Courtesy of the Nashville Health Care Council
According to a new report
published by Nashville Capital Network
(NCN) and the Nashville Health Care Council,
Nashville is an active market for venture capital activity with a growing supply of funded companies that contribute to economic growth.
Titled “Nashville Venture Capital Report: 2001-2011,” the comprehensive report investigates venture capital investments in Nashville-based companies over the last decade, with a special focus on venture capital investment in Nashville health care companies. The report, researched by NCN and authored by NCN associate Chris McGanity, is the first study of its kind on local venture capital investment.
A vibrant economy like we have in Nashville requires strong capital markets to support the growth of fast-moving companies. Venture capital provides the fuel for new business concepts to take off, grow and become big companies. This report confirms that we have a market that is healthy, active and growing.
Key findings in the study include:
- Since 2001, more than $1.4 billion in venture capital has been invested in 215 different Nashville-based companies. Over the past decade, health care was the most attractive industry for venture capital and new business growth, due to an established market and strong culture of entrepreneurship. More than $950 million, about 65 percent of all venture capital dollars, were invested in health care companies.
- Exciting new companies are being founded faster now than at any time in the past decade. In 2011 alone, 37 companies received their first venture capital investment.
- Buoyed by strong interest in the health care industry, venture capital investment trends in Nashville fared better than those of the overall national industry in aggregate since the economic downturn of 2008.
- Venture capital is fueling the growth of new industries in the community, such as health care information technology, media and Internet.
- Collaborative efforts by Nashville’s public and private sectors to spur entrepreneurship and nurture an ecosystem to support it appear to be working. The increased number of funded startups can be attributed, in some measure, to the state-established TNInvestco program and local initiatives such as Nashville Capital Network, Nashville Entrepreneur Center, Jumpstart Foundry and others that are enhancing the business climate.
- The report also highlights a widening gap in Nashville’s venture capital market between the capital available to the earliest companies and the capital available to later-stage ventures. This gap could become a problem as the number of promising startups continues to grow. However, this challenge also presents an interesting opportunity for venture capital firms who will have numerous attractive high-growth companies to consider for investment.
The findings underscore the strong role our community plays in creating new innovations and improving patient care. Our ongoing support for entrepreneurship and commitment to nurturing young ventures is critical as we continue to develop Nashville’s leading health care cluster.
The report indicates that Nashville has seen increases in organized angel and early-stage venture investment. But as more companies get first-time financing, they will need capital partners to support their continued growth. As a community, we need to keep developing a healthy continuum of capital so that companies of all stages are able to connect with the resources they need to be successful. NCN and others will continue to address the capital gap that could impact our growing entrepreneurial companies.