The US state of Tennessee has set up nine regional business accelerators on a public-private partnership basis, which draw on the state’s resources to help new companies launch and grow.
According to a recent report from Launch Tennessee (LaunchTN), a public-private partnership whose aim is to coordinate and support all the south-eastern state’s entrepreneurship-related activities, Tennessee seems to have become the new Eldorado for startups. As the report states, “the number of startup companies based on technologies from research institutions in the state has tripled over the past two years.” Four high-growth sectors are given a special mention: software and consumer Internet; digital media and entertainment – Tennessee has a rich musical heritage, with companies such as Universal and Sony Music based there; healthcare services, a field in which the state boasts 26,000 companies, employing 400,000 people and generating $70 billion in revenue annually; and medical devices and life sciences. To stimulate further growth, Tennessee is now betting on business accelerator programmes, which support a large number of entrepreneurial projects every year.
Mentoring programmes accelerate the creation process
Nine regional business accelerators – each with a different industry focus – have been set up across Tennessee in recent years with a view to helping would-be businessmen and women to launch and grow their companies. These intensive programmes, in which a total of over 500 mentors participate state-wide, generally last between three and six months, enabling entrepreneurs to refine their business models and develop their ideas. Most of the programmes conclude with a ‘Demo Day’ where the new business creators have the opportunity to pitch their projects to investors. Each accelerator is eligible to receive $250,000 in state funding per year for up to three years, based on performance. In 2012 the nine accelerators screened over 700 company ideas and graduated over 125 startup companies from their mentoring programmes, leading to the creation of 185 full-time equivalent jobs that year, says the LaunchTN report.
Invest and connect
However, not all sectors are growing at the same speed, despite investment from the state. Around $3 billion is invested annually in R&D but the state’s efforts over time have not produced the number of new companies expected. For example, in 2010 only eight new companies were launched on the basis of technology developed by the various research institutes in Tennessee. “Recognising the challenge, both the State of Tennessee and individual research institutions have made substantial investments to support the commercialisation of new technologies,” underlines the report, adding that these efforts had succeeded in increasing the number of startups making use of R&D-driven technologies to 24 by 2012. LaunchTN also notes that, in addition to investment, the key to making an entrepreneurial ecosystem thrive is ‘connectivity’ between entrepreneurs, innovators and investors. The report points out that Tennessee is today the number one US state for organising entrepreneurship conferences, motivational speaker sessions, product commercialisation fairs and pitching-to-investors events.