Fred Tompkins is a Distinguished Professor Emeritus at the University of Tennessee, Knoxville, and a member of the Three Roots Capital Board of Directors. With his 40+ year career at the university and supporting entrepreneurs in the greater East Tennessee region, Three Roots is proud to work with Tompkins and benefit from his experience and relationships.

“I enjoy what this organization is doing: Trying to better the lives of people in this area,” said Tompkins. “They are trying to create and support businesses, which create employment opportunities. I enjoy that we are doing something that positively impacts the lives of the people we interact with.”

As a self-described “farm kid” from Hamblen County, Tompkins came to UT to study engineering in the 1960s and, aside from a three-year stint in the military, has never moved away from the area. Originally planning to get his engineering degree and transition into industry, he received a faculty position at UTK and has remained there for his career.

In addition to his role within the engineering faculty, he has held several administrative roles, including President and CEO of the UT Research Foundation, Vice President for Research, and Dean of Engineering. He became interested in entrepreneurship through his work at UTRF and wanted to see how the community could further engage and encourage individuals to license technologies from the university or other regional institutions and work toward commercialization. Following his retirement, he became the co-founder of four early-stage technology companies.

Tompkins met Grady Vanderhoofven, President and CEO of Three Roots, when Tompkins was on the Board of Directors of Technology 2020. When Vanderhoofven was looking to form Three Roots and its board, Tompkins was an excellent fit due to his history of supporting entrepreneurship in the region and extensive career at UT.

“I’ve known Fred for close to 15 years. I knew I wanted him to be involved in Three Roots because he is a true champion for access to capital for small and young businesses in our region,” said Vanderhoofven. “I’m so thankful for his guidance and support over the years in my own career and through his work on the board of Three Roots and with the TennesSeed Fund.”

Tompkins was an early proponent for the creation of the TennesSeed Fund, dedicated to providing seed- and early-stage capital to startups throughout Tennessee. Tompkins serves as the Chairman of the Board of Directors of TennesSeed Funders, which is the nonprofit, sole limited partner of the TennesSeed Fund.

“We want people and institutions, who want to help their community, to contribute funds to the TennesSeed Fund, which in turn will deploy funds to support young companies in Tennessee,” said Tompkins. “We want to put people in a position to make a living and make a difference.”

Though Tompkins’ area of expertise is in technology, he recently was impressed with Three Roots’ role in helping turn the Brushy Mountain State Penitentiary into a tourist attraction in Morgan County. With a restaurant, distillery and other offerings, Brushy Mountain is a job-creating organization providing economic impact in an underserved community.

“Three Roots was instrumental in funding individuals who were converting that space and making it a place for tourism,” said Tompkins. “That tourist attraction is making a difference. I’ve seen it firsthand – it’s amazing.”

Reflecting on opportunities for growth in the area’s entrepreneurial ecosystem, Tompkins believes the region should focus on educating future entrepreneurs about commercialization opportunities, providing access to debt and equity capital, and advising and mentoring burgeoning entrepreneurs.

“We are a technology-rich neighborhood. There’s a ton of cutting-edge technology activity at Oak Ridge National Laboratory, UT, and the other local entities,” said Tompkins. “What I would really like to see is the community come together to help entrepreneurs work toward commercializing technology here in East Tennessee.”

Startups and small businesses throughout East Tennessee and greater Appalachia need access to financing to enable growth, but traditional financing options have not historically been readily available. This access to capital gap has left many innovative thinkers, researchers, and business owners unable to commercialize their technology, expand their production capabilities, or otherwise grow their business in their community.

While Three Roots Capital is extremely proud of its role as a source of financing for numerous impactful real estate and economic development projects, the firm is also enthusiastic and active as a small-business investor. From its founding, Three Roots has been committed to deploying high impact equity and equity-like capital to growing businesses. To do so, Three Roots created two pools of capital: the Impact Fund and TennesSeed Fund.

