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There were no venture capital firms in the city, and Chattanooga was not known as a place with much to offer in the way of access to funds. But Culp had a feeling things in his hometown were about to change.

“I knew we would have trouble. I just accepted that,” Culp says. “But I felt like things were moving in the right direction, and I wanted to be one of the pioneers.”

That leap of faith is starting to yield results. Culp spent most of December and January meeting with venture capitalists interested in Smart Furniture, his Web-based custom shelving business. Culp made the contacts during the seventh annual Tennessee Venture Forum, which met in Chattanooga for the first time in November. Fifteen businesses, including four from Chattanooga, pitched ideas to more than 300 venture capital firms.

Chattanooga leaders lobbied hard to woo the forum away from Nashville, where it had met for the past two years. They raised more than $60,000 for sponsorship of the event, and Mayor Bob Corker hosted a soirée for participants at his Riverview home.

Tom Rogers, executive director of the Tennessee Technology Development Corp in Oak Ridge, says forum organizers were impressed.

“The event was successful, but we never really felt much love from the Nashville community in terms of sponsorship,” he says. “It wasn’t that big a deal to them To Chattanooga, it was a big deal.”

According to Corker, the forum is just the latest step in an effort to transform the hat-in-hand investment culture that has long discouraged local entrepreneurs.

“We have not had much institutionalized venture capital,” says the mayor, who campaigned on the economic development issue during his 2001 run for office. “If you know wealthy individuals, you might talk with them, but that really is a most humbling experience. It does not engender much entrepreneurial spirit.”

Real changes in the local investment landscape began in October 2001 when aggressive recruitment led Southeast Community Capital (SCC), the lending arm of Oak Ridge-based Tech 2020, to open a Chattanooga office. The deal with the public-private partnership brought the first influx of institutional venture capital—$45 million—to Chattanooga. The city put $1.5 million under the firm’s management through the Chattanooga Opportunity Fund, paying Tech 2020 $50,000 a year to manage the fund, which targets local women- and minority-owned startups.

As of July 2003, the funds had made or backed $3.2 million in loans to 18 companies, says fund manager Allen Summey. The companies employ about 170 people.

“We desperately hope to reach the underdogs,” Summey says.

Joe Ferguson, chairman of the city-backed Enterprise Center, says SCC was the first prize in a “string of pearls.” The next move was to recruit a privately financed venture capital firm with deep pockets and a keen interest in companies poised for high growth.

That pearl presented itself during the venture forum, when Memphis-based Delta Capital Management announced it would open an office in Chattanooga early in 2004. The 11-year-old firm has over $90 million of capital under management. The decision to open a Chattanooga office was largely the result of persistence on the part of city leaders, says Don Mundie, managing partner for Delta.

“Mayor Corker has made it a mission of his to increase the availability of capital for entrepreneurs and technology in the area,” Mundie says. “That support from the public sector is very important.”

Having the firms in Chattanooga, rather than Atlanta or Nashville, makes all the difference in getting local investment, Corker says.

“When you look at the companies these firms have funded, many of the dots are located around the community they exist in,” he says.

For Culp, seeing Chattanooga move ahead is an important part of his business plan for Smart Furniture.

“I brought my business back to Chattanooga because when this company grows, I want a community that I care about to benefit,” he says.

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