clark Ben Hanback Vicki Hill Dan Hogan Dudley Jacobs John Kepley Bill Kimberlin Arnie Malham Charles May
Glenn McConnell Bryan Merville Jackson Miller Tim Ozgener Hannah Paramore Mose Ramieh III JJ Rosen Mike Rustici Sam Sanchez Alex Tolbert Jeff Turner
enced sales trainer and coaching expert. In late August 2011, Catalyst, presented by EO Nashville in cooperation with the Nashville Entrepreneur Center, launched its inaugural curriculum. The EO/EC organized 18-month Catalyst program is designed to help entrepreneurs grow their companies past the key benchmark of $1 million in annual sales. The first Catalyst class consists of 20 business owners who employ a total of 88 individuals, with average annual gross revenues of $386,000. The program kicked off with 12 biweekly classes taught by EO Nashville member Michael Burcham, president and CEO of the Entrepreneur Center. At the conclusion of the classes, Catalyst participants were broken into forum groups, which meet monthly for 12 months. Catalyst members also engage in one-on-one mentorship with an EO Nashville member. “We’re working to build and strengthen Nashville’s entrepreneurial community through a variety of channels, both supportive and educational,” said chapter president elect Andy Bailey and founder of Rock Habits and 30Avacation.com. “Just as there’s no single motivation that propels individuals into business ownership, there’s no single resource that can support these endeavors. EO Nashville’s goal is to offer a vibrant peer community for local entrepreneurs to help them in the best ways that we can.” For more information about EO Nashville, contact Sameera Lowe, executive director, at (615) 309-1755 or eo@eonashville.com.
6 | Summer2012
Developing strategies puts companies on the fast track to success
turning Ideas into Reality
By Melissa Webb Nashville area freelance writer
The atmosphere of Nashville’s Entrepreneur Center is completely unique. Inspiring quotes line the walls and white boards are strategically placed throughout work spaces to catch any breath of an idea that is generated. Activity buzzes in every cell of the people working in this vibrant space. The creative energy is nearly palpable. Everything about the Entrepreneur Center is designed to shift the journey to success into overdrive. New businesses that are accepted as incubating companies are given work stations fittingly termed “accelerator spaces.” Those companies will, in a few brief months, do the incredibly hard work of sculpting their ideas into a bankable investment. The eight-hour workday is eclipsed as entrepreneurs tackle minimally twelveto-fourteen hour long shifts. The core of the program is pitching. The mantra “if you can’t pitch it, you can’t raise money,” is the reality of starting a business. Fledgling companies will try out their pitches and rework their strategies hundreds of times before presenting to potential investors. They work a 100-day plan to build an investible story that narrates their brand. “What we are creating is a fail-fast environment,” explained Clay Jackson, Director of Marketing and Business Development for the Nashville Entrepreneur Center. “The companies keep developing their strategies using the feedback of the people here to continually improve until they have a rock solid business plan. The result of this process is something far better than it would have been without iterative development.” “The Entrepreneur Center is the best place to start a new business that I can imagine,” said Jack Waddey co-founder and senior attorney at Waddey and Patterson P.C. who serves as a board member and mentor for the Entrepreneur Center. “Physically, the open concept in the design of the space is conducive to the work that is happening. The energy that comes from having that accountability is incredible. The mentors really have a tough love approach to grooming these companies for success. The group support and the ‘all for one and one for all’ approach make people stick with it.”
“The entrepreneur center is the best place to start a new business that I can imagine. Physically, the open concept in the design of the space is conducive to the work that is happening.”
– Jack Waddey Co-founder and Senior Attorney at Waddey and Patterson P.C.
Entrepreneurs with over 1,000 new ideas have made their way to the Entrepreneur Center since its opening. Of those, only a couple of hundred have proceeded to become active “EC members,” developing their ideas. A small fraction has been accepted as “accelerators.” The best opportunities are evaluated as those having the potential to be funded and launched within six months. The highest percentage of team involvement is dedicated to those companies. To successfully launch, a business needs to make it through the riskiest stage of the startup process known as the “death valley.” At this critical point many potentially successful businesses fail. The ability of a business venture to pass through this “valley” in a predictable and timely way determines its ultimate viability. Entrepreneurs that are part of the center’s accelerator program focus on the five areas of business an investor needs to have confidence in before making the decision to invest. They are called the 5-M’s – Model, Management, Market, Money and Momentum. “In short, investors need to know: what is the product; how will it make money; who is the customer; how will the product get to them; how much money is needed and how long it will be before the money runs out,” explained Jackson. The more thoroughly an entrepreneur can work through the 5-M’s of starting their business, the better the chance they have of being successful and lower their cost of market entry. LeShane Greenhill, Founder and CEO of Sagents, an incubating company at the Entrepreneur Center, is a testament to the effectiveness of the process. He started his business after years of experience in sales and has taken his idea through several pivots since coming to the center in the fall of 2011. Sagents is a cloud application that matches pre-qualified suppliers
with “ready to purchase” buyers. The most critical information for Greenhill came from pitching his idea to potential customers. “I started my business from a sales perspective thinking this would be a sales tool,” Greenhill said. “After having pre-development and pre-launch meetings with potential clients, I learned that the software was not designed in the best way for them to use. We had to redesign the product for the buyers and bring them back to the table. After eight months of product development, we literally started all over! Now, our product is a simplified procurement tool.” Greenhill says his work at the Entrepreneur Center has accelerated the launch of his software by at least nine months, saving him between $40,000 and $50,000 in startup costs. “We would have launched a product that no one could use,” he said. “I am self-financed, so I would have been in a completely different situation than I am now talking to investors. Today, I have not just a little more, but a lot more leverage. It’s not about what I am going to have to give up in order to become successful.” The support entrepreneurs receive enables them to retain greater ownership in their companies than they might have otherwise. That means that their initial inspiration and goals for their business can stay intact. Because of the groundwork that has been done, both the entrepreneur and investor have more confidence in the future of these startup companies. “Because of the investment risk of unproven entrepreneurs in startup companies, the entrepreneur is often required to give up a lot of equity in initial rounds,” Burcham explained. “During follow-on funding rounds, their equity gets further diluted. With the support of the Center and the processes that improve a busi-
