Jumpstart Foundry enters new era

In its early days, Jumpstart Foundry was a local version of the television hit "Shark Tank": A few teams pitched their company idea and a group of 20 experienced Nashville entrepreneurs and investors, meeting over beer and pizza at Belmont University, would choose the best concept to invest in and help build. The next month, they did it all over again.

Within months, the founders of the business accelerator decided more structure was needed, and they developed the program into a 14-week boot camp for startups. Three years later, Jumpstart was recognized as a top 15 accelerator in the U.S. by TechCrunch, a prized threshold for the group of founders, each dedicated to advancing Nashville's tech and entrepreneurship sector.

Now the accelerator is headed for its second reset. There's new leadership, with co-founder Marcus Whitney recently named Jumpstart's president, and the accelerator moved its focus entirely to health care companies. Perhaps most significantly, much bigger dollars are flowing to the Jumpstart companies — $100,000, up from $15,000. It's a shift that Whitney and Jumpstart CEO and founder Vic Gatto say is going to allow Jumpstart to better compete against the now heavily populated field of startup accelerators.

"It changes everything," Whitney said. "This is the right thing for the Nashville ecosystem."

A new direction

For years the local venture capital community has pressed the importance of diversifying Nashville's entrepreneurial landscape, arguing the city can be more than just a breeding ground for health care companies. To become a thriving startup hub, Nashville should support early-stage companies in tech, e-commerce, music and tech education. Whitney, who co-founded Moontoast, a digital marketing firm, was a shining example of the city's potential to build companies that knew nothing about electronic health records or medical insurance.

But based on the success rates of companies exiting Jumpstart, health care companies had the strongest results. NextGxDx, Octovis, Utilize Health, Invision Heart, dVisit, Healthcare Marketmaker and Evermind are the seven health care companies graduating from Jumpstart — out of 37 total — that have brought in nearly half of the $23 million in investment dollars and created almost half of the jobs coming from Jumpstart companies.

Six of the seven have so far survived (DVisit, a mobile health app company, closed in December). The oldest among them is NextGxDx, a company that helps clinicians find and order genetic tests, and it has raised $5 million since launching in 2010 and employs 16 people.

Meanwhile the pressure to further distinguish itself among the crowded field of business accelerators has mounted. When Jumpstart started its 14-week program in 2011, it was one of about 100 similar accelerators in the U.S., based on TechCrunch estimates. Now there are more than 1,000 listed online. In Jumpstart's first year, applications came from across the U.S. and even from Eastern Europe. But with accelerators proliferating, the application pool has narrowed geographically.

"This market has completely exploded," Whitney said.

Even Whitney, whose resume includes tech roles at Moontoast, email marketing company Emma and HealthStream, sees value in building on the city's health care strengths. With the Nashville Entrepreneur Center offering a broader range of startup support, as well as its new music-tech accelerator, Project Music, and with the growth of accelerators nationwide, non-health care companies will find a home, he said.

And more importantly, Nashville has much to lose if it does not become a more visible leader in health care innovation.

"A large part of what makes innovation ecosystems work is leveraging the existing infrastructure in your city," Whitney said. "It doesn't mean we don't need that diversification. We have a very strong position in arguably the most important industry in America right now. There are other innovation ecosystems that are being very aggressive about taking control. It would be a shame that everyone in Nashville would feel if we allowed that to happen."

More specifically, Whitney means Silicon Valley and Boston, areas with engineers and entrepreneurs coming up with solutions to significant health care problems. As the home to HCA, Vanderbilt University Medical Center, Community Health Systems and Saint Thomas Health, Nashville should be at the forefront of health care company creation.

Bigger bucks

So far at Jumpstart, which now operates out of the Entrepreneur Center at Rolling Mill Hill, the startup selection focus has centered on the team. The thinking was that the barely hatched business model probably would be reformed throughout the rigorous 14-week process, so the strength of the company founders was a more telling measure. Under the new Jumpstart model, businesses probably will be further along and will be generating revenue before entering. Investors will have a bigger say in the types of businesses they want to help build and will be more involved earlier in the program. Jumpstart will be actively recruiting startups and, in some cases, helping form them if a company lacks a key component in its founding team — a software developer or someone from a health care niche.

"As opposed to waiting for the perfect team to apply through our website and just kind of praying, we are taking a much more active, involved role," Gatto said.

The investors and accelerator will gain a 7.5 percent stake in each company that joins the accelerator. Jumpstart is raising $800,000 from local investors to fund eight companies that will begin the program in May. Instead of its traditional "Investor Day" pitch session that drew more than 1,000 attendees last year, Jumpstart will host a two-day health care innovation conference in August called Health:Further. As part of that event, graduating companies will showcase their businesses to investors.

Given the increased funding, Whitney said he expects an increase in applications. While Jumpstart has accepted a few revenue-generating companies in the past, that will become more typical, and startups will begin growing customers and refining products earlier in the program.

Competition

Just as Jumpstart moves its focus to health care, another health care accelerator is looking to return to Nashville after operating out of the Entrepreneur Center in 2013. Healthbox, based in Chicago, has run more than 10 accelerators in U.S. and international cities and is seeking to launch its second Nashville program this fall, according to Healthbox manager Chris Sherrill. In Nashville and in other cities, Healthbox will be a Jumpstart competitor.

"From a provider perspective, (Nashville is) the leading health care market in the country. It kind of makes sense they would want to be here," Whitney said. "We feel really good about our position in the market."

The area's health care assets that drew Healthbox to Nashville in the first place also have influenced each of the six remaining Jumpstart health care graduates to stick around. With the new health care focus, companies are more likely to stay in town and create jobs locally, Whitney said.

"We hope that we will have done a good enough job after 14 weeks to prove to them that they ought to be growing their business in Nashville," he said. "If it's a health care business, much of their market is right in their backyard. Why would they leave?"

Reach Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee_.

Jumpstart Foundry

A 14-week business accelerator for health care companies runs from May to August out of the Nashville Entrepreneur Center.

Company teams receive $100,000 in funding from Jumpstart investors in exchange for a 7.5 percent equity stake.

Health:Further

As part of its evolution, Nashville business accelerator Jumpstart Foundry is transforming its "Investor Day" pitch event into a two-day health care innovation conference called Health:Further.

Investor Day has traditionally served as the culmination of the 14-week program, and the pitch session now will be one component of the larger Health:Further conference targeting established health care companies, startups and investors.

Health:Further, which will be held at the Omni Nashville Hotel on Aug. 19 and 20, will include sessions featuring industry experts and investors and will focus on innovation within tech, business models and startups. The event also will highlight Jumpstart graduate companies and include an exhibition on new health care technologies.

The Nashville Entrepreneur Center, the Nashville Health Care Council and the Nashville Technology Council have signed on as marketing partners.

"We are making a pretty strong move into health care, and we're positioning pretty aggressively as a health care innovation platform," Jumpstart President Marcus Whitney said. "To do that, we need to provide something that's of more value. ... This is going to be more beneficial for our graduates."

For more information, visit http://HealthFurther.com.