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Next Level Ventures continues to invest in Iowa’s growth as it opens second fund

September 19, 2018

For the last five years, Next Level Ventures has been investing in growing companies based in Iowa.

Their first fund was certified in 2013 and backed 11 Iowa-based companies, including Dwolla, Igor and WebCareHealth. 

“The goal for these investments is to propel innovative, fast-growing companies in Iowa,” Scott Hoekman, co-founder and Principal of Next Level Ventures said. “We are already seeing great success for that vision: our 12 portfolio companies have $60 million in combined sales – that is about four times as many sales as four years ago.”

In 2018, Next Level Ventures received the LWBJ Impact Award, which recognizes individuals or organizations who have had a significant impact on Iowa’s technology culture and industry.

In April, Next Level Ventures formed a second investment fund and plans to invest in approximately 10 companies with the fund.  Like their first fund, all of these companies will be in Iowa. Next Level Ventures will continue to invest $1 to $4 million per company.

“We have the same investment thesis as fund one – Iowa companies, great teams, innovative solutions, and fast growing sales. Usually, our portfolio companies have some focus on software to enhance their solutions but that is not imperative,” Hoekman said.  “However, the one change we are making with fund two is that we are willing to look at earlier stage companies.”

Next Level Venture’s first investment with their second fund is a great example of that. Last month, Next Level Venture invested in Pitchly,  a web-based content service platform for merger and acquisition professionals,  allowing them to organize and activate their client experience.

Next Level Ventures also had their first exit last month, as BirdDogHr was acquired by Providence Strategic Growth.

“We were thrilled with the sale, but we are also excited for BirdDogHR’s future.  Plus, we are an investor in that opportunity which is the new business called Arcoro,” Hoekman said. “This is a human capital management platform which Providence Equity has formed, and there is a strong plan for Arcoro to become a leader in that space.”

By the end of their second fund, Next Level Ventures plans to have 20 portfolio companies with combined sales of at least $120 million.

“That would be a great achievement for our investors, our companies and entrepreneurs, and our state of Iowa,” Hoekman said.

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Next Level Ventures continues to invest in Iowa's growth as it opens second fund | Clay & Milk
A central Iowa ag-tech accelerator has secured more backers and finally has a name. The Greater Des Moines Partnership first announced the accelerator last year, naming four initial investors. On Monday, the Partnership said the program will be called the "Iowa AgriTech Accelerator" and named three new investors. The new investors include Grinnell Mutual, Kent Corp. and Sukup Manufacturing, all Iowa companies. They join investors Deere & Co., Peoples Co., Farmers Mutual Hail Insurance Co. and DuPont Pioneer. Each investor has agreed to put up $100,000 for the first year of the accelerator. Startups entering the program will receive $40,000 in seed funding in exchange for 6 percent equity. Tej Dhawan, an angel investor and local startup mentor, is serving as interim director until the AgriTech Accelerator names a permanent leader. Dhawan held a similar role with the GIA before Brian Hemesath was named as managing director. As interim director, Dhawan said his main job includes hiring the accelerator's executive director, establishing a business structure and initial recruiting for the first cohort. The accelerator will place few filters, such as location and product, on the applicant pool, Dhawan said. "When you’re seeking innovation, innovation can come from every corner of the world so why restrict ourselves," he said. One area the the AgriTech Accelerator won't recruit from is biotech. For its first cohort, the AgriTech Accelerator will work out of the GIA's space in Des Moines' East Village, Dhawan said. A future, permanent home is still to be decided. The accelerator's program will host startups from mid-July through mid-October, ending with an event connected to the annual World Food Prize. The GIA, which the AgriTech Accelerator is based on, also ends with presentations at an industry event. The accelerator has also started lining up a mentor pool. The Iowa Corn Growers Association, Iowa Soybean Association and the Iowa Pork Producers Association have agreed to provide mentors, as has Iowa State University. While the AgriTech Accelerator is loosely based off of the GIA, it will differ in its business structure, Dhawan said. The GIA runs through a for-profit model for both operations and its investment fund. The AgriTech Accelerator will have a nonprofit model for its operations and a for-profit setup for its fund. Dhawan said the nonprofit model is being used so the accelerator can better work with other nonprofit partners, such as trade associations. "These are all organizations that are nonprofits and can be amazing stakeholders without ever having to be investors in the accelerator," he said. "It becomes easier to work with trade associations in their nonprofit role when we are also a nonprofit." When it's up and running, the AgriTech Accelerator would be one of a handful of ag-focused startup development programs in Iowa. Others include the Ag Startup Engine out of Iowa State University and the Rural Ventures Alliance from Iowa MicroLoan. Matthew Patane is the managing editor and co-founder of Clay & Milk. Send him an email at mpatane@clayandmilk.com.
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