ness greatly from the start and create early customers - entrepreneurs are in a completely different position to establish investment terms with the capital community. The business idea is already into execution mode and early customers are creating growth. When fundraising, selling execution is easier than selling inspiration.” “Really big ideas need capital access to grow rapidly,” said J. Tod Fetherling, Chairman and Founder of Stratasan, one of the first companies to launch out of the Entrepreneur Center. “Ninety-percent of the time, businesses fail because they are undercapitalized. The Entrepreneur Center adds significant resources. The right business plan with the right capital mix can leapfrog a business from an idea to getting customers; that’s exactly what happened to us when we started Stratasan.” The tenacity that it takes to make it through the startup process is a critical success factor that is part of the entrepreneurial spirit. Jackson describes entrepreneurs as “people that just don’t give up.” “Entrepreneurs just have a certain psychology about them,” Jackson said. “They are wired a little differently. They work harder, try harder and focus more. Being an entrepreneur is more like a calling. It takes an immense amount of work and tenacity to successfully turn an idea into reality. Second or third time entrepreneurs are much more likely to succeed because they have gone through the process before.” The success being found at the Entrepreneur Center is creating momentum as companies get on track for the growth and goals they set for themselves. That collective experience is knowledge capital for the city and future entrepreneurs. “What makes a successful entrepreneur? It is a mindset and mentality,” said Mark Montgomery, serial entrepreneur, EC Board Member and President and CEO of FLO {thinkery}. “People who are entrepreneurs see opportunities everywhere in what most of the world sees as only problems. Entrepreneurs have a certain way of looking at the world and Nashville is full of those kinds of people. Our city has an incredible ecosystem of resources to offer them with the Entrepreneur Center as the hub.”
Summer2012 | 7
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8 | Summer2012
PartnersforProgress
Building Innovation Business partners and mentors key to Center’s success
Steven Buhrman, Founder/CEO, Kahottzz, right, speaks with Clay Jackson.
By Melissa Webb
Nashville area freelance writer
“There is a very supportive business environment here. People are very community minded and they truly want to help one another.”
– Germain Boer Professor of Accounting and Director of the Owen Entrepreneurship Center at Vanderbilt
No one understands the impact of the Entrepreneur Center better than the people who give their hearts and minds to it each and every day; the business partners and mentors. They come together to give their resources to make Nashville a stronger community with even greater opportunities to offer. In many ways, these leaders also see it as their mission to honor Nashville’s heritage as a community built on entrepreneurship. “To really have a context for what the Entrepreneur Center means to this community, you have to understand the history of Nashville,” said Chris Sloan, Co-Chair of the Emerging Companies Team for Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., who was instrumental in the founding of the center and currently serves as a mentor. “Nashville is a city built on entrepreneurship. From Christian publishing to music, healthcare and even restaurant chains (such as O’Charley’s and Cracker Barrel Old Country Store), Nashville has entrepreneurism in its blood. It’s who we are. That entrepreneurial vibe has really always been a part of this city. This is the next generation of it.”
Many people from various aspects of the community make the Entrepreneur Center possible. A partnership of local and state government support, private interests and the Nashville business community at large uphold the center’s mission to “raise the quality of resources available to the Nashville entrepreneurial and small business communities.” “The growth of entrepreneurism is an index of how a local economy as a whole is trending and ours is trending in a very positive way because of what the Entrepreneur Center is doing,” said Rob McCabe, Chairman, Pinnacle Financial Partners. “The impact will have a compounding effect that will add even more fuel to the fire as successful companies launch and then continue to grow and give back. It’s a pay it forward mentality.” The core of the Entrepreneur Center’s program is mentorship. More than 150 mentors offer their time and talents to give budding businesses a boost. The mentors that serve the center are an elite group of business leaders, many of whom have launched their own successful ventures. Through the “Turning Ideas into Reality” capital campaign, the center aims to provide the founding endowment to sustainably fund center operations and provide the capital renovations for the
permanent home of the Entrepreneur Center in the Historic Trolley Barns at Rolling Mill Hill. “There are other business models that are accelerator programs, but the EC is one of the few operating as a nonprofit,” said Chris Calton, Managing Director at Avondale Partners. “We are very proud of the fact that the community participates in the support of the center financially as well as with their time.” The community-minded spirit of Nashville’s business district truly sets it apart from other regions. That spirit is what many credit with spurring the Entrepreneur Center to where it is today. “Nashville is a place where, if you simply go out and meet people, you can find help anywhere you look,” said Germain Boer, Professor of Accounting and Director of the Owen Entrepreneurship Center at Vanderbilt. “There is a very supportive business environment here. People are very community minded and they truly want to help one another.” The involvement of the community is integral to the Entrepreneur Center’s success. Support is needed in people to serve as mentors, as leaders and as partners or sponsors. It takes every level; each subset is critical to the function of the whole. “As well as the Entrepreneur Center is doing, continued and additional support is critical,” said Townes Duncan, CEO of Solidus General Partners, LLC. “The center is doing a great job and the new facility will make it even better. I am excited about its future. Contributing to the support of the Entrepreneur Center financially is as good an investment as anyone can make to improve the economy of this region.” “Although not always widely publicized, everyone here knows that the Nashville business community has long been driven by an entrepreneurial energy and sense of innovation, which has resulted in a thriving environment for new business,” said Robert A. Frist, Jr., chief executive officer, HealthStream. “The Entrepreneur Center is a natural outgrowth of this community where investors, mentors, and critical resources are pulled together in one place to accelerate entrepreneurial activity. I believe the Entrepreneur Center is having a tremendous impact in positioning Nashville on the national stage as an emerging leader of entrepreneurial excellence.”
