A new report released last month by Nashville Capital Network (NCN) and the Nashville Health Care Council highlighted robust venture capital activity with more than $1.6 billion invested in local companies over the past decade.
"Nashville Venture Capital Report: 2005-2015" found more than 300 different Nashville-based companies received venture capital investment during the 10-year timeframe with healthcare leading the way. More than $940 million of the $1.6 billion, almost 60 percent of the total, was invested in Nashville healthcare companies.
"This data highlights the evolving venture capital environment in Nashville and illustrates the important role that VC and healthcare play in making Nashville an elite city for entrepreneurship," said Sid Chambless, executive director and managing partner of NCN
Chambless continued, "Over the past several years, regional and national venture capital firms have shown an increased willingness to invest in the growth rounds of Nashville companies. Numerous firms that previously had not invested in Nashville appeared in the most recent years of the data. We believe that interest in Nashville-based companies will continue in the coming years."
Key findings included:
- Annual VC investment in Nashville has grown to 450 percent of 2009 levels. Nashville's growth far exceeds the national average where VC investments have grown to 140 percent of the 2009 level.
- While the physical number of investments dipped some in 2015, the aggregate dollar amount held relatively steady, exceeding $200 million.
- Heavy activity in seed-stage funding from 2011-2013 led to more early-stage and growth capital investments in 2014 and 2015. Chambless noted, "These trends show an exciting opportunity for Nashville investors. Early success often increases a company's capital requirements beyond the scope of individual angel investors. Therefore, local venture resources focusing on the early-stage rounds are necessary to maintain a healthy capital continuum in Nashville."
- VC investment in Nashville HIT companies grew more than 30-fold over a five-year span from 2009 through 2014. Locally, venture investment in HIT companies surpassed investment in healthcare services companies in 2012 and now represents the largest share of VC investment.
"We are particularly interested to see the tremendous investment growth in the healthcare IT space - $62.5 million in 2015 alone, up from $2 million in 2009," said Nashville Health Care Council President Hayley Hovious. "This tells us that investors see great potential for solutions in HIT."
Chambless noted, "Many traditional healthcare services operators are finding ways to deliver care more efficiently, effectively, and with better outcomes by leveraging technology. New business models are being developed, and this is resulting in increased investment in Health IT locally."
The VC report comes amid numerous national accolades for the city and its business climate. Forbes has routinely sung Music City's praises, including an article on Aug. 24 lauding Nashville as one of America's 'hottest spots' for tech jobs. In July, CBRE Group, Inc.'s annual report, "Scoring Tech Talent," ranked Nashville second in the nation for growth of highly skilled tech workers. And in June, Nashville was named a top city for startup growth in the 2016 Kauffman Report. This year's ranking at number five was a four spot leap from 2015, when Kauffman ranked Nashville ninth in the nation.
The continuing buzz around Nashville's entrepreneurial climate led by the healthcare industry bodes well for additional investment. "Nashville is well positioned to capitalize on its deep healthcare expertise to innovate and create the future of healthcare," Hovious concluded.
To take a deeper dive into the "Nashville Venture Capital Report 2005-2015," access the full report online through NCN's website at nashvillecapital.com.