Capital Network launches sidecar fund

Backers of $5.2M pool aim to fill early-stage funding gap

Email | Print By Geert De Lombaerde

Sid Chambless

The Nashville Capital Network has launched a $5.2 million investment fund that will commit cash to area start-ups alongside members of the angel network it has cultivated since 2003.

The group, which was founded by a consortium that includes Vanderbilt, the Nashville Technology Council and the Nashville Health Care Council, foreshadowed the formation of the NCN Angel Fund I LP last spring as it sought to expand early-stage funding options available to local entrepreneurs.

Sid Chambless, executive director of NCN and managing general partner of the new fund, told NashvillePost.com yesterday the sidecar fund – modeled in part on successes in the Boston area and on the West Coast – is designed to fill the void between friends-and-family seed money and traditional financing vehicles.

Chambless said he believes the $5 million will fund between eight and 12 ventures and last from three and four years.

Chambless said, "It's important that there is a fund focused on the early-stage capital market." He said NCN Angel Fund I now enjoys "a unique position in the Southeast."

An NCN release issued late yesterday explained the new fund will invest on behalf of "many of the leading entrepreneurs and early-stage investors in Nashville."

Chambless declined yesterday to provide investors' names, explaining that players' identities may later be revealed as they become board members and mentors of the companies that receive funding.

The investment process will be managed by a committee consisting of Crom Carmichael of Carmichael and Carmichael, Townes Duncan of Solidus Co., Frank Gordon of Crofton Capital, Tom Noland of Vanderbilt University Medical Center and Paul Wallace of Healthways.

NCN says its affiliated angels have invested more than $10 million in 13 early-stage ventures since the group's formation five years ago.

Note: Solidus Co. is the majority owner of the parent company of NashvillePost.com.