City, county pen­sion money could be used to aid star­tups

The Commercial Appeal - - Business - Ted Evanoff Mem­phis Com­mer­cial Ap­peal USA TO­DAY NET­WORK - TEN­NESSEE

A Mem­phis non­profit agency aims to tap pen­sion funds of Mem­phis and Shelby County em­ploy­ees and in­vest the money in lo­cal en­trepreneurs.

Epi­cen­ter has asked for a por­tion of the city and county pen­sion money to en­ter a new in­vest­ment fund al­ready seeded with $10 mil­lion from FedEx Corp., city and county of­fi­cials said.

The stand­alone non­profit agency was spun out of the Greater Mem­phis Cham­ber’s Chair­man’s Cir­cle, which listed a new set of goals in 2014 called moon mis­sions. Epi­cen­ter’s mis­sion is aid for 1,000 en­trepreneurs by 2025, in­clud­ing 500 newly started firms.

The agency has raised about $40 mil­lion and in­tends to even­tu­ally pool $100 mil­lion for in­vest­ments, Epi­cen­ter Pres­i­dent Leslie Lynn Smith said.

Shelby County Mayor Lee Harris said Epi­cen­ter sought $10 mil­lion from the county pen­sion fund. He said the re­quest was re­ferred to pen­sion ad­viser Wil­shire As­so­ciates for a rec­om­men­da­tion. Mem­phis Mayor Jim Strick­land’s spokes­woman by email said an in­vest­ment ad­viser was asked to con­sider Epi­cen­ter’s re­quest.

The ad­vis­ers would as­sess Epi­cen­ter’s man­age­ment, in­vest­ment strat­egy and abil­ity to over­see a ven­ture cap­i­tal fund. It isn’t clear when the ad­vis­ers will com­plete their tasks.

Mem­phis’ mu­nic­i­pal pen­sion fund has amassed more than $2 bil­lion. The money has been spread among pri­vate in­vest­ment man­agers re­spon­si­ble for us­ing their share of the money to buy stocks, bonds and other sound as­sets. The county fund is sim­i­larly al­lo­cated among in­vest­ment man­agers, and Harris re­cently sought to in­clude Mem­phis­based Preser­va­tion Partners among these man­agers.

Harris said he was not sure what Wil­shire might re­port on Epi­cen­ter’s re­quest. In gen­eral, he said, in­vest­ing a por­tion of lo­cal pen­sion money in new Mem­phis busi­nesses able to ramp up jobs and tax base seems fine.

“It’s a great thing to in­vest in Mem­phis,” Harris said.

No in­vest­ment funds cur­rently in­vest ex­clu­sively in Mem­phis en­trepreneurs. This lack of startup money, called ven­ture cap­i­tal, re­sults in many young firms stay­ing small and un­able to ramp up sales vol­ume to a level that can at­tract op­er­at­ing loans from reg­u­lar banks.

Dozens of wealthy Mem­phi­ans have com­mit­ted money to the in­vest­ment fund, bring­ing it to the $40 mil­lion level. Money al­lo­cated by the city and county pen­sion funds could raise the level to $60 mil­lion.

“Our pen­sion funds could cer­tainly help. They’ve in­vested in other en­trepreneurial ve­hi­cles. Why not in­vest in our en­trepreneurs?” said FedEx ex­ec­u­tive Richard Smith, who also serves as vol­un­tary chair­man of the Greater Mem­phis Cham­ber and is un­re­lated to Leslie Lynn Smith.

A donor has ten­ta­tively agreed to re­plen­ish the city and county pen­sion funds for any money lost in Epi­cen­ter’s in­vest­ment fund, Richard Smith said.



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