TNInvestco yields 1,800 jobs in seventh year at $111,000 per job

Tennessee’s TNInvestco program has yielded 1,800 new jobs and helped attract about $500 million in additional funding to Tennessee companies in its seventh year, according to a 2016 annual report.

The program was created in 2009 and 2010 to spur job creation at early stage companies and to boost tax revenue while generating profits for the state.

With $200 million dedicated to the program through tax credits to insurers, $111,000 has been spent per new job created, as of 2016.

Tax revenue will not be disclosed until the program has recouped its total investment and the state has returned $6.4 million of the $200 million, or about 3.2 percent. Because weaker companies close more quickly, returns are likely to increase over time.

TNInvestco fund managers have cautioned against assessing the program's effectiveness too early and emphasize the shortage of venture capital in the state when the program was created. 

Jim Phillips, who helps manage TNInvestco fund XMi, describes the TNInvestco program, along with the Music City Center and the 2010 flood recovery, as a major catalyst for Nashville's economic success in recent years.

"It was sold as a jobs program in the context of an HCA or a FedEx," Phillips said. "HCA and FedEx didn’t take seven or eight years to get going, they took decades to get going. That’s really how you have to look at this, very much in a long-term time frame." 

So far 187 companies have received funding. Among those that have produced the most jobs since attracting TNInvestco capital are Criterion Holdings in Nashville, RLCL Acquisition (Gray Line Tennessee bus company) in Nashville, Digital Reasoning in Franklin, Complete Holdings Group in Franklin and Skuidify in Chattanooga.

"We are very proud of those companies," said Phillips, referring to XMi's portfolio companies RLCL and Criterion Holdings, a security staffing company. 

ABT Molecular, in Louisville, Tenn., is among companies that have attracted the most dollars after a TNInvestco investment, called follow-on funding. NuScriptRx in Nashville and Digital Reasoning in Franklin have also gained significant investments.

Through the TNInvestco program, 10 TNInvestco funds selected by the state sold $200 million in tax credits to insurers, yielding about $117 million for investment after management and professional fees are paid. Eventually, the state and the 10 funds split returned principal and profit. 

Top job creators as of 2016:

Criterion Holdings: 511 jobs created, attracted $0 in additional capital

RLCL Acquisition: 190 jobs created, attracted $4.4 million in additional capital

Complete Holdings Group: 113 jobs created, attracted $5 million in additional capital

Skuidify: 112 jobs created, attracted $5 million in additional capital

Digital Reasoning: 99 jobs created, attracted $55.4 million in additional capital

Most Follow-on Funding:

Digital Reasoning: $55.4 million

NuScriptRx: $36.4 million

ABT Molecular: $24.7 million

Change Healthcare: $24.2 million

NuSirt: $22.9 million