Summer2012 | 9
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| Summer2012
Two years on Broadway The inspiration for Nashville’s Entrepreneur Center grew from the Nashville Chamber of Commerce’s “Partnership 2010” initiative which named Robert A. Frist, Jr. and Michael Shmerling co-chairs of the Entrepreneur Task Force. Business leaders came together as catalysts for change after realizing that, although Nashville is recognized for having a substantial creative class, there was a state of reduced entrepreneurial activity in the area. There was no way to connect entrepreneurs with the critical resources needed to launch companies. “We realized that we had become proficient in recruiting companies to Nashville and retaining companies, but there was a gap in the entrepreneurial ecosystem here,” said Janet Miller, Chief Economic Development and Marketing Officer for the Nashville Area Chamber of Commerce. The support of Miller and Ralph Schulz, President of the Nashville Area Chamber of Commerce was steadfast in the development of the Entrepreneur Center. “We pinpointed that there was no front door for businesses looking to develop. There was no energy center.” The “energy center” that was needed took form as Nashville’s Entrepreneur Center. In 2009, Nashville Technology Council President and CEO, J. Tod Fetherling and local entrepreneur Mark Montgomery lead the first Entrepreneur Center meeting. The Entrepreneur Center appointed Joe Kustelski as project manager. Out of the 11 initiatives that grew from the entrepreneurial task force, Fetherling and Montgomery looked to create a virtual entrepreneur center as the first step. The site launched in September of 2009. The team spent the next six months pitching the concept of the Entrepreneur Center to the business community. “The rolodex of people from the Partnership for 2010 initiative really did open up all the right doors,” said Kustelski. “Of course, if it wasn’t a sound idea it wouldn’t have taken off the way it did. It really was a community effort to shape the idea and foster its adoption to where it is today.” “The best way to test an idea is to see if people are willing to invest money in it,” said Michael Shmerling, Managing Partner, XMi High Growth Development Fund, LLC. “We were seeing if the idea was something the community could believe in enough to support it financially. After six months, we had raised $200,000 and recruited the board.” The $200,000 in startup funds, coupled with the chamber’s initial $150,000 to conduct the research phase, gave the Entrepreneur Center legs. “One of the first people we brought on board was Clayton McWhorter as Entrepreneur Center Chairman,” said Miller. “He is such a titan of entrepreneur-
s
Next Page
Historic Trolley Barns:
Center’s Future Home By Melissa Webb
Nashville area freelance writer
When the Nashville Entrepreneur Center was launched, the founders knew that the 7,500 square foot space on Broadway in Downtown Nashville would be a temporary location. They did not foresee, however, that the center would be growing into a facility that would more than triple its capacity so quickly. After opening its doors in August of 2010, the Entrepreneur Center is intended to be at home in its new space by the end of 2012 or the first quarter of 2013. “We are thrilled with where we are,” said Sam Lingo, Chief Operating Officer for the Entrepreneur Center. “We always planned on moving into a new building, but we didn’t know it would be so soon. The expectations we set were high and we really exceeded those within the first year.”
The Entrepreneur Center will fittingly be moving to the Historic Trolley Barns, part of the Rolling Mill Hill development that is being dubbed “Downtown’s new Center for Creativity and Innovation.” The Trolley Barns are a unique space in Nashville made up of 80,000 square feet of historic structures built in 1940 by the Works Projects Administration (WPA) as part of The New Deal. The Entrepreneur Center will soon occupy more than 20,000 square feet of that space after the renovation of Trolley Barn #1 is complete. “We will have about three-times what we have now in terms of actual space, but as much as four-times the functionality,” said Lingo. “We currently have 18 accelerator spaces and will have 75 accelerator spaces in our new location.” Thom Meek served as architect for the Entrepreneur Center’s new space which is comprehensively designed to encourage idea flow and innovation with areas for
Summer2012 | 11
“We will have about three-times what we have now in terms of actual space, but as much as four-times the functionality. We currently have 18 accelerator spaces and will have 75 accelerator spaces in our new location.”
– Sam Lingo Chief Operating Officer for the Entrepreneur Center
collaboration as well as individualized work environments. Much of the furniture will be modular so that it can be rearranged to accommodate a variety of needs. There will even be a coffee bar (an entrepreneurial venture itself ) to further fuel the creative work being done. The design of the renovated space will be complimented by the original features of the structures that were preserved such as the bowed steel truss roof systems, original metal frame windows, stepped parapet roof lines and decorative brick detailing. The vaulted ceilings bring a tremendous amount of natural light to the entire building. “We have incorporated what are seen as best practices in the design of this space,” explained Meek, Senior Design Architect at IDS. “Above all, we want to encourage collaborative innovation.” Even with all the wind in its sails, securing funding for the construction of the new Entrepreneur Center was no easy feat. A lengthy grant proposal process - principally spearheaded by Lingo - eventually led to three major sources of public funding. The largest amount of funding came in the form of an EDA grant of over $2.5 million. The grant was the largest EDA grant ever awarded in the state. The center also received $700,000 in funding from the state’s economic development commission as a Fast Track Infrastructure Development Program grant (FIDP). The center additionally secured a $300,000 grant from the city under the Urban Development Action grant. The new building for the Entrepreneur Center has been leased to the center under a 45-year term by Mayor Karl Dean, the City of Nashville, and the Metropolitan Development and Housing Authority (MDHA) on the condition that the center could renovate and revitalize the property. “The move by the Entrepreneur Center has been made possible through public, private and non-profit contribution, as well as a lot of creative energy,” said Phil Ryan, Executive Director of MDHA. “I think the community understands the type of role the Entre-
preneur Center can play in the economic revitalization of Nashville as well as the redevelopment of downtown.” Energy efficient practices have been employed in the redevelopment of the Trolley Barns as well as the Rolling Mill Hill development as a whole. With the Entrepreneur Center leading the way for future innovation in Nashville, utilizing sustainability practices such as making new use of an existing structure was of importance in deciding where and how to relocate. The Entrepreneur Center anchored the development of the Trolley Barns as the first company to announce its decision to locate there. Emma, Hands on Nashville and the Center for Nonprofit Management are other tenants that have come on board. “We are thrilled that the Entrepreneur Center is moving to the Trolley Barn,” said Bert Mathews of The Mathews Company, developer of the property. “There are some other wonderful tenants there and they will all create really great synergy.” “The Entrepreneur Center will be located right next door to us,” said Lewis Lavine, President of the Center for Nonprofit Management. “The center’s social enterprise pillar is really the strongest synergy with our mission to improve the performance of nonprofits. Michael Burcham and I have had a number of conversations about ways we can collaborate in the area of social enterprise.” “We’ve spoken of the tenants in the Trolley Barns being part of a “creative campus,” interacting with each other across public spaces, and the hope is that interaction generates new ideas and creative solutions to community needs and community issues,” Ryan said. “It’s an interesting mix of private businesses and non-profit organizations locating in the Trolley Barns, but the common thread appears to be a spirit of innovation and entrepreneurship thatcombined with technology- can develop into a whole range of interesting ideas. We’re seeing a real energy develop in the space and my belief is the Entrepreneur Center will be a strong catalyst for that.”
