Inside the Equity Investment Process: What Eller Kelliher at LaunchTN Wants Founders to Know

Written by Bailey Hughes 
Photos credit LaunchTN

Equity investment shapes which startups get funded and how fast they grow, but for most people, it's never been explained plainly. 

That's where Eller Kelliher, Chief Investment Officer at LaunchTN, comes in. Eller oversees InvestTN, a $70 million venture capital program funded through the U.S. Treasury. Venture capital, at its core, is when investors provide capital to startups in exchange for equity, betting that the company will grow significantly over time. I sat down with her to break down how it all works in Tennessee. 

To Begin, What Is Equity Investment?

When most people think about funding a business, they think about loans. You borrow money, and you pay it back with interest. But equity investment works differently. Instead of lending you money, an investor gives you capital in exchange for partial ownership of your company.

That distinction matters–especially with InvestTN.

"We still are taking equity, taking ownership in your business, and we'll be sitting on your cap table for a long time," Eller said.

A cap table is simply a record of who owns what percentage of a company. If InvestTN invests in you, they show up on that list– for a long time. 

Now That That’s Covered, What Is InvestTN?

InvestTN is part of a larger federal initiative called Fund Tennessee, which includes three programs: InvestTN (equity investment), LendTN (traditional loans), and AssistTN (free technical assistance for entrepreneurs).

InvestTN specifically has three funds:

• The Regional Seed Fund ($28M) – for early-stage startups, investing between $25,000 and $250,000.

• The Growth Fund ($36M) – for more established companies ready to scale, investing between $250,000 and $3 million.

• The Multi Fund ($6M) – for early-stage venture capital funds focused on Tennessee companies (currently fully deployed).

Eller came to the role after years in private venture capital, and the shift changed how she thinks about investment.

"The biggest thing that was a shift for me in this role is, yes, we have to have that return mindset, but we also have to have the mindset of economic development."

That dual mission is reflected in the numbers. InvestTN has received over 400 startup submissions since launching.

"It tells me that Tennessee has a very robust startup ecosystem, and that anyone who says, 'Well, there just aren't investable companies or investable opportunities in Tennessee,' that's just not true."

So, Is InvestTN a One-Size-Fits-All For Businesses?

This is probably the most important question to ask if you are thinking of applying, and the honest answer is no.

"All those small businesses, or what I call 'main street' businesses, like coffee shops, small boutiques, consulting services, things like that, are realistically not a great fit for InvestTN. You have to think of venture-backed companies as those with a vision to return capital at a significant multiple."

That doesn't mean those businesses aren't worth building.  It just means a traditional loan is probably a better fit. And Eller is direct about where venture capital should fall on your list of options.

"Your very last option should be venture capital. If you can fund your business with friends and family or through a traditional loan and avoid taking on debt, do so to retain as much ownership of your business as possible."

What Does the Process Actually Look Like For A Founder?

Eller suggests that you look at the full process outlined on their website at investtn.org/our-process, but here are the highlights.

It starts with an intake form. Eller insists on being thorough because this determines which fund you're routed to. If you're a fit, you'll move to a full application and begin due diligence: a back-and-forth with a Capital Associate who will dig into your business and request access to your data room (a folder of key documents, i.e., financials, legal paperwork, pitch materials, etc.).

"If you don't know what a data room is, or you don't know what to put in your data room, that's also going back to the fact that you need to have all of your materials ready and in line before applying."

From there, applications go to LaunchTN's Investment Committee, which meets monthly. If approved, you'll need to secure matching private investment before moving to the legal closing.

"A 90-day turnaround is actually really quick for a venture firm. A lot of times, venture capital firms want to spend a year getting to know a company before they actually invest."

What If You're Not in Nashville?

"I actually see fantastic founders in advanced energy and materials manufacturing out of the Knoxville/Oak Ridge area, really interesting stuff in logistics and transportation out of Memphis and Chattanooga."

If you're in West Tennessee, your starting point is theCO. Regional entrepreneur centers aren't just a resource; they are built into the InvestTN process.

"Founders should view their entrepreneur centers, like theCO, as the front door to this process. We really ask the entrepreneur centers to be sherpas and advocates for founders in their region."

Being connected to your local entrepreneur center signals to InvestTN that you're engaged, coachable, and invested in your community, and that matters when they're deciding whom to back.

Where Should You Start?

Start at investtn.org, especially the FAQs and process pages. Then, come talk to us at theCO. We can help you understand whether you're a fit and walk alongside you through the process. If you think InvestTN could align with your business goals, schedule a Founder Fit Check with theCO.

"It should be viewed the same way you would view taking money from a venture capital firm. Ask yourself, “Is this the right relationship? Is this the right type of financing for my business?"

InvestTN exists because Tennessee founders deserve access to capital. But it's still an equity investment, so going in prepared for anything could make all the difference.