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Commentary

Eric Engelmann’s 2019 Forecast

December 20, 2018

Growth in 2019 for Eastern Iowa’s startup ecosystem

We’ve worked for five years building a team at NewBoCo, and fostering collaborative networks in Eastern Iowa, all intended to strengthen our ecosystem. We’re deeply involved in a number of efforts designed to 1) foster and grow more startups 2) help existing companies be more innovative and 3) build the talented workforce that can make those first two things possible.

Here’s what we expect to see happen in 2019:

  1. A much larger seed fund will be established, designed to support more early stage startups. We’ve experimented with some of the key parts of developing the startup community here, such as Iowa Startup Accelerator and its accompanying seed fund, and it’s time to scale up those efforts. Key to that will be to develop a much larger seed fund, both to provide the modest, initial capital that we do today, but also with the ability to follow on in more meaningful amounts than is presently possible.
  2. DeltaV Code School will expand, and have a much more meaningful impact on our tech talent workforce shortage. DeltaV isn’t even two years old yet, but we’ve been able to upskill existing talent successfully – e.g. a grocery store clerk or call center rep becoming capable software developers – in six months of full-time, intensive work. Expanding the code school, and our accompanying apprenticeship program that lets students extend their learning by building software for startups, has the potential to alleviate the significant constraint that the lack of technical talent is placing on our ecosystem’s growth.
  3. We will see sector-focused expansion of startup programming around areas where Eastern Iowa has unique strengths, e.g. EdTech. We are likely to, in some fashion, construct variations of our existing accelerator programs focused on sectors, much as Des Moines has done in Ag and Insurance, whereas today most of them are generic and open to a variety of industries. This will include mentor networks, corporate partners and possibly investment vehicles that focus on those sectors.
  4. We will see better support for founders who’ve reached product market fit. For the past few years, our efforts have been intentionally focused on very early stage founders at the top of the funnel. Now, as those founders have grown and gained traction, their needs have shifted significantly toward operational challenges and scaling issues. We expect to see more resources (mentoring, peer groups, etc) focused on these later stage CEOs.
  5. We expect to see more formal relationships between the startup community and our corporate leaders. Now that the startup community has grown significantly, we need to build stronger relationships with our existing industry leaders to leverage each others’ strengths and networks. This will likely take the form of programs that train high potential leaders in our existing companies on innovation, intrapreneurship, disruption strategies while they mentor startups on the challenges deep in their industries an networks that most entrepreneurs can’t possibly know.
  6. We’re going to see new ways to acquire talent emerge. Access to talent – technical and otherwise – is the primary constraint on startups in Eastern Iowa today. Other than the code school, our approach to this so far has been informal, leveraging networks to make connections to potential leadership talent to join our best startups. But as the startup ecosystem has matured and there are lots of startups looking for key leaders, we’re going to need to place much more emphasis on this issue. Examples include formal ways of identifying potential talent, introducing those leaders to our startup ecosystem and engaging them with it, aggressively recruiting talent from other communities on behalf of our startups, and providing fractional support for startups when they need it until they can find the right full-time hires.
  7. More direct and impactful collaboration on ecosystem development. We’ve been fortunate in Eastern Iowa that most of us that work to foster entrepreneurship and innovation get along pretty well, even though the various organizations mostly operate independently. Some really strong relationships are emerging that should manifest in even stronger and more aggressive programs and opportunities that wouldn’t be possible acting independently or alone. In my view, we’ve solved most of the problems that a small organization could do alone; the remainder require much larger, more complex and coordinated efforts. This will necessarily force us all to work meaningfully together if we’re to continue to make progress as a region.
  8. We will start to see exits from the startup pipeline. The past five years have seen significant emphasis on building more and better startups in Eastern Iowa; Iowa Startup Accelerator alone has invested in 39 companies in that time, with 10-15 more planned for 2019. Some of them are now reaching the point where acquisitions or other exit options are now plausible. If it goes well, we will see those exits start in 2019, and some of that money will flow back into our community and our startup ecosystem to fuel even more growth in the future.   

Overall, these are exciting developments that reflect the progress of the past few years in Eastern Iowa’s startup community. We’re proud to play a role in it, alongside the entrepreneurs and leaders in these companies. We look forward to these coming to fruition in 2019 and beyond.

Eric Engelmann is the co-founder of the Cedar Rapids-based companies NewBoCo and Geonetric and is a familiar face in the Iowa startup ecosystem.

Eric Engelmann's 2019 Forecast | 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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