continued from page 8
ship. We were very fortunate that he got excited about the project and stepped up to take this on.” From there, the Entrepreneur Center’s first board of directors was recruited. The decision to tap Michael Burcham as President and CEO was met with astounding approval from everyone involved. “We got the idea that he would be the perfect guy to do it,” said Miller. “We honestly thought it was a long shot that he would, but his passion for entrepreneurism inspired him to come on board. He is really credited with setting the pathway and the trajectory of the center to bring it where it is today just two years later.” “What made the Entrepreneur Center so successful was that Michael Burcham knows what the heck he’s doing,” said Jack Waddey co-founder and senior attorney at Waddey and Patterson P.C. “He knew what it had to look like to be successful and he got it there…and he was right.” “Michael Burcham is one of the best evangelists for entrepreneurs in our community,” said Kustelski. Nashville’s Entrepreneur Center was created by entrepreneurs for entrepreneurs and has, in a short time, revolutionized the development of innovation in the community. All of the leaders involved in the center share a passion for helping other people realize their dreams. “Many talented individuals have come together to build something really incredible with the Entrepreneur Center,” said Landon Gibbs of Clayton Associates. “If you are pursuing your dream, we are here to help you. Most importantly, we have created a network where we celebrate the people who have succeeded. Then, the people who have succeeded want to help other people succeed as well. It’s what this community does so well; uphold one another.” With a new location for the Entrepreneur Center scheduled to open as early as the end of this year, or first quarter of 2013, Burcham and the leadership team have much to be proud of. However, they are each quick to point out that many different elements have brought the center to fruition. “Immense credit should be given to the community and all of the players along the way who have said, ‘I’ll show up and help,’” Burcham said. “Today we have an army of volunteers who show up week after week to coach new businesses. We have larger companies getting involved with helping smaller companies get started – and then turning around and becoming their first customers. There is a true community made up of all kinds of individuals who have had success and who have wanted to help others. That spirit is what has made the Entrepreneur Center what it is today.”
Design created by Thom Meek – Melissa Webb
MentorSpotlight
12 | Summer2012
EIR: Entrepreneurs in Residence
Dr. David Furse | Director of the EC Mentor Program, EC Master Mentor Dr. David Furse has 35 years of experience as a marketing professor, business entrepreneur and strategy consultant. He founded NCG Research in Nashville and grew it into an international leader in consulting and healthcare outcomes benchmarking. He is currently Director of the Mentor Program at the Entrepreneur Center and an Adjunct Professor of Management at Vanderbilt University’s Owen Graduate School of Management.
Joe Galante | EIR Digital Media, EC Board Member
Joe Galante brings with him nearly 40 years of experience in the music publishing and entertainment industry, having led some of the biggest labels in the business including RCA and Sony Nashville. In April 2010, Joe Galante stepped down as Chairman of Sony Music Nashville after 39 years with the same label family. In addition to his role on the Entrepreneur Center Board of Directors, he mentors both first time entrepreneurs and serial entrepreneurs focused on the entertainment and digital media spaces.
Shawn Glinter | EC Master Mentor Shawn Glinter is an entrepreneur & senior–level executive with 15 years of experience in all aspects of leadership, management, sales and operations in diverse industries including healthcare, technology, manufacturing, distribution and service. He was recently President and CEO of Special Water Global, an early stage European biotechnology company. He previously served as Vice President of Sales for Emdeon (formerly WebMD). He has built and led sales teams for both products and services for domestic and international markets.
Keith Gregg | EIR Health Technology
Keith Gregg has over 25 years of operational and advisory experience in high growth life science, healthcare IT, and disruptive information systems environments. He mentors entrepreneurs in corporate development, licensing, operations, federal government liaison, marketing, financing, and mergers. Through his company JRG Ventures, he is developing OneC1ty, a mixed-use building complex designed to drive innovation in healthcare, life sciences, and technology by encouraging cross-industry collaboration and interaction.
Scott Rouse | EIR Product and Pitch Development
Scott Rouse is a Grammy nominated producer and serial entrepreneur. Through his company IdeaBang, he works as an innovation consultant and develops products for patent and licensing. He joined the Entrepreneur Center after participating in Jumpstart Foundry 2, the seed venture fund and 14-week accelerator program. He actively mentors entrepreneurs in branding, marketing and pitch consulting and “general innovation needs”.
