Nashville’s startup scene is booming. Here’s why investors and founders are moving to ‘Music City’

On a flight from Fort Lauderdale, Florida, to Nashville, Tennessee, earlier this month, 36-year-old Robin Shah settled into his seat and ready to crank out some work for his well being tech startup, Thyme Care. 

Founded in 2020, Thyme Care helps most cancers sufferers handle their illness by connecting them with the personalised care and assets they want. Shah, the co-founder and CEO, sports activities a purple Thyme Care sticker on his water bottle, and it caught the attention of the enterprise capitalist sitting subsequent to him on the airplane.

The VC acknowledged Shah’s firm – an incidence that’s hardly uncommon for him anymore. As extra traders and founders are flocking to discover Nashville’s booming well being care and know-how scene, Shah mentioned he will get acknowledged commonly. Sometimes individuals know his first and final names. 

“It happens probably every two or three flights,” Shah informed CNBC in an interview.   

Nashville is residence to greater than 680,000 individuals, together with Shah, who love town for its southern allure and small-town vibe. But whereas the group would possibly really feel quaint, Nashville is a titan of the health-care trade. The metropolis helps greater than 900 health-care firms that generate a complete of $97 billion in income annually, in accordance with the Nashville Health Care Council.

As a consequence, town is bursting with alternatives for founders like Shah who’re in search of methods to disrupt the trade and redefine the affected person expertise.

CNBC spoke with a dozen founders, traders and executives in Nashville who described a tight-knit, supportive well being tech group that is rising bigger by the day. 

“Great companies are being born here,” Shah mentioned. 

Nicknamed “Music City,” Nashville is chock-full of nation singers and perpetually buzzing with dwell music. It has additionally change into a preferred vacation spot for bachelorette events, so teams of ladies, usually donning pink or bedazzled cowboy hats, might be seen wandering out and in of bars on the favored avenue referred to as Broadway. 

But simply minutes away from the occasion vibe on Broadway lies Nashville’s vibrant community of well being methods, startups and funding corporations. 

The metropolis’s status as a health-care hub was catalyzed when HCA Healthcare, one of many first for-profit hospital firms within the U.S., was based there in 1968. HCA operates greater than 180 hospitals throughout 20 states and facilitates greater than 37 million affected person encounters annually, in accordance with its web site.

The firm has helped appeal to troves of health-care professionals to Nashville, and different organizations shortly adopted swimsuit. 

Community Health Systems, which operates 74 acute care hospitals, Brookdale Senior Living, which runs greater than 670 senior residing communities, and Acadia Healthcare, which operates greater than 250 behavioral well being services, are all headquartered within the higher Nashville space. 

Prominent larger training establishments like Vanderbilt University, together with the Vanderbilt University Medical Center, Belmont University, and Meharry Medical College are additionally primarily based in Nashville.  

“Fundamentally, Nashville is sort of the healthcare capital of the world. That’s how we describe ourselves often,” Kyle Cooksey, chief expertise officer at Monogram Health, informed CNBC.

Monogram Health, headquartered in a Nashville suburb, presents digital instruments that may assist sufferers with circumstances like power kidney illness handle their care from residence. The firm closed a $375 million progress funding spherical in January, and former Senate Majority Leader Bill Frist serves as chairman of the board.  

Cooksey mentioned the Nashville startup ecosystem is “incredibly supportive” and mission-driven, and now so entrenched within the metropolis that it is onerous to overlook.  

 “You can’t literally go a block here without stumbling across a health-care company,” he mentioned.

As a consequence, health-care expertise and experience is plentiful in Nashville, which is a considerable perk for founders constructing firms there.  

John Bass, a Nashville native and the CEO of a enterprise studio referred to as Hashed Health, mentioned town is such a “highly concentrated” atmosphere of health-care professionals that it may be onerous to go away. He based Hashed Health, which goals to de-risk and spin out health-care startups, in 2016.

Bass mentioned VCs in Nashville are likely to take a realistic and conservative method to investing, which displays the difficult actuality of constructing options for the historically technology-averse well being care trade. He mentioned innovation on this house requires a cautious understanding of laws and constraints.

