UT, ORNL and TVA join together to launch tech startup accelerator

Three of East Tennessee's major institutions are launching a collaboration aimed at making the Knoxville-Oak Ridge corridor a national innovation hub.

Oak Ridge National Laboratory, the Tennessee Valley Authority and the University of Tennessee System are partnering with worldwide firm Techstars to launch a startup accelerator that will foster the growth of 30 technology companies over three years.

"We believe this is a start of a future collaboration," UT System President Randy Boyd told Knox News. "Working together, we can make a profound impact in the community. I think Techstars is a great project by itself, but maybe the bigger story is this new degree of collaboration between these three organizations."

Techstars' Industries of the Future Accelerator will specialize in startups using clean energy, artificial intelligence, cyber security, digital currency, 5G and big data to solve problems. Techstars was founded in 2006 and has invested in more than 2,500 companies valued at more than $209 billion.

The leaders of UT, TVA and ORNL say partnering with a firm that has helped launch startups into billion-dollar ventures is the beginning of a larger vision to make the corridor a national destination for entrepreneurs, investors and a skilled workforce.

The three entities are sharing the $9 million cost of the accelerator.

Public policy organization Brookings Institution identified East Tennessee as one of 35 metro areas that could become "one of America's next dynamic innovation centers" in a 2019 study.

"This is just one step in the evolution of what I believe Knoxville (needs) to rise up to the level of the Silicon Valley or Austin or Research Triangle Park," ORNL Director Thomas Zacharia told Knox News.

Startups focused on future problems

Techstars is familiar with Knoxville. It conducted an assessment of the Knoxville area's entrepreneurial ecosystem and presented those findings in January.

The report identified the market's challenges, including attracting early stage funding, establishing support for growth-stage companies and opening doors to local research institutions and resources.

One of its recommendations was to provide founders with more early-stage funding through a national accelerator.

"We felt as though Knoxville could really benefit from a focus on entrepreneurship and technology that could leverage the capabilities of those three great institutions, and add that as a significant dimension to this economy," TVA CEO and President Jeff Lyash told Knox News.

This will be Techstars' first accelerator in Tennessee and the first affiliated with a national lab.

"It's kind of like a catalyst for igniting the entrepreneurial spark, if you will," said Techstars Accelerators General Manager Nancy Wolff. "It gets people excited. People come out of the woodwork to get involved."

Techstars will begin accepting applications for its inaugural class of 10 startups in July. Each accepted startup receives $20,000 from Techstars in exchange for 6% equity in the company.

The entrepreneurs will spend 13 weeks in the area and receive hands-on support to help grow their businesses. They establish goals, connect with mentors, build a financial model, identify customers, create a product strategy and refine their investor pitches in order to raise capital.

The accelerator will be led by Managing Director Tricia Martinez, the founder of financial services platform Wala and an alumna of the London Barclays Accelerator. She is a 2021 Presidential Innovation Fellow and worked with the Department of Energy to bring technologies of the future to market faster.

After the program ends, the startups benefit long-term from Techstars' deep network of mentors, investors and entrepreneurs.

Though there's no obligation to set up shop in Knoxville, the graduating startups could decide to stay in the region, leading to more jobs, more economic development and a reputation for driving innovation.

"Why does Silicon Valley exist? Because there's a belief system that you go there, you have the infrastructure that allows a founder to translate their idea into opportunities and be a success," Zacharia said.

From 'cordial' to coming together

These three institutions have long histories together, but the leaders are fairly new to their roles.

Zacharia has worked at ORNL since 1987 and became director in 2017; Boyd was appointed president of UT in March 2020 after a 16-month interim stint; Lyash was appointed in February 2019.

What was once a "cordial and collegial" relationship has deepened, Boyd said.

"We have done many things bilaterally together, we've had many joint ventures where we're working on a project to our mutual benefit together," Boyd said. "But this is a first time in which all three have come together to do something that's primarily focused on helping make our community better."

Techstars has a history of 'unicorns'

Most Techstars accelerators are tailored to the community, like the sports technology accelerator in Melbourne, Australia, or the sustainability accelerator in Boulder, Colorado. Some of these accelerators are partnerships with single universities. Others, like the Indianapolis sports accelerator, are a partnership between multiple entities.

Wolff said 86% of companies that participated in a Techstars accelerator are still in business or have been acquired.

Nine unicorns — startups worth more than $1 billion — have gone through a Techstars accelerator, including DigitalOcean, a cloud computing company that raised $775 million in its initial public offering earlier this year. Amazon purchased Pill Pack, another Techstars alumni, for an estimated $750 million in 2018.

The institutions have plenty to gain from the accelerator, too. For UT, Boyd said it gives students access to mentorship and draws future entrepreneurs to enroll in the university.

The TVA, which serves portions of seven states, has not invested in a place-based accelerator before, Lyash said, but it could serve the utility's missions of providing energy, fostering economic development and upholding environmental stewardship.

"We have technologies that can be used to drive this energy transformation, up to a point," Lyash said. "But beyond that point, we need technology at scale and at a cost, and with an impact that we don't currently have. And who knows, perhaps some of that will come out of this accelerator project?"

Zacharia said while Silicon Valley innovators are welcome, he hopes the program can give opportunities to disenfranchised local communities and create good-paying jobs for people already living in the region.

"This is a once-in-a-generation opportunity, in my opinion, if some of the kinds of investment that's being proposed come to pass," Zacharia said. "And we certainly need to come together as a community to leverage and capitalize on this opportunity to transform our region for the better."

Source: Knoxville News Sentinel, by Brenna McDermott

The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit www.eteda.org


Published June 3, 2021