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Key takeaways from last week’s “Innovation Acceleration” Power Breakfast

December 3, 2018

The Des Moines Business Record hosted a Power Breakfast panel discussion last Thursday focused on “Innovation Acceleration.” Each panelist represented a different sector within Iowa’s startup ecosystem.

The five panelists were:

  • Stephanie Atkin – Vice President of Marketing at Dwolla
  • Craig Ibsen – Managing Partner at Next Level Ventures
  • Megan Milligan – President & CEO of the Iowa Center for Economic Success
  • Jeff Russell – President & CEO of Delta Dental of Iowa
  • Geoff Wood – Founder of Gravitate

Here are some of the key takeaways from the event:

Iowa plays to its strengths

Two sectors where Iowa outperforms the national average are in agtech and insurtech, said Ibsen during the breakfast.

In recent years, two industry specific accelerators have started in Des Moines, the Global Insurance Accelerator and the Iowa Agritech Accelerator.

“We are seeing some statistics that show that employment levels in those areas are 30% better than the national average,” Ibsen said. “We’re seeing new company formation and investment dollars growing in those two sectors, both from within the state and from out of the state.”

Startup activity can be hard to measure

“It’s really hard to understand what startup activity is in Iowa. When I try to dig into the rankings that come out, I can’t make heads or tails of them. And I live this every day,” said Wood.

“When you look at a lot of these businesses, some of the reasons they’re not included in the statistics is that so many people are still innovating out of their their basement,” added Milligan. “Part of what we have to do is welcome inclusivity. But those people aren’t going to come to use. We have to go to them and bring them to us.”

“One change we have seen since 2009, when I moved back to Iowa, is capital investment,” Wood said. “When Dwolla first raised $1 million it seemed like so much money to raise here. They filled a coffee shop to celebrate. It was like a rock concert. Now, companies are raising a million dollars, at least quarterly, usually monthly.”

We track this at Clay & Milk and through the first three quarters of 2018, over $90 million has been raised by startup companies in Iowa.

Rural Iowa needs better access to resources

“One of the reasons Iowa is underrepresented is because we have a rural population that is disproportionate to the rest of the United States,” said Ibsen. “The vast majority of venture capital is going to urban areas. And speaking as an investor, I see most of the dollars flowing into the Ames-Des Moines, Cedar Rapids through Coralville-Iowa City corridors, and that is a challenge. And it’s a challenge that I don’t really have an answer to.”

“I think part of the rural urban divide is infrastructure,” added Russell. “If you don’t have broadband of any significant speed in rural Iowa in certain places, you know, you’re as lost as if you didn’t have a road. How do you have broadband in rural Iowa so that when these kids go to college, they want to come back and start a startup business in these small towns?”

Geoff Wood is the co-founder and Publisher of Clay & Milk.

Key takeaways from last week's "Innovation Acceleration" Power Breakfast | 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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