Three Roots capitalized the Impact Fund by successfully deploying capital to generate retained earnings from the firm’s loans and from other economic development projects. Since 2016, the Impact Fund has grown from $0 to more than $3 million, which has enabled the firm to make the types of loans and investments that it cannot make with funds borrowed from bank partners. As Three Roots continues to increase the amount of capital available for this specific type of investing, the level of activity and level of impact will increase.

Meanwhile, the TennesSeed Fund was launched in 2019 as a seed- and early-stage venture fund. It is managed by TennesSeed Partners, which is a collaboration of Three Roots Capital, Meritus Capital, and Innova Memphis. TennesSeed made its first three investments in Active Energy Systems (AES), SmartRIA, and Entac Medical.  AES, based in Oak Ridge, previously participated in ORNL’s Innovation Crossroads program and is a current participant in the Spark Innovation Center.  SmartRIA was founded by an entrepreneur in Knoxville and continues to grow and thrive there.  Memphis-based Entac was co-founded by a University of Tennessee researcher based on intellectual property he developed, which the company licensed from UT Research Foundation.

Recently, Three Roots directly invested in two of the original TennesSeed Fund portfolio companies. In early April, Three Roots participated in the seed round financing for Active Energy Systems, alongside Clean Energy Venture Group (Boston) and Queen City Angels (Cincinnati). The new funding will allow AES to advance its business development efforts and engage partners to further commercialize its technology.  Near the end of April, Three Roots invested in SmartRIA, alongside a handful of strategic investors, which are also customers of the company.  The new funding will allow the company to accelerate growth in anticipation of a Series A round later this year.

Three Roots is extremely selective with respect to investing time and capital in young and small businesses. The firm invests in a small fraction of the companies it evaluates. In addition to AES and SmartRIA, Three Roots has invested in NellOne Therapeutics, Smart Furniture, and Southeastern Packaging Technologies.  Along with those investments, Three Roots was integrally involved in the formation and financing of Familiar Faces Home Care, which represented a big commitment of resources in participating with a minority founder in a start-up.  From providing a company’s first desk to putting “fuel” in a company’s tank to accelerate growth, these investments support the operations and expansion of regional businesses.

Members of the Three Roots team have a long history in company creation and early-stage and expansion-stage financing in high-growth companies.  The team’s experience and expertise with a combination of company creation, early-stage investing, and small-business lending is rare, especially within the region in which the firm is deploying capital. Through the team’s work with Meritus Ventures and Southern Appalachian Fund (SAF) a decade ago, they made multiple successful investments in East Tennessee. Meritus Ventures portfolio company GRIDSMART, for example, was acquired for $87 million by publicly-traded CUBIC Corporation in 2019, and the company has continued to grow and lead its industry, with a facility still located in Hardin Valley.  Similarly, two SAF portfolio companies were successfully grown and acquired in East Tennessee.  EonStreams, which was located on Market Square in Knoxville when SAF invested, was acquired by publicly traded VitalStream, and Tricycle in Chattanooga was acquired by Shaw Industries, a Berkshire Hathaway Company.

“We’re proud of our large projects and all of our loans. Those deals generate revenue for our business and create impact in our community, and we value our excellent relationships with our bank partners,” said Grady Vanderhoofven, President and CEO of Three Roots. “But this kind of investment capital for young companies and entrepreneurs and small business owners is vital. We must use this capital judiciously because it is challenging to attract and aggregate this kind of capital, but we get a lot of satisfaction out of being able to deploy it to support high-growth potential businesses that can create significant positive impacts in our community.”

Tom Rogers is the President and Chief Executive Officer of the University of Tennessee Research Park (UTRP) and a valued partner of Three Roots Capital. Rogers has spent his career supporting entrepreneurship and business development efforts in the region and has a long history with the Three Roots team.

Rogers started his career at the Tennessee Valley Authority, eventually moving to the Oak Ridge Chamber of Commerce, as its President and Chief Operating Officer. In 1995, he founded the venture development organization, Technology 2020 (Tech 2020), and served as the Executive Director of the Tennessee Technology Development Corporation (now Launch Tennessee). Prior to joining UTRP, he spent over a decade at Oak Ridge National Laboratory, serving as the Director of Industrial Partnerships and Economic Development and founding the Innovation Crossroads program.

