Thanks to dedicated efforts and a shared mission, one state more than doubled capital investment — from $189 to $428 million — in four years, graduated over 500 companies from supported accelerators, and is home to 3 out of the 4 top-ranked cities in the country for female entrepreneurs. No, it’s not one of the Valleys or Alleys on the coasts — it’s good ol’ Tennessee.
Much of this stems from the work of Launch Tennessee, a public-private partnership that runs education programs, connects capital to companies, and hosts one of the regions’ largest startup conferences. Why a public-private partnership? The structure of the nonprofit allows LaunchTN to enter into transactions that a government agency can’t legally participate in, such as financially supporting private businesses.
And who better to run a entrepreneur support organization than someone who has passed (with flying colors) through the startup obstacle course himself? Charlie Brock founded Foxmark Media, an advertising company, in 1998 and sold it eight years later. He then turned to the investing world, launching a Chattanooga-based investment bank and serving as a founding partner of Chattanooga’s first angel fund.
Not one to leave a stone unturned, Brock also served as a startup growth educator as the CEO of Chattanooga accelerator CO.LAB. Now, as CEO of Launch Tennessee, Brock combines his background in entrepreneurship, capital-raising, investing, commercialization, corporate engagement, and education to direct an organization with many tentacles but one overarching goal: to make Tennessee the #1 most startup friendly state.
Following LaunchTN’s 36|86 Festival for entrepreneurs, Hype picked Brock’s brain to learn more about what a public-private organization like LaunchTN can provide for entrepreneurs, some of the measures he has helped pass to help startups, and why they are focused on not just Tennessee, but the whole region.
How did you get to the role you are in today as the leader of Tennessee’s largest hub for startup and entrepreneurial resources and programs?
I’ve been on my own entrepreneurial journey for nearly 20 years now, being a part of the founder group for several businesses in different industries. The game changer for me was a media startup which I sold in 2006. I stayed on board for one and a half years with the Australian-based acquirer and then committed to trying to play a significant role in revitalizing the Chattanooga startup scene. We had once been known as “the Dynamo of Dixie” but our entrepreneurial dynamism had been pretty faint for a number of years.
The timing was ideal as a number of individuals from different sectors also committed to helping recreate our city’s entrepreneurial boom. It was crazy but fun, working alongside so many great people to help put our community on the startup map. My involvement was most directly in helping raise our first angel fund (Chattanooga Renaissance Fund), mentoring various startups and coming on board as the Executive Director of Colab and Director of the first GigTank accelerator in 2012. From there, I was asked to lead Launch Tennessee, a revamped organization charged with fostering entrepreneurship across the state.
How have you used your role to advocate for policy that supports entrepreneurs?
Our vision is to make Tennessee the most startup friendly state in the country. That vision certainly includes a role for LaunchTN developing, advocating for and ultimately implementing legislation favorable to startups. On that front, we developed an Angel Tax Credit program that was passed by the legislature in 2016 and kicked off January 1, 2017. For the recently-completed 2017 legislative session, we developed an SBIR State Matching program. The Governor and Legislature approved it and we will begin implementation this month.
We are funded in large part by the department of Economic & Community Development (ECD), our state agency charged with economic activity. Importantly, we have now moved from a one-time contract with ECD to being a recurring line item in the ECD budget, which was a major win. While the reporting, compliance and sense of stewardship have not changed, the fact that we have annual funding enables us to think more strategically to implement a longer term vision for entrepreneurship in Tennessee. We are very appreciative of the support of ECD, Governor Haslam and our state legislature, who all believe fervently in the power of entrepreneurship to transform individuals and communities.
How have you utilized public-private partnerships to grow the startup ecosystem in Tennessee?
LaunchTN is a public-private entity and the entrepreneur centers we help support are all 501c3’s who get a mix of public and private funding. The network of entrepreneur centers has been key to the growth of the state’s startup scene, bringing together founders with mentors, investors, talent and existing industry. None of this would be possible without the support we receive through ECD and our partnership with them extends well beyond just a funding source.