Bass has thought of buying and selling in Music City for the Rocky Mountains in Colorado, however he mentioned he’s glad he stayed.

“Moving to a different city would be fun, but I don’t think any other town has that same level of concentrated talent that Nashville has,” Bass informed CNBC in an interview. “It still feels like it’s the right size, it hasn’t grown so big that it’s too diluted.”

Ellen Herlacher, a accomplice on the health-care VC agency LRVHealth, grew up in Nashville and lives in Boston. She mentioned Boston is a powerful metropolis for each tutorial and medical innovation in well being care, however Nashville is the middle of health-care business. 

Herlacher travels to Nashville each six to eight weeks to satisfy with portfolio firms and co-investors. Sometimes she makes the journey two weeks in a row. 

Luke Benda, co-founder and CEO of the Nashville-based medical robotics firm Healing Innovations, mentioned town offers founders easy accessibility to the “heavy hitters” of hospital operations, which might be troublesome to succeed in, not to mention rent, from elsewhere. 

However, he mentioned startups additionally want conventional technologists like software program builders and engineers, which might be tougher to seek out in Nashville.   

The broader tech expertise pool has improved lately as tech firms like Amazon and Oracle have established hubs in Nashville, however Bass mentioned it is nonetheless not all the time straightforward to seek out true technologists.

Amazon introduced it will construct an expansive new workplace house in Nashville in 2018 and promised to convey greater than 5,000 company and know-how jobs to town. Oracle, which accomplished a deal to purchase the digital medical data firm Cerner final 12 months, is constructing its second U.S. headquarters in Nashville for $1.2 billion, in accordance with The Tennessean. 

“It’s still the reality that you’re probably not going to find everything you need here,” Bass mentioned.

Nashville’s well being tech startup scene has additionally benefited from important funding from native organizers and authorities officers. 

In November, the Greater Nashville Venture Capital Association (GNVCA) formally launched. The group is membership-based and goals to make capital and expertise extra extensively obtainable to traders within the area by attracting new VCs, organizing networking occasions and sourcing funding alternatives. 

Vanderbilt offered a grant to assist the GNVCA’s preliminary operations, in accordance with a weblog submit. 

The GNVCA was in a position to launch partly as a result of a “critical mass” of VC corporations have now arrange store in Nashville, mentioned Marcus Whitney, a member of GNVCA’s board and a co-founder and accomplice of the agency Jumpstart Health Investors. 

Whitney has lived in Nashville for greater than 20 years, however he mentioned the VC and startup ecosystem has modified “drastically” within the final 5 years. He mentioned town is attracting new residents from business hubs on each coasts, together with founders, VCs and funding bankers.

“We look a lot more like a tech and innovation hub than we did 10 years ago, that’s for sure,” he informed CNBC in an interview. 

Nashville can be residence to the Nashville Entrepreneur Center, which helps join startups with the assets and assist they want. The heart opened its flagship facility in 2010 after the Nashville Area Chamber of Commerce commissioned a 75-person “Entrepreneurship Task Force” again in 2007. It has labored with greater than 10,000 entrepreneurs since 2010, in accordance with its web site. 

Benda mentioned the Entrepreneur Center is an “amazing hub” filled with mentors that need to assist founders, even when they do not know what they’re doing. Landon Gibbs, managing accomplice at Nashville-based Altitude Ventures, mentioned that the middle is the “front door” for entrepreneurship within the metropolis.

“The community is really behind that,” Gibbs mentioned. 

Eligible Nashville entrepreneurs also can change into members of the Greater Nashville Technology Council and the Nashville Health Care Council. The Nashville Health Care Council is made up of greater than 300 firms, together with HCA Healthcare, and it presents networking alternatives and academic occasions. 

Raelyn Wilson, co-founder and CEO of Nashville-based Peer Supply, mentioned there are “constant” social occasions for the startup group in Nashville, together with many which can be very informal. Peer Supply, a platform that helps to enhance health-care provide chains, is Wilson’s first enterprise as a founder. 

