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Innovation Capital Continuum

Overview

The Launch Tennessee Innovation Capital Continuum (ICC) provides in-demand capital solutions for scalable early-stage companies. LaunchTN leverages our complete portfolio of programs, relationships, and other resources on behalf of Tennessee startups when funding is committed from this program, maximizing the potential return on investment in the form of real dollars, jobs, capital investment, and innovation leadership. 

By creating a continuum of capital resources for Tennessee startups, the state can promote financial opportunity and inclusion for all citizens.  

The Innovation Capital Continuum includes three equity initiatives: the Impact Fund, the Blended Capital Fund, and the Follow-on Fund. The LaunchTN Capital Program Team helps ICC applicants find the appropriate resources. Funding from each ICC initiative requires a match of private dollars, a thorough diligence process by LaunchTN, and approval from the ICC Investment Committee.

Impact Fund

The Impact Fund focuses on Tennessee-based seed-stage ventures in the areas of agriculture, healthcare, sustainability, education, clean energy, financial inclusion, and more. LaunchTN functions in one of two ways: 1. As a round closer for companies that have raised the majority, or all, of the matching funds necessary, or 2. As a lead capital commitment for companies that clearly demonstrate growth potential but are lacking initial angel or seed-stage risk capital.

Blended Capital Fund

The Blended Capital Fund (BCF) provides a customized investment solution for otherwise under-resourced early-stage companies. The BCF responds to several conditions: 

  • Shortage in the capital markets with respect to smaller-dollar products for new companies  
  • Lack of access for many entrepreneurs to the traditional “friends & family” funding that can bridge a young company to traditional capital sources  
  • Desire for building a diverse founder network (gender, race, ethnicity, geography, business model)

Follow-on Fund

The Follow-on Fund (FoF) provides capital to companies in which LaunchTN already holds an equity position. Prudent follow-on investments in our portfolio companies are essential to “signal” other investors within the ecosystem that a company continues to have positive growth prospects. Furthermore, these investments prevent significant dilution, which allows us to maximize the ROI of the LaunchTN portfolio.

ICC Portfolio

We invest in innovative, early-stage Tennessee startups, pairing our capital with connections, programming, and resources to help each team go further. With a focus on Tennessee, we’re proud to support companies with big ideas and global potential. Check them out here.

ICC Equity Initiative Details

Fund investment $50K to $150K 
Target total round size $150K to $1M
Private sector match ratio 4:1
3:1
** for companies with principal businesses in Tier 3 and 4 counties, and Opportunity Zones, female-owned companies, minority-owned companies, veteran-owned companies, and companies owned by those with disabilities (per state definition)
2:1

** for companies that fit two or more of the following criteria (only one criteria can be geographic): principal businesses in Tier 3 and 4 counties, and Opportunity Zones, female-owned companies, minority-owned companies, veteran-owned companies, and companies owned by those with disabilities (per state definition)

Private sector match requirements Private investment must be made no more than 90 days before or after the time of the Fund’s investment

-and-

Private investment must be made on the same terms as the Fund investment

Investment structure SAFE notes, convertible debt, revenue-share, or equity
Investment timing Companies must close on Fund investment within 180 days of Investment Committee decision

** At the discretion of the LaunchTN CEO, LaunchTN reserves the right, but is not under the obligation, to make up to three (3) 30-day extensions

Other
  • Companies must be based in Tennessee at the time of investment with intention to remain so for 24 months
  • LaunchTN will not take board seats or set deal terms
  • LaunchTN will provide ongoing support through access to a variety of networks and resources
  • Companies will report annually to LaunchTN on jobs, revenue, and other economic development-related data 
Fund investment $25K to $50K 
Target total round size Not to exceed $100K
Private sector match ratio 1:1 minimum
Private sector match requirements Founder’s capital cannot exceed 50% of private sector match

-and-

Private investment must be made no more than 90 days before or after the time of the Fund’s investment

-and-

Private investment must be made on the same terms as the Fund investment

Investment structure Convertible notes or revenue-share instruments
Investment timing Companies must close on Fund investment within 90 days of Investment Committee decision