We have also been the recipient of funding from several federal agencies, most notably Appalachian Regional Commission (ARC), a key partner that has funded significant entrepreneurial programming across 52 of the 95 counties in Tennessee. Additionally, we have received programmatic funds from the Small Business Administration and Economic Development Agency. We supplement the public funds with support from private companies, both in-state and out-of-state, as well as ticket fees from our marquee events like 36|86.
Launch Tennessee is an excellent example of an effective public-private partnership that has moved the needle for many entrepreneurs and communities across the state.
What do you believe is the #1 thing the southeastern startup scene needs to grow?
While it’s getting better, we all suffer from a dearth of capital in the Southeast. In Tennessee, we have seen substantial growth of startup capital, increasing our annual investment by 128 percent over the past four years. Much of this has been driven by a greater number of successful startups accessing capital from the coastal investors. We love these relationships as we started 36|86 in part as a way to bring California and New York investors to Tennessee.
However, the reality is that three states — California, New York, and Massachusetts — still enjoy between 75-78 percent of the country’s venture investment. There are great companies being formed across the Southeast and we need to make sure they have access to the capital to scale their organizations and transform communities across the region.
How can we encourage investment in southern companies?
Events like 36|86 are meant to help companies from across the region, not just Tennessee. At Launch Tennessee, we take the approach that a “rising tide lifts all boats” and thus it’s important that startups in our neighboring Southeast states achieve success. We started 36|86 to shine a light on some of the best companies across the 12 state footprint and to bring together investors from across the region, as well as the coasts. We need more capital flowing across state lines in syndicated deals between our Southeast based investors. We can then have the coastal firms come in at the B and C round level to write the larger checks.
We also want more existing industry in the Southeast to “get in the game” and support the startups with their capital, their connections and ultimately with their purchase orders. Nothing helps persuade investors off the sidelines than startups who have strong partner and customer relationships with well known larger corporations in the region.
What are you most proud of during your time at Launch TN?
At the top of the program list would be 36|86. However, I think I’m most proud that we have built a brand for Launch Tennessee that embodies our core values. These include collaborating, putting founders first, acting entrepreneurially and being driven to serve. We do this because we truly believe that entrepreneurship is transformational and being an entrepreneur is the best job in the world. I know that’s how we feel within the organization. Hopefully people outside looking in see that, believe it about us, and want to work with us to make it happen for even more people.
What is your vision for Launch TN in the future?
Our vision for Launch Tennessee is to make Tennessee the most startup friendly state in the country over the next 4.5 years. We will achieve this vision by continuing to increase investment in our early stage companies, building more connections with industry, making sure we have a substantial, trained high-tech workforce, and getting more research out of the labs and into the hands of entrepreneurs and investors. It’s also crucial that we continue to pass startup friendly legislation that creates the right environment for entrepreneurs and innovators to do what they do best.
We have made enormous strides on these initiatives over the past five years and have a strong platform in place. However, to fully realize our vision, we need to bring more potential stakeholders off the sidelines. I often say that the way we win big in Tennessee is by collaborating — everyone has a part to play and our job at Launch Tennessee is to activate all of the people who need to be engaged. We can do this — after all, we are the Volunteer State.
What new partnerships or initiatives are you particularly excited about?
I’m thrilled with the early reception to the Angel Tax Credit program that started this year. We have seen several investors increase their investment size due to the credit and it has also helped bring some new investors off the sidelines, which was our hope.
We are getting ready to launch a new Impact Seed Fund this fall. Not only will this fund help plug the gap in the early-stage funding, but it will do so by investing in companies solving real problems in the world in industries like healthcare, agriculture, energy and sustainable living.
We will also be enhancing our programming geared toward our “portfolio” companies. These are companies that have come through programming at Launch Tennessee or our regional entrepreneur centers. We are all doubling down on support for the highest-potential companies. If we can help them achieve success and inculcate in them a commitment to “pay it forward” after they do, the multiplier effect will be enormous and communities across Tennessee will prosper.
