Techpreneurship: Could 2012 Be the Year of the Startup in Arkansas?

Jeff Amerine

With the recent flurry of new startups, angel investment activity, accelerators, startup co-working spaces and networking events, 2012 may well be The Year of the Startup in Arkansas.

Why now? What’s different?

In Arkansas over the past 10 years or so, a steady march has been underway toward creating a robust venture ecosystem. The process began with the Milken Institute assessment in 2001. That report clearly identified the crucial linkage between education, innovation, entrepreneurship and achieving a higher standard of living.  Flowing from the recommendations of that report, Accelerate Arkansas sprang to life.

Accelerate Arkansas, comprised of notable Arkansas business leaders, developed a series of important initiatives to help address the major challenges Milken identified. These initiatives included the creation of the Arkansas Research Alliance (ARA), Innovate Arkansas (IA) and the Arkansas Risk Capital Matching Fund (ARCMF).

ARA, modeled after the Georgia Research Alliance, works to attract “rock star” researchers to Arkansas’ universities. IA, modeled after I2E in Oklahoma, provides mentoring and coaching to substantially improve the prospects for growth of technology and knowledge-based startups. ARCMF provides matching investment when qualifying early-stage companies have raised investment capital from other private sources.

The ARA, IA and ARCMF coupled with other startup-focused incentives and support from Arkansas Science and Technology Authority (ASTA), the Arkansas Economic Development Commission (AEDC), Arkansas Capital Corporation, and the Arkansas Small Business and Technology Development Center (ASBTDC) have created a startup friendly environment in Arkansas.

In addition, in 2011 the Fund for Arkansas’ Future (FAF), the largest, oldest, and most active angel fund in the state, continued to play an essential role in providing needed early-stage capital across the state. FAF was joined in 2011 by Gravity Ventures Arkansas (GVA), a 21-member angel fund focused on investment capitally efficient, high-growth startups.  GVA has made five investments in Arkansas companies during the past year, one of which was a joint investment with FAF.

Moreover, if anyone had doubts about Arkansas’ ability to compete in the startup arena with the best-of-the-best, they need only look at the unmatched national and international success the University of Arkansas graduate business plan teams have had over the past five years under Dr. Carol Reeves’ guidance.

Fortune magazine took notice by highlighting Carol’s leadership and the amazing success or her teams in a 2011 article about the 10 most influential entrepreneurial women in the United States. High potential startups such as BiologicsMD, Cyclewood Solutions, MerchantView and Silicon Solar Solutions would not exist were it not for Carol’s great leadership.

Another clear indication of Arkansas’ ability to compete nationally came in late 2011. A team comprised of the University of Arkansas, Winrock International and Northwest Arkansas Community College won the federal Jobs and Innovation Acceleration Challenge for 2011. The team was awarded a $2.1 million grant from the Department of Commerce to create an information technology and mobile applications focused startup boot camp.

This accelerator, known as Launching the ARK, will begin in the coming months to recruit the best and brightest startups to come to Arkansas from across the country.  The boot camp will engage existing flagship clusters in retail, supply chain, and food processing to identify their top information and mobile application challenges.

The ARK will then turn out 15 high potential, new startups each year, two of which will receive substantial seed investment and the opportunity to do 90-day pilot deployments with customers within the retail, supply chain, or food-processing clusters.

Building on the foundation set by the state, in 2010 the Northwest Arkansas Council commissioned Market Street Services to develop a regional, economic development strategic plan for Northwest Arkansas.  The Council unveiled the strategic plan in January 2011 and began to assemble a “coalition of the willing” to make it happen.

Within the economic development aspect of the Northwest Arkansas regional strategy, significant startup-focused objectives include creating an energetic entrepreneurial culture, supporting the formation of angel investment groups, creating startup incubators/accelerators, enhancing sustainable product development and expanding university technology commercialization.

To begin to rationalize how to implement the various big picture, startup-focused objectives, a framework for the Northwest Arkansas venture ecosystem comprised of programs, places, events and networking has come together over the course of 2011.

To be fair, some of the activities that support the startup environment  were underway prior to the Council’s strategic plan being released.  Even so, the Council’s support brought invaluable legitimacy and advocacy to initiatives such as the(NWAEA), The Iceberg startup co-working facility, the Gone in 60 Seconds elevator pitch contest and the Natural State Angel Association.

Everything I’ve mentioned thus far in the state and Northwest Arkansas serves as little more than accelerant. The fire must come from those with the vision, fortitude and tenacity to actually create amazing new ventures.  Some would question the romantic notion that optimism perpetually radiates from that strange breed we have come to generically refer to as “entrepreneurs.”

I believe it, and I believe the DNA for entrepreneurship in this state at this time can compete with anywhere else in the world.  Some recent examples that give a clear illustration of the growing vitality of the venture ecosystem in the region and state include the successful acquisition of Rockfish Interactive by WPP for an undisclosed-but-rumored-to-be substantial multiple, and the rapid growth and multi-round venture funding success of Acumen Brands.

Out of adversity, necessity or by design, everyday intrepid startup founders in Arkansas dive head long into the chaos of creating something from nothing with a clear knowledge that failure may await.  Yet, even in the face of significant obstacles, the new generation of Arkansas entrepreneur feeds on the spirit of entrepreneurial legends like Sam Walton, J.B. Hunt, Don Tyson, Sheridan Garrison, Jack Stephens and Donald W. Reynolds.

In my view, we have every reason to be optimistic that 2012 will be the Year of the Startup in Arkansas.  Together, we can make it happen.

(Jeff Amerine is an IA advisor, entrepreneurship educator, and officer with the University of Arkansas Technology Licensing Office. Each Thursday, or whenever the spirit moves him, his Techpreneurship blog will appear in INOV8. Drop him a line in comments.)

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