Three Roots Staff Spotlight: Dr. Melissa (Missy) Muendel

Photo of Grady and Missy at Missy's retirement paty

Dr. Melissa (Missy) Muendel has been a trailblazer her entire life.

She is an anthropologist, archaeologist and historian who recently retired from Three Roots Capital as its Director of Research and Reporting. With over 36 years of experience in research and development in the social sciences and humanities, she has made a lasting impact on her community and loved ones.

“I want people to think I did a good job, was a good coworker, was a faithful employee and knew how to have fun,” said Missy.

Growing up in New Jersey, she always wanted to become an archeologist or an anthropologist. After receiving her Master of Arts degree in Near Eastern Archaeology, she spent several years on archaeological research projects. Since the late 1970s, she has participated in 16 research and archaeological projects in the eastern United States, the Middle East and Germany.

“My parents had an extensive library when I was growing up, so I used to read all kinds of historical books about mummies, the Pharaohs and Egypt. I was fascinated by archeology and anthropology from an early age,” said Missy. “I still love being overseas – digging and participating in excavations. I love learning about how people used to live.”

In the late 1980s, she moved to Tennessee to pursue her doctorate in anthropology at the University of Tennessee, Knoxville, where she studied under Dr. William Bass, widely viewed as the foremost expert in forensic anthropology.

Before she began her studies, she took a research position at the Greater Knoxville Chamber of Commerce, where she launched and managed a research department for 11 years – while simultaneously completing her Ph.D.

In 1999, Tom Rogers, current president and CEO of UT Research Park, asked her to join Technology 2020, where he was CEO at the time.  Missy became involved in all of Technology 2020’s initiatives related to access to capital.  She remained there until she helped obtain CDFI certification for what would eventually become Three Roots Capital in 2016.

“Helping people is the best way to happiness and prosperity,” reflected Muendel. “I hope my work helped improve the lives of others.”

Over the last two decades, Missy wrote more than 84 grant and certification applications. Her work and insight supported the formation of Meritus Ventures, Southern Appalachian Fund, TennesSeed Fund, Southeast Community Capital (now Pathway Lending), and Three Roots Capital, as well as the receipt of New Markets Tax Credits, multiple CDFI certifications, and millions of grant dollars.

“It would not be an overstatement to say Missy has participated in projects and programs that have created and are continuing to create half a billion dollars of economic impact in Tennessee and the Appalachian region,” said Grady Vanderhoofven, president, founder and CEO of Three Roots.

In retirement, Missy is looking forward to traveling, continuing to teach at the National Forensic Academy and participating in archeological digs around the world. She already has several trips lined up over the next few months.

Freshly enjoying retirement life, she doesn’t miss working quite yet, but she does miss being alongside her coworkers – most of whom she has known and been close to for many years, including Grady. Missy and Grady first became friends over drinks at a conference at the Omni Grove Park Inn in the early 2000s.

“He was always someone I could be completely honest with,” said Missy. “I’m very proud of Grady and the rest of the team. They’ve done remarkable things the past seven years.”

When they met, Grady immediately knew Missy was uncommon and special. The office will not be the same without her, and she is welcome to stop by for a visit any time.

“The words I would use to describe Missy are teammate, loyal, tenacious, impactful and fun,” said Grady. “No matter the situation, I’ve always been able to rely on her to say, ‘We can do this.’ I wish her all the best in her next adventure.”

Three Roots Provides $25.5M for Real Estate Development Projects at the University of Tennessee Research Park

Close up of UT Research Park development

Collaboration between developers, banks, research institutions and innovative financing companies like Three Roots Capital on forward-thinking projects is critical for creating more economic development opportunities and access to capital in the greater East Tennessee region.

Over the past few years, Three Roots Capital has worked with the University of Tennessee Research Park (UTRP) on numerous real estate projects and efforts to support the region’s entrepreneurs. Three Roots has provided more than $25.5 million in financing for real estate development projects at UTRP, including the construction of the Innovation South building and the renovation of the Innovation North building.

“Three Roots has collaborated with UTRP since our founding in 2016. In 2020, we formalized the relationship by partnering to apply for a $645,600 grant from the U.S. Economic Development Administration to fund our joint effort to encourage and support development at the site,” said Grady Vanderhoofven, president, founder and CEO. “Through our work at UTRP, we want to attract additional private developers and capital to the location to continue making Knoxville a great place to start and grow a business.”

