Tennessee’s Business Accelerators Put Entrepreneurs in the Fast Lane
|Wednesday, May 21, 2014 at 02:24 PM
MEMPHIS, Tenn.—There’s a rich history of entrepreneurs in Tennessee. From FedEx founder Fred Smith to hospital management company HCA, entrepreneurs have thrived in the Volunteer State.
Three Tennessee doctors started HCA in the 1960s to expand their own hospital; the corporation now manages nearly 300 medical facilities.
“So we get it,” said Ted Townsend, assistant commissioner of strategy for the Tennessee Department of Economic and Community Development. “We focus on creating a culture and an environment that is pro business and allows businesses to succeed.”
Townsend was one of the featured speakers during the May 13 CSG Entrepreneurship Day. The daylong event was part of CSG’s State Pathways to Prosperity Initiative, spearheaded by CSG’s 2014 leaders, Tennessee Senate Majority Leader Mark Norris and West Virginia Gov. Earl Ray Tomblin. Memphis was the last of a series of four meetings held across the country that brought together state leaders and experts to discuss what is and isn’t working in their states to help develop more entrepreneurs.
Townsend said when Gov. Bill Haslam took office in 2011, the Department of Economic and Community Development was the first state department to undergo a top-to-bottom review.
“Our department came first because guess what, we’re the front doorstep of commerce,” Townsend said. “We did that exercise in 45 days and what we realized was that we needed to decentralize our footprint. Get out of Nashville and work within a nine region area geographically dispersed across the state.”
One feature of that shift to a more regional economic development plan was to create business accelerators in each of those nine areas.
“Out of those accelerators, you have the very first and only medical device accelerator based right here in Memphis,” Townsend said. “You also have the first-ever automotive accelerator. It’s called autoXLR8R, based out of Tullahoma in middle Tennessee. We also have the first-ever ag tech accelerator called NextFarm, out of northwest Tennessee.”
Those accelerators are vital to keeping entrepreneurship vital in the state, said Charlie Brock, CEO and president of Launch Tennessee, a public-private partnership dedicated to supporting entrepreneurship. All of the accelerators use cohorts, which are groups of entrepreneurs, who go through a short program—typically 13 weeks—that helps them with their business idea.
“The idea is really to accelerate that business,” Brock said. “Or maybe somewhere in the process (they) figure out that they really don’t have a scalable business. It’s better to walk away from it then, fail fast, than to spend additional time and resources and money on that business. A lot of the cohort process is really helping those entrepreneurs identify what their business model is, talk to early customers, … get introduced to mentors who can help them.”
Brock said in 2013, Tennessee accelerators ran 13 cohorts through the process, with leaders of 125 companies graduating from the program. Those companies raised $30 million in private capital to fund their fledgling businesses.
“Does that mean they’re all going to be successful, they’re going to be that high-growth company that we’re looking for? No,” he said. “But it does say they’ve got capital, they’ve had investors who presumably are looking at their business plans … and saying, ‘I’m going to take a risk with you.’”
Andre Fowlkes is president of Start Co., one of the business accelerators located in Memphis. While most accelerators typically run one or two cohorts at a time, Start Co. is running four to capture more local talent, including women and African-American entrepreneurs.
“What we want to do is really create an environment that fosters entrepreneurial growth, so we decided to run four of them at the same time,” Fowlkes said. “There are four programs, one in the area of information technology, women-led information technology, logistics and information technology and social enterprises. It’s basically taking on who’s been walking through our doors and what they’ve told us they want to see in the community.”
Richard Billings is CEO and founder of Screwpulp, an e-book marketplace. His business got its first step toward reality with a Start Co. 48-hour launch event. Billings then went on to participate in one of the 90-day accelerator programs called Seed Hatchery. Screwpulp will be one of the first startups to participate at the BookExpo in New York City in late May.
“I came up with the idea for Screwpulp about two-and-a-half years before the 48-hour launch,” Billings said. “I holed up at the launch and within 48 hours, I had a business plan. … I started going to every Start Co. event that I could. Then we applied for the Seed Hatchery. At that point, I didn’t really have expectations of what was going to happen, but they gave me expectations. At the end of 90 days, you know how to talk to investors, you have a product.
“Anything we needed, they (Start Co.) were there. If we needed introductions to someone, they were there. That took us from being just an idea, within one year, we made all of this progress and we have a product out there that’s usable.”
Townsend said state leaders are focused on providing all the tools entrepreneurs need to be successful.
“We talk about a continuum of care,” Townsend said. “That’s what we’re trying to build here. That’s how we separate ourselves. But it doesn’t happen without entrepreneurs working 70 hours a week.”
“Without pay,” Billings added with a chuckle.
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