Help Nashville entrepreneurs build companies
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Start-up experts Industry experts knowledge experts
Entrepreneur Center Mentors Tara Aaron April Aden Paul Agee Evan Austill Renee Bacon David Baker Larry Berkley Chris Blanz Mark Bledsoe David Bohan Paul Bond Brian Bowman Bill Brennan Jason Brooks Allen Brown Paige Brown Michael Burcham Justin Calcagni Davis Carr Mike Cassity Tommy Cates Sid Chambless Beth Chase
Sarah Clark Lori Cloud Joe Cook Jeff Cook Jeff Cornwall Shane Cortesi David Corts Sharon Cronk Nicolo Davidson Alexander Davie Keith Deerkoski Dave DeLaney Sheri DiGiovanna David Dingess David Dingler Mike Dyer Jody Elder James Fend Drew Fassett Tod Fetherling Matthew Fisher Margot Fosnes Brian Fox
Alan Fox Tim Franke Parrish Freeman Kelly Frey David Furse Joe Galante Linda Garrard Dennis George Harris Gilbert Dave Gilbert Shawn Glinter Scott Gordon Justin Graham Bob Grohovsky Jamin Guy Kerry Hand Lisa Hankins Daniel Hart Robert Hartline Tammy Hawes Clay Haynes Robert Hendrick Dan Hogan
Brian Hogue Nicholas Holland Jim Holmes David Hooper Chip Hoover Alan Hovious Bryan Huddleston Laurie Hughes Rob Humphreys Angela Humphreys Joseph Ivey Robert Jack Clay Jackson Rishab Jaju Nancy Johns-Wood Feleesha Johnson Laurie Kalmanson Gene Kelly Kris Kelso David Klements Scott Kozicki Barry Kyte Edward Landquist
Justin Lanning Brian Lapidus Dave Lawrence Mead Lawson Randy Lee Ken Lewellyn Greg Lewis Don Leyrer Sam Lingo Ryan Little Mike Lovett Dennis Lyftogt Alison Lynch Kimberly Lynn Adam Maruskin Chris McIntyre Mary McLendon Todd Meador David Medlock Sherman Mohr Mark Montgomery John Murdock John Murdock, Jr.
Matthew Musser John Nail Jake Neu Drew Nord Burt Nowers Jozef Nuyens Kate O’Neil David Owens Victoria Pao Robert Pautienus Frank Pazera Rob Pittman Tracey Power Rachael Qualls Christopher Rand JJ Rosen Scott Rouse Peter Rousus Amanda Runnels Rick Sanders Eric Satz Rachel Schaffer Paul Schatzkin
Fran Scott Salil Shibad Tim Shipley Chris Sloan Shepley Smith Tim Smith James Soto Ben Stauffer Tim Stowell Matthew Thigpen David Tiller Todd Vandawater Jack Waddey Clay Walker James Ward John Wark David Warren Rob Watkins
Summer2012 | 13
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14 | Summer2012
‘Startup America’ Initiative increases start-ups, successes
Center puts Nashville in spotlight “The Entrepreneur Center is absolutely an important partner in growing Nashville’s reputation as the nation’s health care industry capital.”
– Caroline Young President, Nashville Health Care Council
The incredible success of Nashville’s Entrepreneur Center is garnering attention nationwide. All across the country, states and cities that are working with the Startup America Partnership are turning to Nashville as an example of how to build their own ecosystems. Startup America is an initiative aimed to dramatically increase the prevalence and success of America’s entrepreneurs. The mission is part of an innovation strategy to achieve sustainable growth and promote job creation throughout the United States. Startup Tennessee was the second state to launch as part of the Startup America initiative and there are currently 27 others scheduled to launch or launching. In October of last year, Tennessee trained 15 other states on how to launch their programs for Startup America. Since that time, 16-18 other states have looked to Nashville to tap into the city’s knowledge and expertise. “There are unbelievable startups growing in Nashville and other communities like it across the country,” said Scott Case, CEO of the Startup America Partnership. “The Entrepreneur Center team’s passion and dedication is playing a major role in helping young companies connect to the network they need to thrive.”
“While Nashville has a long tradition of entrepreneurial activity, the city is now gaining the national spotlight as a prototype for supporting entrepreneurs and their start-ups through the Entrepreneur Center,” said Mark Montgomery, President and CEO of FLO {thinkery}. “A formidable mix of city, state, and federal resources are starting to be aligned through the Entrepreneur Center in a way that has never been done. “ Tennessee shines most brightly because of the incredible entrepreneurial ecosystem that the Entrepreneur Center facilitates. That ecosystem, made up of entrepreneurs, investors, mentors and business partners all over the state, is the core of the center’s vast impact. “We have focused from the start on developing our entrepreneurial ecosystem,” said Sam Lingo, COO of the Entrepreneur Center. “We are creating that better than any other state. It’s spurring the community to do this together; and there’s a heck of a community here.” The spirit of the Nashville community is the intangible that will be difficult for others to duplicate. The creative culture that supports new ideas and the people trying to make them work is unique to the city. “Nashville is unlike any city I’ve ever seen,” said Hal Cato, President and CEO of Zeumo, a startup company launching out of the center. “I’ve lived all over the country and I wouldn’t want to be anywhere else to start a business. The community here is invaluable.” “The spirit of Nashville is something that should be treasured,” said Bert Mathews, President of The Mathews Company. “It feels like the entire community has really rallied around the Entrepreneur Center as a tremendous asset. Michael Burcham and all of the folks in leadership there have really done the best job in integrating all of these resources into one community.” The Entrepreneur Center is effectively making what Nashville does best even better. The four key verticals of the center further segment Nashville as a leader in the innovation of health care, digital media and entertainment, technology and social enterprise. Caroline Young, President of the Nashville Health Care Council, credits the Entrepreneur Center as a resource for the health care industry as a whole and broadening the city’s reputation as a leader in the field. “The Entrepreneur Center is absolutely an important partner in growing Nashville’s reputation as the nation’s health care industry capital,” Young said. “The innovation being created here are fostered by Entrepreneur Center offerings and mentoring. This nurturing environment will guide successful growth for health care start-ups. In a short time, it has become a nationally recognized program, and it will continue to develop as a one-of-a-kind resource for entrepreneurs.” Nashville has long been centripetal in attracting creative capital with educational pillars such as Vanderbilt University in its midst. The Entrepreneur Center is giving a “next step” to the bright minds that have found their way to Nashville’s opportunities for higher education. The model of bringing educators, students and the business community together is David Rodriguez, center participates in “Speed Dating” event at Entrepreneur Center.