Successful projects at UTRP require participation by experienced real estate developers like Partners Development and community-focused banks like SouthEast Bank and CBBC Bank, as well as the full backing of UT Knoxville.

“The science and collaboration happening at Cherokee Farm is shaping the future of Tennessee’s economy,” said UTK Chancellor Donde Plowman. “We are at a time of incredible momentum and productivity at the UT Research Park, and none of it would be possible without partners like Three Roots, who share our mission to make life and lives better for all Tennesseans.”

Due to the complex nature of real estate projects at UTRP, Randy Jenkins, Chief Financial Officer and Financial Strategist at Partners Development, invited Three Roots to collaborate in creatively structuring the projects’ unique financing.

“Developing projects at UTRP benefits the university, collaborations between public and private institutions and the entire community,” said Jenkins. “We love having a partner like Three Roots to dive into complicated projects for creative financing strategies. They are always willing to jump into a conversation to build project financing solutions which support the vibrancy of our community.”

Aerial view of development at the University of Tennessee Research Park.

Innovation South, a project developed and owned by Partners Development, will enable UT and industry partners to educate a next-generation workforce, conduct cutting-edge use-inspired research, and scale up technology development for many critical sectors including automotive, biotechnology, forestry and manufacturing.

On the Innovation South project, Three Roots collaborated with multiple banks, including SouthEast Bank. As a local bank, SouthEast is committed to working with Three Roots and other regional partners to positively impact the community. Three Roots has worked closely with Jimmy Dalton, Chief Credit Officer at SouthEast Bank, on multiple projects over the course of the last seven years.

“We’re proud to work on a project that helps the university and UTRP offer tremendous opportunities for researchers, professors, students and private partners to do work that drives impact in their industries,” said Dalton. “Between rising interest rates and other challenges, without Three Roots, this project wouldn’t have been economically feasible. Grady is somewhat of an innovator in this space. We’re proud to work with Three Roots on this project.”

Three Roots recently teamed with CBBC Bank to finance the buildout of space in the Innovation North building to house the new Nursing Scholars Program at UT, established through a partnership between University Health Systems and the UT College of Nursing. The space will accommodate specialized training for hundreds of nursing students beginning in the Fall of 2023. Because of the critical need for registered nurses in the community, the project had an ambitious and aggressive schedule, so it was essential to have the support of financial partners that could be creative and move quickly.

“We’ve teamed with Three Roots Capital to finance multiple projects at UTRP,” said CBBC Executive Vice President and Chief Lending Officer John Harris. “We share their commitment to supporting projects that benefit our community, and we value our relationship with them.”

In addition to real estate projects, Three Roots has financed four innovation-based companies affiliated with the university and UTRP, including a $150,000 participation in a $1 million seed funding round for Shift Thermal (formally Active Energy Systems) and a $300,000 loan to Eonix in the fourth quarter of 2022.

For Tom Rogers, president and CEO of the Research Park and a valued Three Roots partner, Three Roots has been critical in helping further the mission of UTRP, which is to serve as a gateway for collaboration between the University and public and private partners.

“Three Roots has provided value in two primary ways: Helping finance building projects and providing important seed capital for some of our most promising Spark Innovation Center clients,” said Rogers. “We’ve established some significant momentum, and Three Roots has been a great strategic partner in making this happen.”

Three Roots raised $33.7 million from six bank partners in 2022

In 2022, Three Roots Capital raised $33.7 million from six bank partners, making it one of the organization’s most successful fundraising years to date. With these funds, Three Roots is better positioned to support companies and projects in low-and-moderate income and rural communities throughout the greater East Tennessee region.

“Sometimes you get so busy working that you forget to look up and reflect on the progress you have made. 2022 was a really big year for us,” said Grady Vanderhoofven, president, founder and CEO. “This additional $33.7 million is especially significant in light of broad economic uncertainty and the rising interest rates we all experienced last year.”

Three Roots forged new relationships with Regions, Truist Bank, Coffee County Bank, and First Bank & Trust and raised additional funds from existing bank partners, Pinnacle Bank and CBBC Bank. One of the first new community partnerships formalized in 2022 was with Regions.

“Regions is proud to work with Three Roots Capital in strategically deploying resources to communities that need them the most,” said Rob Stivers, market executive, Regions. “This directly complements our long-term focus on creating more inclusive prosperity in East Tennessee. Grady and the rest of the staff have done a fantastic job educating banks and the broader financial community about the importance of having a viable CDFI in today’s market.”

