The state’s Department of Economic and Community Development is deferring to big time investors to decide who will get $30 million from the U.S. Treasury. The plan is up for public discussion this week.
The so-called INCITE fund comes from a federal grant meant to spur small business lending. But instead of companies going directly to the state for a loan, Tennessee has elected to go another way. Venture capital firms or big time private investors can apply for as much as $3 million and use it along with their investment into Tennessee startups.
Ryan Gooch is innovation director of the state’s Department of Economic and Community Development.
Ryan Gooch, the state’s innovation director, says to qualify, participants must have $15 million already invested in other companies.
“We think it’s important to have professional investors who have a track record of making the types of investments into potential high growth companies.”
Gooch says partnering with experienced financiers should also help the state make smart investments and could actually stretch the money. If the state gets repaid, Gooch says the fund can invest in more companies.
The plan is designed in part to attract investment from places like New York City or Silicon Valley.
“If that capital is coming in from somewhere outside the state into a Tennessee company, we think that’s a win.”
Gooch says either way, Tennessee start-ups will be getting capital they need to expand. The companies receiving the investment must be headquartered here, with most of their employees also located in the state.
A draft of the INCITE investment fund guidelines is here. They include restrictions on what kinds of startups are ineligible, such as restaurants or real estate companies. Comments must be submitted to [email protected] by Friday.
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