Summer2012 | 15
also a beacon for other communities to follow. Chris Cole is a recent Vanderbilt graduate and co-founder of the social enterprise, Everly, an incubating company at the Entrepreneur Center. Cole points to the Entrepreneur Center as an important new resource for students. “As a recent college graduate, I sort of have a foot in both worlds,” said Cole. “The Entrepreneur Center is bridging the gap between students and jobs. There are so many students that have ideas and inspirations and they are able to come here and absorb what is going on. This center makes the dream of becoming an entrepreneur tangible.” “We are constantly referring students to go down and work in the center,” said Joe Ivey, clinical professor of management, Lipscomb Graduate School of Business. “It has been a fantastic resource for us and is working out much better than we had ever thought possible. The Entrepreneur Center helps us get experience for our students that we really can’t provide here. It is a great climate for our students. It’s a very good next step and a
transition into the real world.” That link between education and the business world is the key to a community absorbing the talent that is already there. The presence of the Nashville Entrepreneur Center not only attracts talent to the area, but it also retains the bright minds that are already within the community. “I have met people from all over the country who are moving here to start a business,” said Ivey. “From the vets that participate in Lipscomb’s yellow ribbon program to the business graduates, Nashville is a fantastic place to start a business. Our young people really like the quality of life and they don’t want to leave. With resources like the Entrepreneur Center at hand, we are retaining and continually adding to the talent pool here in town.” “The national perception of Nashville is aiding in the retention and absorption of talent,” said David Furse, EC Master Mentor. “The entire perception of Nashville is changing – I’m watching it every day. Nashville is becoming known as one of the greatest startup hubs in the nation!” The Nashville Entrepreneur Center is continuing to develop training
and will soon be unveiling an online database resource for entrepreneurs, business partners, mentors and investors. Mentors can then be engaged in “tele-mentoring” and notes from live mentoring sessions can be shared with other entrepreneurs making their expertise reach even further. “Having the physical location is invaluable, but we will also have a custom-built database that houses all of the entities involved in our ecosystem linking our entire network together,” said John Murdock, EC Director of Programming. “Our partners will always know the status of jobs being created and everyone will have a picture of the whole process at any given time. We are on course to becoming the number one city for developing an entrepreneurial ecosystem in the nation.” “Coming into this role, I viewed the work to be done the same as if I were starting my own business,” said Michael Burcham, President and CEO of the Entrepreneur Center. “I challenge myself each day to do more that seems possible so that we can indeed become the number one city to start a business in America.”
“The spirit of Nashville is something that should be treasured. It feels like the entire community has really rallied around the Entrepreneur Center as a tremendous asset.” – Bert Mathews President of Mathews Company
Initiative proves to be leading the way to a stronger economy Startup Tennessee was cre-
Commissioner of Economic and Community Development
Associates. “The Entrepreneur Center has harnessed this
ated by the Entrepreneur Center
for the State of Tennessee. “Entrepreneurship creates
entrepreneurial spirit and institutionalized it in a manner that
to answer Gov. Bill Haslam’s and
jobs.”
provides real structure and boosts outcome potential for
Commissioner Bill Hagerty’s call
“Nashville has more entrepreneurial activity going on
those start-ups in residence there.”
to action to connect and align
now than we have ever seen here before,” said Linda Re-
entrepreneurial efforts across the
brovick, President and CEO of Consensus Point and EC
development. StartupTN is leading entrepreneurship
State of Tennessee. The initiative
Board Member. “The governor’s initiative at the state level
statewide and building the entire state’s entrepreneurial
is part of the Jobs4TN eco-
is also good. If we get companies started here, we don’t
ecosystem. The overall goal is to make Tennessee the
nomic development plan and is
have to spend our tax dollars to move businesses here.
number one state to start, invest in and grow a business.
headquartered at the Entrepre-
We can start our own businesses.”
Tennessee’s success toward that goal has identified it as a
neur Center in Nashville. With at least three out of five new
The nine physical locations of StartupTN are compli-
The bottom line is that entrepreneurs create economic
trailblazer for Startup America.
jobs coming from companies that are less than 5 years old
mented by one online network at StartupTN.com. The
(companies that are considered “startups”), StartupTN has
network connects entrepreneurs and startup companies
should join Startup Tennessee today in order to gain ac-
the potential to heavily influence the future of job creation
with mentors, advisors, investors, major corporations,
cess to the people, companies and resources that can
in the state.
business partners, service providers and government or-
help them scale their businesses,” said Scott Case, CEO
ganizations. The goal is to accelerate the startup process
of the Startup America Partnership. “Tennessee is killing it.”
Nine economic zones throughout Tennessee are the sites for incubation and acceleration programs. StartupTN provides the organizational support for these sites. The
and build high-growth startup companies. Each of the nine economic zones will benefit from
“Every startup in Nashville and throughout the state
“Coming out of the deepest recession in half a century, our country is looking to entrepreneurs as the ‘thought
goal is to have no entrepreneur in the state more than
strengths in core industries. Focusing on key verticals
leaders’ in jump-starting our economy and the Entrepre-
one hour’s drive away from the help they need to start a
compounds a region’s success in those. The opportuni-
neur Center is a great model for bringing together those
business. This revolutionary strategy fosters the potential
ties that are drawn to the region in those areas of focus
critical ingredients of ideas, business acumen and venture
for urban as well as rural entrepreneurs to be successful.
are therefore increased and made even better through the
capital that are essential to success and essential to our
Tennessee’s is the first regional accelerator program in the
incubation process.
community’s economic growth,” said Phil Ryan, Executive
nation. “StartupTN is putting our economic destiny back into the hands of the citizens of this state,” said Bill Hagerty,
“Nashville has long been known as a center of health care expertise since the founding of HCA over four decades ago,” said Clayton McWhorter, Chairman of Clayton
Director of the Metropolitan development and Housing Agency (MDHA). – Melissa Webb
16 | Summer2012
EntrepreneurSpotlight
The Next Generation
and those who launch them.