For Truist, partnering with CDFIs helps their community development managers and regional leadership meet the unique needs of the communities in which they operate. More than just connecting capital with people and projects, Three Roots also offers essential business coaching and wraparound services that help businesses grow and thrive.

“Truist’s partnership with Three Roots Capital is an example of our purpose to inspire and build better lives and communities,” said Lauren Butler, Community Development Financing Initiative Relationship Manager at Truist.  “Our investment with Three Roots provides much needed resources to support the needs of businesses and projects in the greater East Tennessee region. It’s a great partnership focused on growth in the community.”

Looking ahead, Three Roots will focus the additional funds on projects and companies in low-and-moderate income areas. With the funds from Truist, Three Roots seeks to emphasize the deployment of capital to minority-owned and controlled businesses and affordable/workforce housing projects.  With the funds from CBBC, Three Roots will support specific projects and opportunities at the University of Tennessee Research Park.

Three Roots Staff Spotlight: Jeff Ault

“I’m constantly amazed at the creative way that Three Roots Capital works with its clients,” said Three Roots Capital’s Controller Jeff Ault. “It’s not a cookie-cutter approach.”

Three Roots welcomed Ault to the team in 2021. With a 32-year-long accounting career at Oak Ridge National Laboratory, he brought an unparalleled level of expertise to Three Roots’ financial operations.

“You either really like accounting or you don’t. Thankfully, I enjoy it. It’s like putting a big puzzle together,” said Ault. “I’ve been able to do so many things with my accounting degree. I did work in public accounting for several years, but what it allowed me to do was learn a lot about how businesses work.”

During his career, Ault held many positions, including internal auditor, Director of the Logistical Services Division and Chief Financial Officer of UT-Battelle Development Corporation. He is most proud of his work implementing two major business systems for accounting and human resources at ORNL.

“I felt like I got to leave my fingerprints on a lot of things that are still in use today,” said Ault. “There is a certain amount of professional satisfaction that comes from knowing the Lab is still using at least two of those big systems that I was heavily involved in implementing.”

In his last 10 years at ORNL, he got involved with the lab’s mentorship program, where he paired up with employees who were early in their careers. He found the work meaningful and that it aligned with his mission to help others recognize, improve and use their talents to help themselves and the organizations they work for.

“I enjoy helping people be the best they can be at whatever they’re doing at the time,” said Ault.

It was this drive to help others that brought him to work at Three Roots. He reached a point in his career where he was considering retirement, but as his wife would say, he “failed retirement miserably” by leaving ORNL one day and starting work at Three Roots the following week.

“If I was going to go back to work after retiring, I wanted to do something with a small company and an organization that was contributing to the community,” said Ault. “I was intrigued by how Three Roots helps businesses solve problems and grow. Businesses need money to operate and good advice. Our team does a good job at listening to what our clients need.”

Three Roots was extremely deliberate in bolstering its in-house accounting services. Instead of posting the open position online or using a job service or recruiting firm, the team connected with Ault through their professional network.

“Three Roots was – and is still – growing our capacity and capabilities,” said Grady Vanderhoofven, founder, president and CEO. “Jeff was the perfect fit for this position. He has extensive, relevant experience that allows Three Roots to expand its resources and expertise for our clients and partners. In addition, he is a pleasure to work with and a great fit with our team.”

Three Roots Valued Partner, Mark Taylor of Dominion Group

Dominion Group is a Knoxville-based real estate investment firm co-founded by Chairman Steve Hall and CEO Mark Taylor. The firm develops, acquires and operates generational real estate assets in Tennessee, South Carolina, North Carolina and Kentucky.

Hall and Taylor founded Dominion in 2007 and began buying older, neglected apartment communities and “bringing them back to life” through strategic rehabilitation projects and installing new management infrastructure. In the past 15 years, Dominion has grown dramatically and is approaching two billion in assets under management, development and ownership.

Since its founding, Dominion has kept its original business model of acquiring and rehabilitating existing structures. The firm also develops and builds new apartments, manages two senior living brands and operates management companies for its properties. Additionally, it has an affordable housing business that acquires, rehabilitates and develops projects in the affordable and low-income housing space.

