Venture Notes - April 3, 2024

By Milt Capps Updated April 4, 2024

Published April 1, 2024

Applications window open for Project Fintech
The Works deadline for 5-startup cohort, Knoxville
Altitude Ventures filings support Fund III and SPVs
Calm Waters AI, backed by Montecito et al notches raise
SubSplit founders aim to consolidate sector
EQL Games raises money, targets lottery-only content
Melt Pharma's latest filings
Update on Sharecare, Claritas gambit and the rest 4/4/24

► FINTECH: APPLICATION deadline for Nashville Entrepreneur Center's next cohort of Project Fintech is April 19, with the program to begin in June and conclude in September. The inaugural cohort, announced in August 2023, included nine firms from six states, with an eye toward their likely entrepreneurial impact in Tennessee and elsewhere, details in release here. Rather give back? Ask to be a mentor to the EC's fintech startups. You'll find info on mentoring, too, right here. More VNC coverage on Nashville-Tennessee fintech here.

► THE WORKS Accelerator at Knoxville Entrepreneur Center is accepting applications through April 12, 2024, for the 12-week accelerator cohort. Five companies will be selected and notified by April 30. The kickoff is June 30, with Demo Day Sept. 9. Details here.

Landon Gibbs

► LANDON GIBBS-led ALTITUDE VENTURES III has raised $5.2M toward its $100MM aspirational goal, it reported today in an SEC filing. Altitude affiliates also reported that Altitude Spiras II had raised $600K for further investment in Spiras Health. In 2021, Altitude Spiras SPV raised $787.5MM. Spiras Health is led by CE Scott Bowers. VNC research indicates that other SpiraS Health investors include FCA Ventures Partners, McWhorter Ventures, New Enterprise Associates, Tamarind Hill, and Jumpstart Capital, among others.

Joe Ferro

CALM WATERS AI Inc. of Nashville was described in Harpeth Capital's portfolio update in January as a "highly-scalable, tech-enabled platform benefiting from recurring/PMPM revenue model with high ROI...and well positioned to capture market share in the automated medical coding spaced" as AI adopters emerge. President Joe Ferro. Last September, the company reported one investor had put $1.5MM into a planned $2.5MM equity raise. Directors listed included not only Harpeth's Chuck Byrge and Ray Guzman of Switchpoint, but also Calm Waters Chairman Edward "Chip" Conk of Montecito Medical and JT Terrell, managing partner of MontecitoPLUS and is COO of Clarity Ventures Group. Harpeth Capital recently provided placement services for follow-on financing for Montecito's Clarity Ventures Veterinary Fund LP, according to Byrge's newsletter. That Clarity Ventures raise totaled $50MM from 169 investors, it said in a filing. Two weeks ago, Montecito Medical announced it intends its MontecitoPLUS platform to satisfy a wide range of strategic services, tech-enabled tools and partnerships, outlined in a release.

► CONSOLIDATORS Matthew Brennan and Elliott Cunningham in Collierville at Memphis filed on a $10MM equity raise for their SubSplit Services Group LP, showing $7.25MM in from nine investors. They're drawing on substantial prior M&A experience and focused on providing "permanent equity" to founder-owned businesses in the industrial construction space. They recently closed on its first permanent-equity investment, 38-year-old MIINC.

Brad Cummings

► GAMES - EQL Games Inc. in Louisville yesterday announced it is to provide a series of "eInstant iLottery games" and content studios for the Virginia Lottery. Release. Founder/CEO: Brad Cummings. EQL also filed with the SEC on a planned $5MM Equity raise, showing $450K in from three investors. Since 4Q 2020, Cummings-led raises have had an aggregate aspirational target of north of $16MM. The company's CTO is Austin Mayberry.

► MELT Pharmaceuticals Inc., the clinical-stage pharma company based in Brentwood, filed March 11 for a $47.7MM raise, [updated 8 April 2024] showing $41.5MM in from 300 investors. In that filing, the company estimated sales and finder's fees payments of $1.7MM for the round, the total offering target of which was raised "to account for securities to settle certain outstanding indebtedness." Yesterday, the company announced completion of an approximately $24MM Series B Preferred stock financing. The funding is to development further its MELT-300 program, which is focused on enabling sublinginal provision of a medical procedural sedative, that would be an alternative to needle-reliant and opioid-augmented sedation. CEO Larry Dillaha. In 2019, the business was carved-out of Harrow Inc. (Nasdaq:HROW). In a LinkedIn post yesterday, Harrow Founder & CEO Mark L. Baum commented on the Melt's progress, citing contributions by Dillaha, as well as Melt CFO Brad Osborne, Newbridge Securities, Black River Wealth Management, partners at Catalent Pharma Solutions and others.

John Chadwick

Kathy Harris

John Chadwick-led CLARITAS CAPITAL of Nashville on Oct. 3, 2023, submitted a preliminary, revocable and non-binding offer to by Atlanta-based Sharecare Inc., a fact Sharecare conveyed to the SEC on Oct. 11, 2023, as Venture Nashville reported at that time. Update: April 4, 2024: Cannell Capital's Managing Director J. Carlo Cannell wrote Sharecare Director Alan Mnuchin insisting on an accelerated response to Sharecare's challenges, citing the nonbinding Claritas offer as indicative of one or more opportunities for immediate consideration. That letter is here. A few weeks ago, on March 12, the Sharecare board disclosed that for some time the company has been considering a potential sale of the company. It has also acknowledged having conversations with potential bidders. With much of the related work in the hands of a special board committee of its independent directors, the company is also revisiting such options as carveout divestitures, and-or actions that might result in its continuation on a standalone basis. Outside financial and legal advisors are said to be in-place. In February, former Centene executive Brent Layton became Sharecare's CEO, with a contract term through December 2026. He succeeded now-Founder and Executive Chairman Jeff Arnold, who had previously founded WebMD. Sharecare became a public company via merger with Falcon Capital Acquisition Corp, a SPAC, and began trading as SHCR on July 2, 2021. In addition to Claritas, the company's previously announced shareholders have included Koch Strategic Platforms, Baron Capital Group, Eldridge, Woodline Partners, Digital Alpha, Anthem, or their affiliates. When SHCR trading went effective, the stock immediately traded above $10. Earlier today, it was trading just north of $0.60/share, with market cap of about $213MM. Notes: Last year, Claritas Capital added former Sharecare EVP Corporate Development Kathy Harris as one of its strategic advisors. Funds update: On Jan. 23, 2024, Claritas CFO Jordan Michael filed with the SEC on Claritas Opportunity Fund VIII QP LP, which at that time showed a target $25MM, with $8.2MM in from 23 qualified investors. Fund VIII QP was registered in Delaware in December 2022. No SEC reports have yet been published for Claritas Opportunity Fund VIII LP for accredited investors, an entity registered in Delaware 15 months ago. Color: Within the past year, the Claritas homepage began describing the firm as "an alternative investment firm" with interest in healthcare, fintech, media/entertainment, hospitality, real estate and other sectors. Previously, the Claritas welcoming page described the firm as a PE. Prior to that the firm operated as a VC since its founding in 2001. The firm's active and realized companies are on its portfolio page. VNC's Previous Claritas Capital coverage here.