CDAC Spotlight
Entrepreneurship in Northwest Tennessee: Successes and Challenges

February 23, 2015
By  John A Bucy

Several metropolitan areas in Tennessee—including Nashville, Chattanooga and Memphis—are rapidly becoming premier locations for startup companies to launch and grow. Due to the continued success of business accelerators in areas like these, entrepreneurs across the state are connected with the business resources and skills they need more quickly than ever before.

Recognizing the need for a statewide increase in entrepreneurial endeavors and innovations, the state of Tennessee announced The INCITE Initiative in 2011. The initiative led to creation of the Launch Tennessee (LaunchTN) network of regional accelerators; many of those are responsible for the growing population of entrepreneurs and startups in Tennessee today.

While the metropolitan LaunchTN accelerators have been adept at grabbing attention and headlines, several rural regions are making strides as well. One accelerator in particular—the Northwest Tennessee Entrepreneur Center (NTEC) in Martin, Tenn.—is positioned to take advantage of operating in a rural community while also weathering the challenges of such an endeavor.

In 2012, the Northwest Tennessee Development District (NWTDD) was awarded one of the original nine LaunchTN grants to open a regional accelerator in Martin. The NWTDD recruited a board of directors consisting of community leaders from the surrounding counties and drafted the original bylaws to govern NTEC operations.

From the outset, the mission of NTEC was to provide entrepreneurs in the surrounding agricultural and rural communities with what they need to be successful—access to seed capital, credible and engaged mentors, crucial and beneficial information, and an expanded knowledge network.

Serving as the front door for entrepreneurship for the surrounding counties, the NTEC board pinpointed small lifestyle businesses as the driving force in local economies. The center's first cohort program was held in early 2013, geared toward lifestyle businesses that often characterize the types of rural communities found in Northwest Tennessee.

Many entrepreneurs from the original NTEC cohort have enjoyed success with their young businesses, including Dr. Debbie Reynolds' Veterinary Home Healthcare, which provides convenient veterinary services to pets in the comfort of their own homes. Another successful enterprise is Tight-N-Tone Fitness, a gym that offers fitness programs and a supportive atmosphere for members.

More recently, NTEC adopted the CO.STARTERS curriculum that was originally developed at the CO.LAB Accelerator in Chattanooga, Tenn. With this program, small-business owners and entrepreneurs learn lean business modeling methods in a simple and intuitive way. As a first step, CO.STARTERS participants are encouraged to build and test small models of their businesses. In the process, they receive real-time customer feedback, update their models to meet customer needs and avoid creating businesses based on incorrect assumptions.

NTEC has successfully completed CO.STARTERS programs in three locations across Northwest Tennessee, with two more underway. Through its lifestyle business accelerator programs alone, NTEC has helped to create more than 30 jobs in local towns since its establishment. While lifestyle businesses are a notable strength among the communities in Northwest Tennessee, the NTEC board decided to expand the center's focus to include a sector uniquely advantageous to rural areas: agriculture. In collaboration with another LaunchTN entity, NTEC launched the NextFarm Agricultural Innovation Accelerator in late 2013.

NextFarm uses a cohort-based process that leverages the advantages of learning in a group setting. Entrepreneurs are coached by mentors with experience in entrepreneurship, farming and commercialization of technologies. Program staff and mentors work with prospective entrepreneurs to refine business ideas and strategic planning, commercialize technology and take products and services to the marketplace. In addition, the program identifies technology at the region's universities that could be brought into the accelerator and commercialized in Northwest Tennessee.

A shift in focus to include agricultural innovations allowed NTEC to accelerate more scalable, higher-growth companies. AgSmarts, a participant business in the inaugural NextFarm cohort, is a precision agriculture company that uses sensory technology to automate existing irrigation systems that optimize crop yield and water conservation while minimizing input costs. Fellow NextFarm graduate Stony Creek Colors produces and delivers reliable, safe and U.S.-grown bio-based dyes that are consistently ready for use in the commercial fashion industry. The group of companies that emerged from the NextFarm accelerator has raised well over $1 million for research, development and growth.

Rural regions such as Northwest Tennessee have proven they have strengths—including lifestyle businesses and agricultural production—on which accelerators can capitalize. However, one challenging question remains to be answered for NTEC and other agricultural communities: Can new and growing startup companies be sustained once they are launched?

Plans are currently in motion to give Northwest Tennessee its best chance at startup sustainability. A crucial aspect of these plans for NextFarm is to continue strengthening relationships with agricultural schools such as The University of Tennessee at Martin to identify and develop technologies for commercialization. A second vital need for sustaining agricultural startups in the region is a dedicated venture capital group, the establishment of which has been a particularly challenging obstacle to overcome.

It is no surprise that rural accelerators face an uphill battle in trying to match the bar set by their counterparts in metropolitan areas. The answer to this challenge for Northwest Tennessee lies in capitalizing on and excelling in its agricultural strengths, just as Nashville has done with healthcare and music, Chattanooga with technology and Memphis with medical innovations. And if the resiliency and determination of the business owners and farmers of the region are any indication, the Northwest Tennessee Entrepreneur Center is certainly up to the task.

Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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