“The desire to impact affordable housing communities and make them really fantastic places to live has been part of our DNA since the beginning,” said Taylor. “From a housing cost perspective, we’re in a season where the need and desire on the customers’ part for affordable housing options has really hit a fever pitch – it’s a real societal need.”

With these projects, Dominion will (1) preserve existing affordable housing and layer in additional social services, (2) develop new apartment complexes or (3) think about new ways to provide affordable housing in the markets they serve, such as setting aside units for lower-income individuals in their conventional multi-family projects.

“We think it’s a great way for us to help,” said Taylor. “If we can help further by bringing in additional services to do more things to help our resident base, then we feel like we’re running a good business and doing good things for the communities we operate in.”

Financing these projects requires more work and creativity than traditional housing financing. Dominion works with partners like Three Roots Capital to support these complicated projects from a capital-sourcing perspective.

“Three Roots has been a great source of flexible capital for us to be able to step into these projects where we may need some additional capital sourcing,” said Taylor. “For us to have flexible capital and great partners like Three Roots that we know we can count on to help us put the capital together to do these types of projects is critical.”

Three Roots has partnered with Dominion Group on three projects. Previously, Three Roots served as an additional credit partner and provided essential bridge financing for two low-income housing projects in South Carolina. Most recently, Dominion Group closed on a project in Knoxville to help provide middle-market housing to help preserve a healthy rent profile for individuals who don’t qualify for affordable housing but need housing that isn’t outside of their budget.

“With need for affordable housing in Knoxville and beyond, we are pleased to work with valued partners like Dominion Group to help solve this crisis,” said Grady Vanderhoofven, President and CEO. “We are committed to working on placemaking real estate projects like these that have a lasting, positive impact on the communities we serve.”

Taylor and Vanderhoofven first met around a decade ago through a mutual acquaintance and have enjoyed working together over the years.

“It’s been fun to have Grady as a partner and a friend. I love his entrepreneurial nature, creativity and excitement about participating in projects that we think are very meaningful,” said Taylor. “We’re looking forward to a long relationship with Three Roots. I imagine we’ll have a lot of fun projects to work on with them over the next few years.”

Collaboration and strategic investment in the face of economic uncertainty, by Grady Vanderhoofven, President & CEO

Earlier this year, the great Tom Ballard, editor of Teknovation.biz and Chief Alliance Officer of PYA, spoke with several angel and venture capital investors in the region, including me, about 2021 trends and our outlook moving into 2022.

At the time of that conversation, there was so much liquidity in the market that angel and venture capital were booming. I spoke about the unprecedented level of activity and wealth creation, allowing for the possibility of more capital flowing into regions, such as Tennessee, outside of traditional investing hotspots.

Unfortunately, I also predicted that a “correction” in the stock market, or an increase in the cost of capital, or in the instance of unforeseen events with severe economic consequences, there would be major disruptions in the market and the economy. My interview with Ballard ran in January 2022 and just a short time later, the war in Ukraine began, interest rates began to rise, the stock market tanked, and the price of everything from fuel to household goods became more expensive.

At a macroeconomic level, we’re dealing with economic uncertainty – everything from inflation to a looming recession. But at a microeconomic level, our community – while still experiencing some economic pain – isn’t feeling the full brunt of some of the problems facing larger metro areas and other states and regions of the country because of the massive influx of people and companies moving to our region.

With respect to jobs, we’re seeing major organizations relocating some or a significant portion of their operations to East Tennessee – as we’re seeing with Smith & Wesson and Elo Touch Solutions – because of our state’s attractiveness to business. The entrepreneurial ecosystem in east Tennessee is increasingly welcoming and attractive to start-ups and young companies, as multiple communities invest more capital and resources in creating and nurturing start-ups. Meanwhile, professionals from the East and West coasts are moving to the Knoxville area in droves to enjoy the relatively lower cost of living and high quality of life.

I believe this surge has provided a slight buffer from the worst of the current economic downturn. With more jobs available and more individuals and businesses participating in our local economy, we’re somewhat insulated from some of the worst issues of unemployment and inflation.

But this buffer doesn’t mean we’re immune to economic difficulties or that it is clear sailing ahead. Right now, we’re facing a dire need for housing of all kinds, including workforce housing and affordable housing. According to the Knoxville Area Association of Realtors, rent in the Knoxville metro area increased about 20% just last year. The median sale price for houses also increased 19.7%, making our area one of the fastest-growing markets in terms of price growth. As an added issue, housing availability is near a record low.