Stratasan provides health analytics in an intuitive, cloud-based format allowing instant access to the intelligence you need to make thoughtful, data-driven decisions. Stratasan’s application suite combine reporting and mapping technologies seeded with unparalleled demographic, socioeconomic, behavioral and geographic data from federal, state and local sources.
Founders: Jason Moore, Brian Dailey, Tod Fetherling Founded: 2010
Sagents.com matches pre-qualified Suppliers with “Ready to Purchase” corporate Buyers. Our repository of opportunities actively extends the sales pipeline for independent sales reps, small business sales forces, and suppliers. Our primary objective is to be “The Premier Online Sales Connector” with products, services, and solutions that enable and transform the way businesses gather, manage, distribute, and communicate information.
Founder: LeShane Greenhill Founded: 2011
Zeumo builds efficient and relevant digital bridges between teens and the organizations, opportunities, and people that can help them thrive. Our goal is to combine a teen’s passion for their cellphone and other digital devices, and build a youth-centric social connector that knows what our members want. The result will be a digital reader that slices through the noise in a teen’s world, and offers a bundled set of benefits.
Founder: Hal Cato Founded: 2012
Splother is the first click to purchase, sync and brand licensing site providing access to artists 100% in control of their masters (recordings), and publishing (songs). Music Supervisors, brand managers, advertisers, marketers and everyday users can choose music, design a license on line, pay and go. In a world where users need immediate and cost effective access to their desired content, Splother.com provides a clean and easy solution.
Founders: Dave Durocher, Jason Collins Founded: 2011 Michael Brody-Waite is co-founder and chief executive officer of InQuicker, a Nashville-based health IT company that provides an online waiting room that allows patients to skip the waiting room at the ER, urgent care center, and doctor’s office nationwide. InQuicker’s mission is to end unnecessary health care waiting by changing the existing providerpatient paradigm with patient satisfaction as its first priority. The company has over 140 partner facilities nationwide.
Founder: Michael Brody-Waite Founded: 2009
RentStuff is a community marketplace to rent your stuff to anyone. Everyone has valuable stuff sitting idle in their homes that people around you want to use right now! From sporting goods, power tools, and gadgets to music equipment, household appliances, and vehicles parked in your driveway, our platform allows you to lend that stuff to your neighbors, community, and city easily, safely and securely.
Founder: Adam Albright, Chris Jaeger, Robert Jaeger Founded: 2011
Jumpstart Foundry (JSF) accelerates the growth of startup healthcare IT, information & data and social engagement businesses. Started in 2010 by Vic Gatto of Solidus Company, JSF is a formal, mentor-driven, 14-week business acceleration program that is run in partnership with the Entrepreneur Center over the summer. The program culminates in an Investor Pitch Day in late August. The program is a TechStars Affiliate. The Jumpstart Foundry Seed Fund is supplied by Solidus Company and SolidusTNInvestco to invest in JSF program companies.
InvestorSpotlight
Summer2012 | 17
Bullpen Ventures was started in February of 2011 by Stuart McWhorter and John Ingram to help entrepreneurs grow fresh ideas into thriving businesses. Shortly after launching the partnership, Bullpen Ventures was joined by three new investors Steve Turner, Joe Galante, and Mark Montgomery. The purpose of the investment partnership is to turn novel concepts into bankable business ventures. The fund operates out of the Entrepreneur Center. Seed funding through Bullpen Ventures gives entrepreneurs the ability to develop a working prototype with strong connections to follow-on rounds of angel and venture funding. Bullpen has pledged a portion of the procedes from any successful endeavor to help sustain the Center.
FUNDING THE BUSINESS
New seed funds lead way for angel investment
Nashville has seen a jump in angel investment activity in the past couple of years, spearheaded by the establishment of two new seed funds – Jumpstart Foundry and Bullpen Ventures. Jumpstart is the brainchild of Vic Gatto, a partner with Solidus, a Nashville-based firm that identifies and invests in early-stage companies. JSF is a 14-week business acceleration program that’s hosted over the summer. Gatto announced JSF’s new class May 3, representing the third year of the program. Previous graduates include RentStuff.com, which recently raised $660,000 in capital, and NextGxDx, which moved into new space at the Cool Springs Life Sciences Center in March. Bullpen Ventures is led by a group of well-known business leaders that includes Stuart McWhorter, president of Clayton Associates, John Ingram, serial entrepreneur Mark Montgomery, music industry veteran Joe Galante, and philanthropist Steve Turner. Bullpen has made angel investments in local companies like Populr, led by Nicholas Holland, and is committed to investing in up to 14 companies a year that graduate from the Entrepreneur Center. And then there’s Nashville Capital Network, led by Managing Partner Sid Chambless, which supported 14 transactions worth $8 million in 2011. NCN supports early stage investments in local companies such as Shareable Ink, PharmMD,
NuScriptRx and NeighborMD. Chambless said a key to Nashville’s entrepreneurial growth is helping national companies scout for opportunities in Middle Tennessee. “We’ve got an active angel group, and national firms see us as a place to find opportunities,” Chambless said. “Scouting the deals that our angels are funding is a good way for them to find opportunities.” One of those national firms includes growth capital powerhouse Galen Partners, a Connecticut-based firm that has more than $1.6 billion under management. Galen, which has invested in more than 60 companies since 1990, said that it is looking to invest in young companies earning roughly $5 million to $10 million in annual revenue. Galen made a commitment to Nashville earlier this year when it became the official health care sponsor of the Entrepreneur Center for 2012. “We saw the work being done at the Entrepreneur Center with so many innovative health care firms and see it as a chance to help support the rapid growth of these companies while creating an opportunity for Galen Partners to provide growth equity investments,” said Galen’s Managing Partner David Jahns. As part of the sponsorship, a Galen representative will be in Nashville at least monthly throughout the year, visiting with Michael Burcham, president
and CEO of the Entrepreneur Center, and his staff and spending time with companies that could eventually benefit from growth equity. Burcham said the sponsorship provides Galen with a virtual office space in the community. “They like what they see,” Burcham said. “This is about them getting to know Nashville’s startup and early-stage health care companies.” Two other large out-of-town venture capital firms recently became sponsors of Chambless’ NCN group. Norwest Venture Partners, a $3.7 billion fund with headquarters in San Francisco, and Sandbox Industries, a $350 million fund based in Chicago, are looking to make investments in Nashville-area startups that are crafting solutions for the health care industry. “It only makes sense if one is going to invest in health care services to spend time in Nashville, because Nashville obviously has a highly skilled work force, a deeply entrepreneurial culture and is really the capital of health care services in the United States,” said Ryan Harris, a partner at Norwest Venture Partners. With the Entrepreneur Center moving to its new space and an increasing interest in the startup community on the part of angel investors, it won’t be long before Nashville solidifies the number one spot as a destination location for startup businesses.