“I can’t tell you how often people want to grab coffee or grab a glass of wine or something just to talk about the industry and share lessons learned,” Wilson informed CNBC in an interview.

Beyond the sensible business benefits, many well being tech founders and traders have discovered that Nashville is just a enjoyable place to dwell and lift a household. 

Live music is ubiquitous within the metropolis, and Tennessee has no state revenue tax, which Whitney mentioned is engaging to many residents. Whitney helped convey skilled soccer to Nashville, and Tennessee is residence to skilled soccer, hockey and basketball groups as properly.

“We have, I think, all the things that you would want from a city, but probably a little bit more community than maybe some of the more aggressive tier-one cities have,” he mentioned. 

However, Whitney mentioned there’s nonetheless “a lot of work to do” to enhance the training system in Nashville. Tennessee ranks thirty third in training within the U.S., in accordance with U.S. News & World Report. He added that infrastructure may also need to preserve tempo with town because it grows, as he’s already noticing extra site visitors.

Herlacher of LRVHealth mentioned Nashville remains to be comparatively accessible and straightforward to navigate, including that there’s a lot much less site visitors in comparison with cities like Boston and San Francisco.

“It’s not hard to leave work, drive 15 minutes, quickly grab a drink with somebody and then be at home for dinner at 6:30 p.m.,” she mentioned.

Herlacher mentioned Nashville is sort of “unrecognizable” from when she grew up there. But regardless of all of the change, she says range remains to be a problem. She mentioned it’s much less widespread to seek out ladies in entrepreneurship there, as an example.

Rachel Soper Sanders, co-founder and CEO of the personalised complement firm Rootine, has noticed this disparity firsthand. Sanders attended Vanderbilt and moved again to Nashville when she determined to construct Rootine. She mentioned it’s nonetheless uncommon to seek out feminine founders, and particularly venture-backed feminine founders, within the metropolis. 

Even so, she mentioned she has discovered a close-knit, supportive startup ecosystem in Nashville that has continued to blossom because it grows.

“There’s this new feeling, excitement, energy, where Nashville is not just Nashville anymore, it’s not just the southeast, but it’s connected to everywhere else,” she informed CNBC in an interview.

Thyme Care’s Shah mentioned Nashville may be very welcoming to newcomers, and he discovered that the well being tech group embraced him instantly. It was surprisingly straightforward for him to regulate after shifting from New York greater than 5 years in the past. 

The week he arrived in Nashville, Shah met an entrepreneur within the trade who launched him to 30 health-care executives in 24 hours. 

“Within two months, I went and met all these people, and everyone was so welcoming to me,” he mentioned. “There’s so much opportunity to learn from each other.”

Bass of Hashed Health mentioned there’s a “strong community feel” amongst entrepreneurs and VCs in Nashville. It’s not unusual to run into friends and colleagues at eating places, cafes or back-to-school nights.

“I just came from my neighborhood coffee shop, and I probably saw three people I knew that live in the neighborhood, and they’re in health care, or tech or venture capital,” Bass mentioned. “It’s almost a daily thing.”

In some circumstances, Nashville’s well being tech group might be supportive to a fault. 

Chase Spurlock, co-founder and CEO of Decode Health, mentioned individuals can expertise a phenomenon referred to as the “Nashville no,” the place they’re informed “maybe” indefinitely. He mentioned it’s a reflection of town’s southern roots and want to not be too damaging. 

Decode Health is an information platform that’s designed to assist pharmaceutical, diagnostic and know-how firms determine new biomarkers and construct new medical choice assist instruments. Spurlock, a Tennessee native, based the corporate in Nashville in 2019.  

Spurlock mentioned he’s “proud” that he has been in a position to keep within the space. He mentioned there’s a real want to see entrepreneurs and know-how reach Nashville, and that the group is dedicated to paying it ahead.   

“I have never needed help and not received help in the Nashville community,” Spurlock informed CNBC. “That’s, I think, what really makes us special.”

TUNE IN: The “Cities of Success” particular that includes Nashville will air on CNBC on Dec. 6 at 10 p.m. ET.