Three Roots Capital is aware of this issue and actively working with developers and other partners to help address this problem. We financed Foggy Bottom Flats Townhomes in the South Knoxville Waterfront District. We have partnered with Dominion Group on three projects – two in South Carolina and one in Knoxville – to bring more access to affordable and workforce housing.

Looking ahead, if we want to keep people and companies here, we need to have more collaboration between like-minded investors inside and outside of our community. I am heartened by the heightened focus on collaboration and information sharing we’re seeing lately and hope this trend continues.

As the founder of a Community Development Financial Institution (CDFI), I have observed in the past couple of years that more capital has been available for CDFIs from the federal government than ever before in the history of Three Roots Capital. These funds can be used to create and grow unique and potent pools of capital, like the Three Roots Capital Impact Fund, from which we make crucial equity investments and subordinated loans and other investments that we cannot make with funds we borrow from our valued bank partners. Ultimately, these funds enable us to add new tools and enhance some of the existing financing tools in our toolbox and allow us to support innovative, growing companies, such as our recent investments in Active Energy SystemsNellOne Therapeutics and SmartRIA.

Through the Three Roots Capital Impact Fund, we recently made a small equity investment in a company in Chattanooga and are in discussions with another Knoxville company to make an investment or loan. We recently have raised flexible capital from a new bank partner to support future deals like these, with a particular focus on affordable housing and minority-owned businesses. Three Roots Capital intends to do even more in the future as we grow our Impact Fund and our affiliated TennesSeed Fund.

My predictions about the current economic situation were unfortunately correct earlier this year. However, with increased collaboration between investors, developers, companies and other forward-thinking individuals, I think we can continue to grow and strengthen our region.

Working together is rarely easy – especially when facing economic uncertainty. Nevertheless, I believe collaboration is one of the most important parts of building on our current momentum to bring more capital to our region and our mission to help people and companies here to thrive.

Partner Spotlight: Bryan Crosby

Bryan Crosby is the Chief Executive Officer of Southeastern Packaging Technologies (SPT) and a valued partner of Three Roots Capital. SPT was a local startup that has grown and matured to offer turnkey solutions for brand managers and retail partners to seamlessly transition consumer packaged goods (CPG) in automotive and household chemicals into eco-friendly packaging.

The company’s patent portfolio includes FunLPro Closure Technologies, a high-end dispensing system for CPG fluid containers, and proprietary Bag-in-Box and Stand-up-Pouch systems that reduce plastic waste by up to 85 percent and maximize storage space.

A Maryville native, Crosby was drafted to play for the Milwaukee Brewers out of high school. In 2009, he returned to Tennessee to attend Middle Tennessee State University and then worked in financial services for a few years. He returned to Knoxville in 2014 to start his MBA program at the University of Tennessee (UTK) as an Entrepreneur Fellow and to develop a business plan for commercializing the FunLPro, a unique pouring device invented by his father and business partner.

At UTK, the Anderson Center for Entrepreneurship and Innovation named Crosby one of four student-led startup company winners in the fall 2014 Boyd Venture Challenge, where he received $7,500 to finance his growing company. It was during this “Shark Tank-style” challenge that Crosby met Chris Miller before he became Chief Financial Officer at Three Roots Capital. The two stayed in touch, and Miller connected him with the rest of the Three Roots team after Miller joined Three Roots.

“I always enjoy working with Three Roots because they know their space better than anyone,” emphasized Crosby. “It’s been an absolute pleasure working with them over the years. They are filling a very big and meaningful void in the funding market for East Tennessee.”

Despite his company’s growth, Crosby remarked that it is challenging to gain access to traditional financing as a small business in a rural area. In 2018, Three Roots provided SPT with a loan through their Rural Microentrepreneur Assistance Program (RMAP).

“We got it closed very quickly,” said Crosby. “We used the $50,000 RMAP loan to buy tooling for an injection mold machine that manufacturers our mechanisms for flexible packaging.”

At the moment, Crosby said the SPT team is working diligently to transition or “cross the chasm” from startup mode to a more traditional business model. The Three Roots staff has been an invaluable source of expertise during this process, explained Crosby.

“If we have an idea about what we need, we can lay it out in a general way to them and they can tell us what to do in about 10 minutes,” said Crosby. “It’s an extremely advantageous relationship because we don’t have to spend hours or months identifying exactly what lending sources to pursue.”