“I guess you can say I’ve hit for the cycle – I’ve worked for all the ‘Big Three’ – TVA, ORNL and now UT,” joked Rogers. “I’ve had great opportunities to work with some really good people, people who share my passion for making this region a better place.”

No matter what new position he finds himself in or organizations he has worked for over the years, Rogers has always found himself gravitating back toward entrepreneurship, particularly in relation to science and technology innovation coming from the university or national lab.

“There are lots of organizations that are in the business of attracting companies. That’s important. But what I like to do is help create companies, not just attract them,” said Rogers. “Entrepreneurs are important because they translate science into impact. I think they bring passion and drive to the table and are really important as part of the process of commercializing the science and tech we create here.”

With the rise of hardtech startups launching out of East Tennessee, Rogers emphasized the importance of attracting capital to the area to keep these companies here or risk their relocating elsewhere. He believes Three Roots’ mission is an important piece of this puzzle.

“I think that everyone in the region recognizes that access to capital is an issue. Everyone recognizes that while we’ve had some success, we’ve not cracked the code on that,” said Rogers. “I’m grateful that Three Roots has agreed to take the lead to continue to work on that issue. Because if we want this region to be the entrepreneurial hub that we think it can be, capital is going to be an important part of the equation.”

Rogers met – and hired – much of the Three Roots team while leading at Tech 2020 and is proud of the work they accomplished during his tenure. Rogers remained on the Board of Directors of Tech 2020 when he left to join ORNL. Some years later, the nonprofit folded its operations as a venture development organization. Rogers admitted he was initially skeptical of the plan to pivot and focus exclusively on access to capital, but he ultimately has been impressed by how Grady Vanderhoofven, Founder, President and Chief Executive Officer, and his team took Tech 2020’s charter and CDFI certification and – “like a phoenix rising from the ashes” – reinvented and regrew it. Rogers and Three Roots have continued to find ways to work together over the years. Examples he cited include the creation of TennesSeed Fund, which invested in Active Energy Systems, a Research Park Spark client, and the assistance Three Roots has provided by financing several real estate development projects at the Research Park.

“Tom Rogers has been an instrumental figure in my career and in the lives of so many others in the Knoxville-Oak Ridge region,” said Vanderhoofven. “I’m proud of what we were able to accomplish together with respect to access to capital when Tom was leading Tech 2020 and in the years since. We’ve partnered recently to secure a federal grant to drive investment to projects and companies at UTRP, which is an Opportunity Zone, and worked together to explore mechanisms to address the need for capital for young and start-up companies in this region. I look forward to more opportunities to collaborate.”

With the launch of the Spark Cleantech Accelerator and other opportunities, Rogers is optimistic about the future of the Spark Innovation Center. From offering incubator space to expert mentoring, Rogers is looking forward to helping hardtech startups grow and have real-world impact.

“We’ve learned a lot in four decades. We have a wonderful team of people, both at UTRP and with our partners and collaborators,” said Rogers. “I call it place-based innovation. We want the park to be the place where the most promising hardtech startups gravitate. In a few years, you’ll see a beehive of activity that I think the whole region will be proud of.”

Three Roots Capital took substantial steps forward in 2021 and celebrated our five-year anniversary of providing capital, coaching, and connections to companies and projects in the greater East Tennessee region. As we move into the new year, I want to reflect on some of our more notable accomplishments from last year.

In 2021, Three Roots made more new loans and investments – including senior loans, subordinated debt, and equity investments – than in any previous year in our history. We achieved a major milestone of having more than $100 million of total assets under management, we raised more than $20 million of new capital for lending and investing, and we deployed almost $19 million of capital. I’m proud of the work we have been able to accomplish, and how we have continued to grow and deploy vital pools of capital for companies and projects that need financing.

