Nashville has emerged as a growing hub for investment companies and financial services firms over the past decade. Several factors make Nashville an attractive location, including low taxes, reasonable cost of living, central location with good transportation infrastructure, and a deep talent pool from local universities. Major firms with a presence in Nashville span private equity, venture capital, wealth management, hedge funds, and investment banking. Key companies include Claritas Capital, FINTOP Capital, Jumpstart Foundry, FB Financial, Pinnacle Financial Partners, and many more. This article will provide an overview of major players, key takeaways, and trends in the Nashville investment landscape.
Private equity remains an area of strength in nashville investment industry
Nashville has cultivated a vibrant private equity community, spanning venture capital, growth equity, buyouts, and more. Many healthcare-focused firms are based here given Nashville’s strength in healthcare.
For example, Claritas Capital is a private equity firm focused exclusively on healthcare services, IT, and tech-enabled business services. They target majority recapitalizations and buyouts of profitable, growing companies. Other examples include Council Capital, which focuses on control buyouts of small businesses, and Mountain Group Partners, targeting growth capital for lower middle market companies.
Several factors make Nashville attractive for private equity firms – direct access to deal flow in the region, low taxes, reasonable cost of living that helps retain talent, and the ability to invest locally as well as nationally. Private equity deal flow and fundraising has accelerated in recent years as Nashville grows as a business hub.
Venture capital and startups are rapidly developing areas of investment
Nashville’s startup and venture capital ecosystems have grown rapidly, with over $1 billion raised by Middle Tennessee startups in 2020.
Key players include Nashville Capital Network, FINTOP Capital, and Jumpstart Foundry. NCN invests in early-stage tech companies via their pre-seed investing arm. FINTOP is focused on early-stage B2B SaaS, fintech and insurtech startups. Jumpstart is a healthcare innovation fund that formed the Nashville Entrepreneur Center, a hub for healthcare startups and entrepreneurs.
Investment is flowing into business services, healthcare, fintech, logistics and transportation, reflecting Nashville’s broader strengths. The growth has been stimulated by affordable real estate, talent from local universities, and good quality of life. Accelerators like the Nashville Entrepreneur Center support the startup ecosystem. Overall, venture capital investment in Nashville should continue growing as the city cements itself as an emerging startup/technology hub.
Wealth management firms find Nashville area attractive due to client needs
Major wealth management firms and RIAs have established a presence in Nashville to serve local high-net-worth individuals and families. Examples include LBMC Family Office Services, a multifamily office, and Beacon Trust, an RIA managing over $3 billion in assets.
Driving factors include Tennessee’s lack of an income tax, the stability of the Nashville economy, and the ability to attract and retain top talent. The Nashville MSA has over 40,000 millionaire households, providing a sizable client base for wealth management.
Firms can address the full spectrum of client needs from financial planning to investments, tax strategies, estate planning, philanthropy, and family governance. The continued growth of Nashville, rising wealth in the region, and favorable tax policies should lead more family offices and wealth managers to build a presence in the area going forward.
Investment banks focus more on specific sectors like healthcare
Being the healthcare hub of the South, Nashville has attracted several healthcare-focused investment banks. These include Avondale Partners, JMP Securities, Piper Sandler and others. However, Nashville has not yet developed as a major hub for bulge bracket banks and large investment banks.
The investment banks tend to focus on senior housing, hospitals, pharma, and medical devices – industries where Nashville has a competitive advantage. Services range from M&A advisory, equity/debt underwriting, and research coverage of public companies.
While not yet a top-tier IB destination, the expertise in healthcare banking should allow firms to continue growing and taking market share. The lower cost of real estate and operations compared to NYC or Chicago also helps reduce overhead.
Insurance and banking players add depth to investment landscape
Major insurance companies like BlueCross BlueShield of Tennessee are headquartered in Nashville, alongside large national players like Unum. On the banking side, FirstBank, Pinnacle Bank, and FB Financial are examples of rapidly growing regional banks based in Nashville.
These large institutions help create a talent pipeline and ecosystem around financial services and investment management in the region. Insurance companies manage large investment portfolios to generate returns on float and invested assets. Banks like FB Financial have investment banking and mortgage operations.
The presence of insurance and banking players complements the other segments of the Nashville investment industry like private equity, venture capital, and wealth management. Together, they help make Nashville a well-rounded regional hub for finance.
In summary, Nashville has developed strong clusters in private equity, venture capital, wealth management, and other investment segments. Key advantages like low taxes, reasonable costs, talent pipeline, and adjacency to major healthcare companies will allow Nashville’s investment industry to continue thriving.