Where is Tennessee's Female Founder Ecosystem?

 

Mapping the female startup founders and investors from across the state

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Contributors: Grace Huefner, Kathy Quigley & Monique Villa

 
 

Where is the Money for Female Founders?

The three of us have many things in common, one being our shared commitment to building and supporting the entrepeneurial community. We are also newcomers to Nashville, Tennessee, having moved here in 2017 without knowing one another previously. It is in Nashville where we first connected and discovered our common vision for community building and supporting the next generation of women pursuing entrepreneurship and/or venture capital as careers. However, we came to find in our interactions with entrepreneurs and investors another common thread -- we are often the only women present in meetings.

Inspired by recent studies (see: AllRaise) documenting female founders and investors from across the U.S., we decided to take a closer look at the State of Tennessee’s startup ecosystem. Our journey to answer this question led us to collect the publicly available information from various sources in the Tennessee startup community and to interview a broad selection of stakeholders who currently invest in and actively support female founded companies. Historically, the data to evaluate Tennessee's female founder ecosystem has been non-existent, so we decided to create it ourselves and make it available to everyone.

What we have found is:

⟶ For the past five years there have been less than twenty companies that were solely founded by women and funded in the state of Tennessee.

⟶ Currently, the State of Tennessee has 18 active female venture capitalists.

⟶ Only 6 venture firms, of a total 44 venture firms across the State of Tennessee, have at least one female investment partner.

⟶ There is a need for a central resource for female founders to identify potential investors.

We have concluded that there has been little to no communication across female founders and investors on the variety of funding resources currently available in the state.

 
 

We Can Do Better...

In mapping this ecosystem, our intention is to spark the conversation on how we can improve the structure of deal flow, investments, and interest in female founded startups. Additionally, we hope to provide a resource for female founders to connect with funding that is not currently available or apparent. In the coming months, we will release a series of maps to visually display the current state of investing in female founded startups in Tennessee. Due to their easily shareable nature and objective view of the investing landscape, the maps are the best tool to help us better understand the ecosystem. We expect that these maps will change the dialogue around companies founded and led by women.

It is our hope that in the next five years over 50 female-founded startups will have received venture capital in Tennessee. This would represent a 2.5x improvement on historical activity by 2022.

 
 

Let's Look At The Data: State of Tennessee vs The United States (2013-2017)

Female VCs In Tennessee

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How Many Are Partners?

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Number of VC Firms

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Female-Founded Startups (With at Least 1 Female Founder)

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Definitions:

Female VC - Analysts, Associates, Partners, Managing Directors, Investor Relations, Chief of Staff.
Partner - This includes partners, GPs and MDs with check-writing abilities.
VC Firm – Early-stage venture funding sources including firms, corporate venture arms, family offices, accelerators with available funds.
Startup - A company in the first stages of its operations, targeting high-growth by offering a scalable product or service.

Sources: AllRaise’s “Where Are The Numbers?”, Crunchbase, and Launch Tennessee

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Source: Pitchbook Data, Launch Tennessee

While Tennessee’s overall number of venture-backed startups with at least one female founder has increased year-over-year, the percentage at the end of 2017 (~15%) still fell behind the United States (~20% according to Pitchbook). However, starting in 2015, Tennessee’s growth began to outpace national growth.

The number of female decision makers (partner-level) in venture capital funds is currently 12 (of 94 total investment partners from across the state). One firm, The JumpFund, accounts for over half of this number, with 6 total female partners based in Tennessee (1 additional partner is based in Atlanta, GA). Launched in 2013, The JumpFund is a prime example of AllRaise’s findings that “new fund formation accounts for the fastest growth of women in VC.”

 
 

Female-Founded Startup Funding Activity (2013-April 2018)

VCs and programs investing in equity rounds ranked by # of investments made into companies located in the State of Tennessee with >1 female founder:

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As of this past April, Start Co. holds the title of being the most active investor in female founders (17 checks written in this period). Innova came in second place, writing checks into startups including SweetBio (raised $620,000 in 2017), MedHaul (raised $75,000 in 2017) and Dev/Con Detect (raised $1.29M in 2017). Since launching in 2013, The JumpFund has publicly announced investments in 22 total companies led by >1 female founder, with 5 of these in the state of Tennessee: Utilize Health, SweetBio, Stoney Creek Colors, Dev/Con Detect, & MomSource Network.

In speaking with female founders, a common sentiment when preparing to raise venture funding for a given startup is that resources are hard to locate. Female investors, such as Eller Mallchok, Managing Director of Jumpstart Foundry, have also added to this sentiment by stating that deal sourcing in the state is difficult due to the limited knowledge of quality deals outside of immediate investor networks. Additionally, female founded start-ups and diversity are not common drivers for VC in the state. But, participation in an accelerator program generally makes access to venture funding resources easier. Katie Milligan, Chief of Staff at Start Co.*, shared that they take additional steps in making capital available to their founders by running Start Co. Angels (also known as Wolf River Angels), an angel fund and network of Memphis-based angel investors.

*Since 2015, Start Co. is responsible for accelerating over 60 companies in the Memphis ecosystem, 34% of which have at least one female founder.

 
 

What's Next?

The road ahead to achieve our goal of over 50 female-founded startups receiving venture funding by 2022 will be a long one, though we are more optimistic than ever about the State of Tennessee’s propensity to achieve this goal. Thanks to the growing efforts of local stakeholders, it is apparent that Tennessee has a unique opportunity to set the standard for how individual states can grow available resources for female-led startups while also growing emerging startup hubs.

In speaking with Courtney Watson, a Partner at Chattanooga Renaissance Fund, this promising future for female-led startups is especially apparent in emerging startup ecosystems like Chattanooga. In addition to CO.LAB, The JumpFund, and INCubator, there are numerous organizations (Urban League, Causeway, Venture Forward, as well as CWLI and the Women’s Fund of Greater Chattanooga) supporting women in all aspects of their careers. These organizations, paired with increasing numbers of female leadership across the city, make for an intersectional and supportive platform for female-led startups to emerge.

 
 

We believe stakeholders across the State of Tennessee can take the following steps to grow the local female founder ecosystem:

⟶ Continue to increase the visibility of female-founded and led startups through speaking opportunities across community events, networks, and conferences
⟶ Increase the number of venture firms with at least one female partner, either through the formation of new funds or the recruitment of female investment decision makers at existing funds

Are you currently a female founder (or have an idea for a startup you would like to launch in the future) and in the State of Tennessee? We would love to hear from you! Please say hello and we will look forward to connecting with you soon.

 
Special thanks to Danielle O’Rourke at ROND Capital for her role as an advisor to this project. We would also like to thank Sasha Pines at Aspire To Her for contributing to our research, and Rebecca Arp for her wonderful graphic design skills.