Three Roots’ portfolio currently includes companies and projects in fourteen (14) counties in Tennessee, including Knoxville, Oak Ridge, Cookeville, Chattanooga, Johnson City, Memphis and many rural and suburban areas in between. Our portfolio includes a mix of place-making commercial real estate projects, microloans, small business loans, affordable housing projects, and equity investments in companies and projects in Tennessee, Kentucky, and South Carolina.

We have made loans to multiple nonprofit organizations, along with investments in small business startups and companies supported by venture capital investors. Three Roots participated in the creation of a minority-owned and woman-owned startup company, providing the company with essential business coaching and critical seed capital, along with meeting a practical need by supplying the company’s first desk. Projects like these are important to Three Roots because they help fulfill one part of our mission: economic and community development.

This past year, we worked on economic development projects funded by the U.S. Department of Treasury, U.S. Department of Commerce, and U.S. Department of Agriculture. As a certified Community Development Financial Institution (CDFI) and Community Development Entity (CDE), we believe projects like these play a crucial role in generating economic growth and positive social impact in some of the most needful low income and rural communities of East Tennessee and the surrounding region.

I’m also happy to announce Three Roots added two new bank partners this year: Planters Bank and CBBC Bank. Both financial institutions are champions of community impact and great additions to our roster of bank partners, and both have increased the capital available in Three Roots’ toolbox.  With the support of these banks, we will be able to continue our mission of stimulating economic growth and creating positive social impact throughout Tennessee and the Appalachian region for years to come.

Lastly, I want to thank all the partners and collaborators we have worked with over the past five years. Our fifth anniversary milestone created an opportunity to reflect again on the fact that we have worked with amazing banks, businesses, community organizations, institutions, individuals, state and federal agencies, and other entities over the years. We could not be more grateful for the support and guidance we have received from our partners and for the confidence in us they have demonstrated by choosing to work with us. In these short five years, we have accomplished much, and I look forward to what more we can do in the next five years with powerful and potent partnerships like these.

Looking ahead into 2022, I am most hopeful about our opportunity and ability to continue to expand our lending and investing activity to increase and compound the positive economic and social impacts we can make in the communities in which we do business.

3Roots – Impact Report – 2016-2021

Partners Development is a multi-generational real estate development company headquartered in Knoxville. Randy Jenkins, Chief Financial Officer and Financial Strategist, has been with the company for 28 years. Three Roots Capital is appreciative to have cultivated a lasting partnership with Partners Development and Jenkins over the years and looks forward to continuing to work with them on place-making real estate projects in the future.

Founded nearly 50 years ago, Partners Development has completed more than 100 projects across North America and Europe, focusing on four major market areas: multi-family residential, commercial, industrial warehousing and higher education.

“Partners Development is a first-class organization, from top to bottom and throughout the company. They have a stellar reputation in this region and market, as well as broadly outside of this region and market,” said Grady Vanderhoofven, President and CEO. “Partners Development is active, creative, innovative, and smart. They are the type of organization with which Three Roots seeks to build long-term, mutually beneficial relationships.”

At Partners Development, Jenkins manages the financial risk of Partners and its affiliates and handles financial planning and reporting, among other responsibilities. In addition to his role at Partners Development, Jenkins is the Chairman of the Finance Committee of the Knoxville Chamber, serves on the Advisory Board of the University of Tennessee College of Nursing and is on the Board of Directors for the Girl Scouts of the Southern Appalachians.

Three Roots met Jenkins and the Partners Development team several years ago and slowly developed a relationship with them over the next couple of years, waiting to find the right opportunity to work together.

“Making deals in this industry involves a lot of relationship building,” said Vanderhoofven. “You have to trust someone, and they have to trust you.”

As they were establishing a relationship, Three Roots first worked with Partners Development on financing for the Innovation North project at the University of Tennessee Research Park (UTRP). Most recently, Three Roots worked with Partners Development to finance the new Elo Touch Solutions facility at the Hardin Business Park, which will bring more than 80 high-quality jobs to the community. Looking ahead, Three Roots is working with the real estate developer on two other prospective projects at UTRP, and the collaborators have explored other prospects together throughout East Tennessee.

