Impact Fund

Overview

LaunchTN leverages our complete portfolio of programs, relationships, and other resources on behalf of Tennessee startups when funding is committed from the Impact Fund, maximizing the potential return on investment in the form of real dollars, jobs, capital investment, and innovation leadership.

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

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

For more information contact impact@launchtn.org.

Seed Investment

The Impact Fund focuses on Tennessee-based seed-stage ventures in a wide variety of industries and verticals. LaunchTN functions in multiple ways, including:

As a round closer for companies that have raised the majority, or all, of the matching funds necessary; or
As an early commitment and vote of confidence for companies that clearly demonstrate growth potential but are lacking angel or seed-stage risk capital

Pre-Seed Investment

The Pre-Seed Investment provides a customized investment solution for otherwise under-resourced early-stage companies. It 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 Investment

The Follow-On Investment 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.

LaunchTN Investments

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.

Impact Fund Details

Seed Investment

Fund investment

$50K to $150K

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 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

** LaunchTN reserves the right, but is not under the obligation, to make 30-day extensions at our discretion

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

Pre-Seed Investment

Fund investment

$25K to $50K

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 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

** LaunchTN reserves the right, but is not under the obligation, to make 30-day extensions at our discretion

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

Follow-On Investment

Fund investment

$150K to $250K

Private sector match ratio

4:1

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 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

** LaunchTN reserves the right, but is not under the obligation, to make 30-day extensions at our discretion

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

Sourcing Deal Flow

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

Contact Us Directly
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

Application Process

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

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 can be referred to resources in the LaunchTN network that may help accelerate progress toward building a more investable business.

Apply Now

If your company fits the criteria outlined for the Impact Fund, the first step is to complete this application.

Apply Now

The Impact Fund has been fully committed as of February 2022. LaunchTN expects to have new capital available to invest through our BuildTN Initiative by the end of 2022. We still encourage you to apply so that we may contact you if we see a fit when new funding becomes available; we may also be able to make connections to other investors.