Vic Gatto
Capitalist

ANYONE not familiar with the bluntness and dark humor that sometimes accompany Vic Gatto's impromptu remarks, might have been discomfited when at the end of Jumpstart Foundry's Investor Day he invited anyone without a "VIP" badge to have refreshments -- somewhere else in Downtown Nashville.

Jumpstart Founder-CEO Gatto then made clear, with a wry tone and the slightest smile, that only VIP badge-holders were invited to join startup entrepreneurs, potential investors and Jumpstart Foundry officers in the vestibule of the Schermerhorn Symphony Center for hors d'oeuvres.

Apart from the handling, it wasn't an unusual arrangement for such an event. Indeed, the bottom-line orientation and telegraphic delivery of Gatto's final comments seemed consistent with his equally direct opening remarks:

Jumpstart Foundry, he told hundreds assembled for the Aug. 21 event, is "proudly capitalist" and aggressively determined to generate "massive" capital gains for its investors. What's more, Gatto emphasized, JSF is currently the only commercial accelerator in the state -- not to be confused with the proliferating nonprofit accelerators that now dot the Tennessee landscape.

"Jumpstart has one goal: To build shareholder value for our investors -- period," Gatto said in his prepared remarks. Gatto seems to have had that premise in mind earlier this year, when he shut down one of his own Solidus portfolio companies, as recently reported by VentureTennessee.

So, Gatto's strong emphasis on achieving return on investment -- whether dealing in canapés or in capital -- proved a harbinger of how the JSF14 event would end: In the vestibule, those closest to the Money would talk. All Others were invited to exit via the side doors of the main concert hall.

Gatto's dismissal served, of course, to clear the way for more intimate conversation in the VIP reception area for JSF14's nine rigorously trained teams and investors who might buy a piece of a startup, or perhaps a piece of a JSF fund. ►The nine JSF14 startups are described here.

However, Gatto's delivery also seemed calculated to leave no doubt that the sharpening and stylized toughening of the JSF brand signal the positioning of Gatto and his associates -- and the investors who trust them -- for a bigger role on the national stage.

For, as announced last week, JSF is now making available up to $100K for each deserving startup in its annual formal cohort, a move roughly on par with investments available via the Bay Area's Y Combinator and Colorado-based TechStars, which offer $120K and $118K, respectively. JSF has, heretofore, provided only $15K per cohort company.

Gatto brought multiple gauntlets to throw down. At one point, for example, he promised his Schermerhorn audience that JSF's 100-plus mentors are not "retired executives, slightly past their prime."

Gatto told VNC he believes JSF "can get more done with $100K" that the rival national accelerators can do within slightly larger amounts wielded within their ecosystems. While JSF might sometimes lose to one of its Western rivals, JSF and Nashville -- "the capital of the New South" -- will often win on niches in which it has special strengths, such as Health, Music and Digital Content.

JSF learns from others, then makes its move. In 2011, VNC reported Jumpstart's proud announcement of its affiliation with TechStars, now an all-out competitor. JSF has signaled it'll be doing more to juice-up its own alumni via the Jumpstart Foundry Network.

In an Aug. 22 VNC interview, Gatto also served notice that, in addition to the Southeast, JSF will target competing markets throughout the U.S., for the best startups. He said he believes the JSF brand is capable of operating effectively in a swath of America "from Dallas through Miami."

JSF will continually scout virtually anywhere for promising companies going to market in verticals in which Nashville has a track record, including Healthcare, Healthcare IT, Music, Digital Media and Digital Content.

Beyond the Southeast, targeting priority will be given to the Silicon Valley - San Franciso Bay Area, Los Angeles, New York and Boston, he said. He also acknowledged competing to some extent with Austin.

Meanwhile, in Jumpstart's own backyard, the implications of all this for homegrown startups remain unclear. Successive waves of Tennessee and Mid-South ventures may find it harder to win a berth in the accelerator, given that JSF is casting its net so broadly.

