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Chattanooga

Located in the heart of the beautiful Tennessee River Valley, Chattanooga has gained national prominence as one of the first cities to install a publicly funded fiber-optic smart grid. The grid has attracted entrepreneurs from around the country who leverage the super fast, reliable, and affordable connectivity (1 Gbit/s ). Its location between both Atlanta and Nashville allows it to attract talent from both of these fast growing markets. From being the birthplace of Coca-Cola’s bottling operations to hosting the central hub for Access America’s logistics operations, Chattanooga punches above its weight when compared to similarly sized cities. The presence and involvement of these companies in this small city has fostered a collaborative and cooperative entrepreneurial community. With initiatives such as The Enterprise Center and Launch Tennessee, the local and state governments have been catalysts in the growth of the community. The Chattanooga Renaissance Fund, an angel fund which has raised $11 million, has been an integral member of the investment community. While the city’s charm may be appealing to some, its size and the lack of a major technical university have made recruiting technical talent challenging.

In This Market

These businesses offer industry expertise and are a source of startup talent and potential customers. They help fuel the local startup community.

Opportunities

  • Chattanooga is one of the first cities in the country to install a fiber-optic smart grid, powering businesses and residents with speeds of up to 1 Gbit/s. The grid has attracted entrepreneurs from around the country to leverage this fast, reliable, and affordable connectivity to grow their businesses.
  • Surrounded by natural beauty, the city is a place where people want to live, with a low cost of living, and a creative, collaborative culture.
  • Equidistant to both Nashville and Atlanta, and only an hour drive to Oakridge National Labs (one of the largest science and technology research centers), the city has the ability to attract talent and capital from these growing markets.
  • The Mozilla Gigabit Fund, backed by the National Science Foundation, has funded projects to build and pilot gigabit-enabled applications and associated curricula.
  • The state and local governments have created Launch Tennessee, the Enterprise Center, and the INCubator (by the Hamilton County Business Development Center) which are both critical in the development of the market. The Lyndhurst and Benwood Foundations have also been instrumental in supporting the community, backing funds and startup accelerators.

Risk Factors

  • Chattanooga does not have a major, nationally-recognized research university, causing a scarcity in high-level, technical talent.
  • The rate at which new startups are created is not as rapid as investors would like. When coupled with the fact that there are very few exits, the market’s immaturity poses certain challenges.
  • Growth capital is hard to find and current investment vehicles only support seed and early stage investments.
  • The role of major, national corporations is minimal, and no big corporation has gotten involved as an active investor or supporter of the community.
  • While Chattanooga boasts some of the most enthusiastic investors in Tennessee, investors’ risk appetite is not on the same level as those from larger ecosystems like Austin. There is a fundamental need for education at the angel level, because capital isn’t being reinvested into the market.
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