The two largest venture capital investments in Nashville to start 2022 highlight the growing variety among the area's tech startup scene.
Overall, venture investing in Nashville and across the U.S. cooled off a bit in the wake of a record-smashing 2021, according to data from Venture Monitor, a quarterly analysis from PitchBook and the National Venture Capital Association.
In the first quarter of 2022, Nashville-area companies snagged $126 million of venture funding in 20 deals. That's the slowest start to a year since 2018, and it's 30% lower than the dollar volume from the first quarter of 2021, when there were 26 deals recorded.
Here are some takeaways:
- The two largest raises in the quarter were claimed by fintech startup Alto Solutions ($40 million Series B round, giving the company a $290 million valuation) and Phosphorus Cybersecurity Inc. ($38 million Series A round, giving the company a $120 million valuation). While the majority of the area's tech economy is rooted in the legacy health care sector, both these deals speak to the action and excitement in companies outside that realm.
- Possip Inc. — whose platform connects school administrators, teachers and parents — also snagged close to $4 million in the quarter. Founder Shani Dowell is the first Black woman entrepreneur in Tennessee to crack the $1 million mark for total venture funding.
- The first quarter also was when Marcus Whitney, founder of Jumpstart Nova, unveiled his debut $55 million fund to invest in Black founder-led health care companies.
- The national upshot: "Headwinds including public market volatility, interest rate hikes and the war in Ukraine have coalesced to shift [venture capital] away from its constant growth trajectory. Deal value totaled $70.7 billion in Q1, the lowest figure since 2020, and [initial public offerings] came nearly to a halt. Deal sizes and valuations have begun to drop. … Despite these headwinds, many areas of [venture capital] data appear relatively unscathed."
Startups in the Nashville region logged $892 million of investments over the course of 2021, the second-highest dollar amount since 2014, according to Venture Monitor.
News of the last several days is not reflected in the latest quarterly report, which tracked activity through March 31. Since then, we're reported on Brentwood-based logistics tech company FreightWise LLC selling a minority stake to a group led by Swiss-based Unigestion SA.
Also, we reported this week that the Nashville Capital Network had secured more than $70 million of investor commitments for its newest startup fund, by far the largest fund in its 19-year existence.