Crit
18 | Summer2012
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The process Turning Ideas into Reality with the Idea Frame and 5:M’s
The Entrepreneur Center and Scott Rouse built the Idea Frame to help Entrepreneurs qualify and evaluate a business idea, and focus on the specific drivers of value for their startup company. By focusing on the core aspects of building their business, entrepreneurs can turn their ideas into reality faster. There are seven pieces of the Idea Frame that need to be identified: • The Product (What is it) • Customer (Who buys it) • Distribution (How do they get it) • Customer Intimacy (Why do they buy it) • Critical Resources • The Essential Recipe • Key Partners and Outsourced Services Once an idea’s potential has been evaluated, the Entrepreneur Center works with entrepreneurs on their 5M’s: 5 Areas of the business that an investor needs to understand in order to make an investment decision. M0: The Idea and the Idea Frame – What’s your idea? The EC mentoring process begins with the question: “What’s your idea?” Having clarity around the core vision for the business is essential to successfully building a startup business, and the Idea Frame helps entrepreneurs
quickly evaluate ideas as potential businesses and identify what it is, how it makes money, and how much money it can make. Often, people don’t realize that entrepreneurship is about ADAPTING. As an entrepreneur begins to work on their idea and turn it into a business, it will change, morph and develop from what the entrepreneur “believes” into what their customers need and will buy. By working with EC Mentors and leveraging their experience, an idea can become functional and marketable faster. In any entrepreneurial endeavor, there is no right way; there is only the way that works. By getting involved
with the Center, entrepreneurs can turn ideas into execution. M1: The Model – How does it make money? A “Business Model” is an overcomplicated word used to describe the question “How does it make money?” Is the business based on a transaction where customers pay once and take the product with them? Is it a subscription where customers pay for what they get? Is it Razors and Blades where the business gives away a product to create a market for “complimentary prod-
ucts”? Is it a franchise? Hub and Spoke? These are some examples of business models, and the differences between them can impact the expense structure of a business and its approach to marketing and growth. Thoroughly understanding a startup’s business model creates clarity around the business priorities and both internal and external goals. When creating a new business in an existing market, entrepreneurs often focus on the way that they can build a more cost efficient business model than their competitors by leveraging technology. The business model is “how” it makes money. M2: Management – Who is responsible for executing? Entrepreneurship is a TEAM sport. With few exceptions, great companies are built by teams, not individuals. Who’s on your team? The Entrepreneur Center exists to bring people together in our community who want to build companies and connect entrepreneurs with co-founders with different skillsets and backgrounds. Management builds the business, creates value for investors and is responsible for executing.
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A startup business is going to have several key positions that need to be held within the company to be successful. For example, if the business is a technology company and the founder is a salesman-type personality, the business will likely need a CTO who can code and fill the development role. In most companies the easiest breakdown in responsibilities is “Marketing” and “Operations”. Who is running the business? Who is selling the product? M3: Market – Who buys what you’re selling? Market sums up 4 questions: What is your product? Who are your customers? Why do customers want it? How do they get it? A phrase entrepreneurs often hear at the Center is “Customer Pain.” What problems (pain) do your customers have that they are willing to pay you to
solve? A product that solves a pain creates a market. Entrepreneurs should take care to target their customers very specifically. By focusing on delivering high value to specific customers, they are more likely to get the traction in their market and create a core market that becomes the foundation for future growth. M4: Money – When does it run out? Money is NOT “how much” the business will make. It’s “how long” until the business runs out. Before things like revenue and profit, a startup will incur expenses. It takes time to build a business where more money is coming in than going out. The number one reason startups fail is that they run out of money before the business could secure enough customers to reach
profitability. Entrepreneurs that know how much money they need, how much they have, and what is needed to secure early customers are positioned to build a sustainable business. Money is the lifeblood of business. When it runs out, the entrepreneur can’t pay employees. It can’t buy product. It can’t fulfill customer needs. When that happens the idea dies. Entrepreneurs that take a disciplined approach to managing their money and timelines keep the most equity in their business and position themselves for success and growth.
have been hit and what are the next steps? Momentum creates confidence in an entrepreneur’s ability to execute. At launch, the EC recommends that a business map out the first 100 days of their business and plan specifically for the goals and next steps that need to happen weekly for the first three months of the operation. The ability to show momentum, and turn action into customer traction creates strong investor confidence in a startup business.
M5: Momentum – What’s the proof?
Entrepreneurship
TRACTION! Milestones are proof that a management team is executing successfully. How many products are pre-sold? How many letters-of-intent (LOIs) are signed by strategic partners and core customers? What milestones
The EC and Scott Rouse built the Idea Frame. Learn all about the Idea Frame at theideaframe.com
Entrepreneurship is taking control of life and pursuing the American Dream. The Entrepreneur Center is Nashville’s front door for start up businesses, where entrepreneurs can connect with the people and resources to help them turn their idea into reality.
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