** At the discretion of the LaunchTN CEO, LaunchTN reserves the right, but is not under the obligation, to make up to three (3) 30-day extensions

Other
  • Companies must be based in Tennessee at the time of investment with intention to remain so for 24 months
  • LaunchTN will not take board seats or set deal terms
  • LaunchTN will provide ongoing support through access to a variety of networks and resources
  • Companies will report annually to LaunchTN on jobs, revenue and other economic development-related data 
Fund investment $150K to $250K 
Target total round size $1M+
Private sector match ratio 4:1
3:1
** for companies with principal businesses in Tier 3 and 4 counties, and Opportunity Zones, female-owned companies, minority-owned companies, veteran-owned companies, and companies owned by those with disabilities (per state definition)
2:1

** for companies with that fit two or more of the following criteria (only one criteria can be geographic): principal businesses in Tier 3 and 4 counties, and Opportunity Zones, female-owned companies, minority-owned companies, veteran-owned companies, and companies owned by those with disabilities (per state definition)

Private sector match requirements Private investment must be made no more than 90 days before or after the time of the Fund’s investment

-and-

Private investment must be made on the same terms as the Fund investment

Investment structure SAFE notes, convertible debt, or equity
Investment timing Companies must close on Fund investment within 180 days of Investment Committee decision

** At the discretion of the LaunchTN CEO, LaunchTN reserves the right, but is not under the obligation, to make up to three (3) 30-day extensions

Other
  • Companies must be based in Tennessee at the time of investment with intention to remain so for 24 months
  • LaunchTN will not take board seats or set deal terms
  • LaunchTN will provide ongoing support through access to a variety of networks and resources
  • Companies will report annually to LaunchTN on jobs, revenue. and other economic development-related data 

A non-comprehensive list from which applications and referrals are sourced:

  • https://launchtn.org/entrepreneur-programs/capital-programs/
  • LaunchTN’s six regional Entrepreneur Centers (ECs) and other Network Partners
  • Tennessee colleges and universities
  • Venture capital firms and angel investors
  • Service providers (lawyers, accountants, etc.)
  • Tennessee’s SBIR/STTR Phase II Award recipients 
  • Social media postings, specifically about the Innovation Capital Program and LaunchTN
  • ECD staff, LaunchTN Board of Directors, ICC Investment Committee members, and other LaunchTN colleagues
Online Application Formstack application captures:

  • Startup name + key company and team information
  • Company overview + value proposition
  • Revenue + expense + funding history 
  • Amount of investment sought + from which ICC initiative
  • Executive summary + pitch deck + CVs, as available

Application submissions trigger an alert to Capital Program Team + Application data autofills into Salesforce

Initial Phone Screen Eligible applicants have the opportunity to share additional details:

  • Specific products or services 
  • Market pain points + market size 
  • Current traction 
  • Plans for use of funds

Capital Program team confirms certain application details.

Ineligible applicants will be referred to potential alternative resources or directed to first secure a lead investor in order to substantiate their investment-readiness. 

Due Diligence Applicants deemed sufficiently competitive progress to the due diligence stage, where they will submit a due diligence questionnaire via Formstack capturing additional information: 

  • Team
  • Market opportunity
  • Competitors 
  • Customers 
  • Business model 

Due Diligence Form submissions trigger an alert to Capital Program Team + data autofills into Salesforce

In-person/Video Meeting(s)  Applicants that continue to show potential as due diligence progresses meet for in-depth conversation about the founding team and their growth plans 

Capital Program Team assembles due diligence files for CEO and Chief Program Officer review

ICC Investment Committee Meeting A committee comprising five individuals deliberates and votes on proposed investments

  • Four experienced early-stage investment and entrepreneurship support organization professionals representing diversity in geography and demographics, plus LaunchTN’s CEO
  • Three yeses indicates a passing vote

Companies eliminated from consideration during the process will be referred to programmatic resources in the LaunchTN network that may help accelerate their progress and make them a more fundable opportunity.

If your company is in the fundraising process and fits the criteria outlined for one of the ICC equity initiatives above, the first step is to complete this application.

Apply Now
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