From working on these projects with the Three Roots team, Jenkins has enjoyed the ease with which he can communicate what his financing needs may be for certain projects and knowing that Vanderhoofven and the rest of the team instantly understand what he needs and where he might want to go with a financing package. He equates working with Three Roots to pressing the “easy button.”

“I know the communication is going to be open and transparent. They want a business or project to succeed just as much as we do as the developer,” said Jenkins. “It truly is a partnership in seeking to find that solution that works for everyone.”

Three Roots Capital is proud to help finance place-making real estate projects that bring high-quality jobs and economic growth to East Tennessee and the greater Appalachian region. Recently, Three Roots provided financing to Partners Development, a local real estate developer and valued partner, to support the creation of a new facility for Elo Touch Solutions (Elo), a leading global provider of interactive touchscreen solutions.

Partners is developing a state-of-the-art, 87,500 square foot facility in Hardin Business Park for Elo, which will house warehousing, logistics, service, product configuration and other customer-facing services. Once complete, Elo expects the building to hold 80 employees, with room for growth. Several employees currently work at a small location in downtown Knoxville, and Elo wanted to expand its footprint in the area where its story first began.

Around 50 years ago, Dr. Sam Hurst, a researcher at Oak Ridge National Laboratory, invented an early version of the modern touchscreen. With this novel technology, he formed the company Elographics, which was later changed to Elo Touch Solutions. Today, Elo touchscreens are used around the world on everything from medical-grade monitors to point-of-sale systems to mobile computers.

“We are happy to have Three Roots Capital and Partners Development supporting this major investment in East Tennessee, where Elo was founded with our invention of the touchscreen in an Oak Ridge basement 50 years ago,” said Craig Witsoe, CEO of Elo. “Today as the global leader in cloud-connected touchscreen computing devices, you will see Elo at the checkout and self-service kiosks for Target, Lowe’s, McDonald’s, Taco Bell, and many more. We have also supplied many of the respirator touchscreens and temperature scanning kiosks used to fight Covid, as well as new Industry 4.0 applications. Grady and the Three Roots team’s mission is well aligned with Elo’s continued job and business growth.”

“There aren’t many of us who haven’t gone to a kiosk somewhere and used a touchscreen to order something. We all have had an experience with their technology whether we realized it was their technology or not,” said Randy Jenkins, Chief Financial Officer and Financial Strategist at Partners Development. “They have a global footprint, so it was wonderful for our community to see them expand here in Knoxville, especially when they had other choices they could have exercised.”

Partners Development began talks with Elo in February 2020. Early on, Jenkins knew he wanted to bring on Three Roots to help finance the project due to the complex, competitive nature of the deal.

“We have financed other projects with Three Roots, so I was familiar with the system of how they do and look at things,” said Jenkins. “It was an easy first call for me to call Grady to say, ‘We’ve got this project opportunity. Let’s think creatively about how we can put a package together that meets not only Three Roots’ needs but also our tenant’s needs.”

One of the major selling points of this project for Partners Developments and Three Roots was Elo’s emphasis on bringing high-quality jobs to the community. With this in mind, Three Roots worked with Citizens National Bank of Tennessee to provide $7,750,000 in senior debt to Partners Development to finance the construction project. Jenkins expects the building will be complete by the end of October 2021.

“I enjoy working with Randy Jenkins because we’re both very analytical about deals. Partners’ approach to business is thorough and meticulous, while they are also aggressive and continuously moving forward,” said Grady Vanderhoofven, President and CEO. “The Elo project is exactly in line with the kinds of deals Three Roots wants to work on because it is a major job creator for the area. As an added bonus, it is also really interesting because Elo was born right here in our community.”

After working with Three Roots on the Elo facility and previous projects, Jenkins said he and Partners Development look forward to continuing their relationship with Three Roots.

“They’re an extremely valuable resource in our community,” said Jenkins. “We’re excited to continue our relationship and look for those opportunities to engage them as we finance our projects here at Partners.