Nashville is world famous for its music industry, which boasts an economic impact of some $10 billion on the city and its surrounding region each year. But perhaps what's even more impressive is its thriving health-care scene, which nearly quadruples that stat.
Health care is a major part of the Nashville ecosystem, with a $38.8 billion impact on the regional economy in 2014 and a slew of publicly traded health-care companies operating out of the city, including the Hospital Corporation of America, according to the Nashville Health Care Council. However, newer start-ups are also laying down roots in the music city.
Vic Gatto runs Nashville's Jumpstart Foundry, a health care–focused investment platform that graduates 10 start-ups from its 14-week accelerator program each summer. Gatto, founder and CEO, comes from a venture capital background and wants to take his participating classes to 100 percent success rates — right now he is at about 70 percent. Jumpstart has graduated 48 companies that have raised more than $31 million in funding over the past six years.
"The health-care industry is going through a pretty dramatic change with new ways to reimburse, new ways to pay doctors and new ways to manage populations. … That is all very scary. Huge businesses are having to rethink the way they run, but that is editing for the entrepreneurs and innovators to build new platforms and solutions," Gatto said.
InvisionHeart joined Jumpstart Foundry's program in 2014. The company created a compact FDA-cleared ECG machine and has raised $3 million total in funding. It fits in the palm of your hand and operates via a Wi-Fi connection.
"Nashville is a great city to launch a health-care company — we live at a crossroads of innovation and health-care services. Companies such as ours can take a technology and rapidly optimize it with input from those who practice medicine," said Josh Nickols, president and CEO of InvisionHeart.
Another reason entrepreneurs are flocking to Nashville and its growing start-up culture: Its low business costs rank some 5 percent below the national baseline among cities with populations of 1 to 2 million, according to KPMG's Competitive Alternatives study for 2014. In fact, San Francisco-based ride-hailing start-up Lyft recently announced its plans to open a customer service center in Nashville in coming months, "creating tech jobs in an area with a lower cost of living," spokeswoman Katie Dally told CNBC via email.
The metro of Nashville's start-up density number increased in 2015, with 132.5 start-up firms per 100,000 residents, which are less than one year old and employing at least one person aside from the owner, and higher than the national average of 130.6 per 100,000 residents. This number was at 128.5 in 2014, according to the Kauffman Foundation's 2015 Kauffman Index: Startup Activity report. It ranked No. 24 out of 40 metros studied, with a move negative in the rate of new entrepreneurs, to .37 percent from .44 percent in 2014.
One of the city's biggest hubs is The Nashville Entrepreneur Center — part of a statewide initiative to boost entrepreneurship alongside a program called Launch Tennessee. The Nashville EC is a nonprofit with an accelerator program helping to grow high-potential start-ups in the health care, digital media and entertainment, tech and social enterprise spaces. President and CEO Stuart McWhorter said they've graduated more than 200 companies in the past five years.
The center is also a Google for Entrepreneurs Tech Hub, and Nashville will also receive , Fiber, in the near future, proving that start-ups need not flock to the coasts for mentorship and growth opportunities.
"Nashville is doing all the right things—we have good leadership in place, an engaged community. The ecosystem will continue to launch and grow even more successful businesses in the future," McWhorter said.
This article has been updated to reflect that InvisionHeart's compact ECG machine has been given FDA clearance.