BusinessTN

Four months ago, Tim Estes stood at a podium and lamented how much further up his company—Brentwood-based Digital Reasoning Systems—would have been on the high-tech food chain had it just been located on either of the country's coasts. The 28-year-old entrepreneur declared that the 15 or so Midstate venture capital firms are too timid or unimaginative to risk anything beyond recycling the same old health care services model over and over again. "Why not link evidence-based medicine and informatics?" he asked. "[Health care] data is essentially the crude oil. Refining data is seven times more profitable than pushing it around. This is inexcusable. We should be leading this."

The directness of the broadside made Estes' speech one of the most interesting in the history of the annual Nashville Technology Council forum. "How many startups have been funded in the past three years in this area?" he continued. "If you have zero effort, you have zero results."

To hear Estes tell it, if properly funded, no firm is closer to defining the next generation of search tech- nology than Digital Reasoning. Estes and company have spent the past several years devising a computer brain that finds the meaning of words in a sea of electronic data. For instance, he helped the U.S. Army's National Ground Intelligence Center provide navigation for American troops in lands foreign and domestic. And as recently as April, Digital Reasoning partnered with two Washington, D.C., software shops to build a data analytics system for the U.S. Army's Intelligence and Security Command (INSCOM).
Estes maintains that with these technologies—and the experience gained in crafting them—Digital Reasoning is creeping ever closer to becoming a major player in the creation of the next generation of the Internet.

Such talk prompts the question: If Digital Reasoning is shaping up to be the next big thing, or at least possibly a part of it, why hasn't there been more interest from VC types? At least three local finance gurus told BusinessTN that nobody would fund Digital Reasoning because its management structure is flawed. A big red flag, said one of them, is the fact that Estes' mother is calling all the shots for the company. (Granted, in the wake of Estes' Technology Council speech, it's unlikely Midstate investors feel warmly disposed toward him.)
For his part, Estes dismisses such criticisms, citing a lack of effort by the VC community to understand his company. "In three and a half years, we haven't had a cursory due diligence done on us," he says.

Lest one consider Estes some enfant terrible, the entrepreneur professes a willingness to tinker with his management structure should a serious investor come calling. But in the meantime, he's planning to locate his e-discovery spinoff out West. "We'll just go where we need to go to be a success," Estes concludes, saying he is tired of "fighting the battle of Nashville" with the local VC crowd. If the Web 3.0 takes off with Digital Reasoning aboard but state capital absent, the South may lose again.