Early Stage Funding Growing in Tennessee, Middle Market Access More Difficult: An Interview with Commissioner Hagerty

Commissioner Bill Hagerty leads the Tennessee Department of Economic and Community Development, Nashville, TN.

Key Takeaways:

  • It is more difficult than it should be for middle market businesses to access growth capital, but early stage capital is becoming more available, especially in Tennessee. In addition to providing funding, early stage investors help entrepreneurs create a logical and disciplined capital structure that makes it easier to attract follow-on funding.
  • Obstacles to greater access to capital in Tennessee include the need for stronger links between research institutions and entrepreneurs, loss of major banks and a growing appetite for more direct flights from capital centers.
  • At the same time, Tennessee and the South benefit from the current low interest rate environment nationwide, which drives the current frothiness of corporate debt markets. This easy money environment has driven valuations higher as investors seek equity returns. With valuation multiples more reasonably valued in the South, disciplined investors are becoming increasingly interested in the area
  • Capital deployed in the South is made more efficient via a more business-friendly tax and regulatory environment that keeps more capital in the business working toward future growth.
  • Tennessee is benefiting from the states’ efforts to increase entrepreneurial activity and attract capital, including helping out-of-state private equity groups partner with local investors, which is key.

Continue reading Early Stage Funding Growing in Tennessee, Middle Market Access More Difficult: An Interview with Commissioner Hagerty

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The “Halo Effect:” An Interview with Bruce Doeg

Mr. Doeg chairs Baker Donelson’s Business Department in Nashville, Tenn., which consists of more than 200 attorneys in the Securities, Corporate, Mergers & Acquisitions, International, Real Estate, Intellectual Property and Tax Groups in 21 offices across the South.

Key Takeaways:

  • Capital is available for companies in the South with strong assets and steady cash flows – especially startups and early stage businesses.
  • Increased capital flowing into startups and early stage companies creates a halo effect that is leading to more capital for middle market companies, as well.
  • Most money is coming from money centers outside the South, as well as across the globe. Foreign investors, in particular, are looking beyond the coasts for better opportunities in other parts of the U.S., especially the South.
  • Southern cities doing especially well at attracting capital include Atlanta, Nashville, Memphis and New Orleans.
  • There are a lot of people with money on the sidelines who would like to get involved in equity investments, but they don’t have the experience, time or enough capital to be the lead investor. Need to provide a way for them to get in deals.

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Put Me In, Coach! Capital Is Sitting on the Sidelines: An Interview with Donny Harrison

Mr. Harrison is a partner in the Business Development & Capital Markets group with Ridgemont Equity Partners. Based in Charlotte, NC, Ridgemont is the largest private equity firm headquartered in the Southeast. 

Key Takeaways:

  • Capital is available for companies with a solid business plan and a good opportunity for growth, especially for larger companies with EBITDA over $10 million.
  • Debt financing is especially available and from sources in the South and other regions of the U.S. Equity capital is available in the South, but higher levels are resident in money centers outside the region.
  • There is capital sitting on the sidelines because there is more money available than quality businesses to invest in, and investors are focused on not overpaying for companies.
  • State governments are assisting capital formation by attracting headquarters of major companies, and those companies can help by being great places to work. The talent and capital typically follow.

Continue reading Put Me In, Coach! Capital Is Sitting on the Sidelines: An Interview with Donny Harrison

SC Capital Formation Picks up Speed: An Interview with Matt Dunbar

Mr. Dunbar is Managing Director of Upstate Carolina Angel Network in Greenville, SC; Co-Founder and General Partner of the Palmetto Angel Fund; and a board member of the Angel Capital Association.

Key Takeaways

  • Capital formation in South Carolina is catching up to an already accelerating entrepreneurial ecosystem.
  • There are millions of dollars on the sidelines; we need to educate accredited investors about the opportunities to invest.
  • Businesses need to be strategic about the exit process and plan for it from the beginning, as exits are the key to fueling the ecosystem through recycling of capital and know how.

Continue reading SC Capital Formation Picks up Speed: An Interview with Matt Dunbar