Asked whether he would have invested an initial $100K in companies in JSF14, just completed, Gatto told VNC it's "hard to answer" that hypothetical question. He then added, "The 2014 were the best applicants among the apps we got. They have done a great job and I'm very proud of the results. However, it is impossible to know who else might have applied," with $100K on the table under the enhanced JSF offering.

Gatto, age 43, said JSF is financially modeling 10 companies per year for its accelerator cohort, and could invest in a group as large as 12. In addition, JSF's owners have decided to entertain individual investments year-round, without limiting its opportunities to companies going through its annual 14-week cohort-vetting cycle.

Gatto said he is now raising funding to cover its expanded investment program. He declined to disclose the target for the raise, but noted that he believes the capital raise is "half-way" completed. State records online show Gatto registered Jumpstart Investors LLC, in December 2013.

JSF will not, he told VNC, rely for cohort funding on the Selous Venture Society, the newish Angel group said to be approaching its 100-member design ceiling, which Gatto recently created with Michael Burcham, CEO of the Nashville Entrepreneur Center. Last week's JSF14 agenda did, however, include time for JSF mentor and Selous investor Kent Kirby to plug Selous membership, as prelude to Kirby's introduction of one of the startups vying for investment.

At no point has Gatto expressed any concern that the recent proliferation of Angel and micro-VC funds in Tennessee presents a competitive challenge, even though large Tennessee metros -- Chattanooga, Memphis and Knoxville -- have regional ties and proximity to key markets, and are cultivating new and expanded investors and accelerators.

Gatto explained in the interview that JSF's new stratagems emerged over the past 18 months, as JSF gained national ranking among top accelerators and networks, and hometown Nashville seemed to continue to gain ever-greater recognition, nationally and internationally.

In addition to earning recognition as the top accelerator in the Southeast, JSF aims to be among the Top 5 accelerators in the nation.

Gatto said that, by his logic, achieving such standing, coupled with America's putative standing as the globe's No. 1 economy, would afford JSF and its American Southeast domain legitimate bragging rights as offering the world's most attractive opportunities for starting businesses.

JSF will not only be telling its own story more broadly, it will be helping startups that aren't in its annual cohort learn to create investable stories, in partnership with boutique interactive agency Mountain, JSF Co-founder and Chief Marketing Office (CMO) Marcus Whitney told the Investor Day audience, during his turn at the podium.

Marcus Whitney

Whitney also underscored the signal importance of JSF's repositioning, noting that -- particularly given the accolades that Jumpstart Foundry has received for its progress -- "we have a responsibility to maintain our position as the best accelerator in the Southeast."

Whitney's CMO title comes with real heft, given JSF's suddenly more aggressive stance with respect to building awareness for the organization. Indeed, achieving "Awareness" -- standing-out visibly from the pack of actual or potential competitors -- is nowadays oft-cited as the most critical factor in tech-startup success, now that technology has become more democratized and affordable.

The partnership with Mountain will allow JSF a close-up view of companies coming along throughout the year, and seems likely to provide revenue for JSF. (Gatto confirmed for VNC that, quite separately, his Selous Angel group has recently been supported by ArcherMalmoVentures, a startup-focused unit of Memphis-based Archer>Malmo, a nationally ranked interactive agency.)

Several sources said the JSF14 venue selection of the Schermerhorn was largely driven by logistics and availability.

Beyond that, though, the Schermerhorn setting "has a certain vibe," said Gatto.

Indeed, the bespoke setting -- and the pro-capitalism event's staging within the Schermerhorn's heart -- may have underscored at least subliminally the generative power of money.

After all, the architecturally and technically exquisite Center has at most points in its short life been chiefly backed by one of the wealthiest and arguably most civic-minded women in the world, Martha Ingram of Nashville.

Given the platoon of videographers hired by JSF to document last week's tightly choreographed JSF Investor Day, and the power of Web-hosted video, Gatto's overt and subliminal messages seem likely to infiltrate entrepreneurial and investor minds in key U.S. and international markets, in time.

From that point, the images of Gatto planting the JSF flag on the global stage are likely to enjoy a long afterlife. VNC