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New startup funding opportunities coming to Johnson County

December 4, 2019

Two new startup funding opportunities will soon be available to those living in Johnson County in an effort to help strengthen the region’s entrepreneurial ecosystem and help early-stage entrepreneurs grow their ideas.

The Iowa City Area Development Group (ICAD) is working with the Community Foundation of Johnson County and the University of Iowa to launch two new seed funding options for local startup companies. 

The first initiative is to collaborate with the Community Foundation of Johnson County to create a new charitable giving fund. This fund would enable the community to make small forgivable loans to help scalable interstate commerce startups meet their match requirements for Iowa Economic Development Authority (IEDA) funding options such as the Proof of Commercial Relevance Program and the Demonstration Fund. These funding programs, managed by Venture Net Iowa, do high-quality due diligence and review on Iowa Startups. When a company receives notice of an IEDA award after this process, they will then be eligible to apply for this local match funding program to accelerate their growth with support from the local community. 

“Gifts made to this fund demonstrate our community’s commitment to growing and supporting business development opportunities in our area,” said Shelly Maharry, Executive Director of the Community Foundation of Johnson County, in an announcement. “When we support our local entrepreneurs, we’re making an investment in our future. These entrepreneurs will grow jobs here, raise their families, serve on nonprofit boards, and give charitably to causes they care about. It’s a win – win all around.” 

The second initiative is a seed fund that will focus on startups that are further along in their growth. The new Johnson County Seed fund is currently being developed with the goal of launching in the summer of 2020.

The new seed fund will be modeled after the success and longevity of the Ames Seed Capital Fund. The fund will be a standalone entity operated by a board of managers with administrative and management support provided by ICAD.

The fund will seek to raise $2 million to $4 million—with pledges of between $50,000 to $250,000 from local investors—to invest in scalable companies with a path to exit.

“We are very excited about the work being done to increase the availability of capital for regional entrepreneurs. It will provide much needed early stage funding and demonstrate the community’s commitment to building a vibrant entrepreneurial ecosystem where entrepreneurs can launch and build their companies right here,” said David K. Hensley, Executive Director of the John Pappajohn Entrepreneurial Center and Clinical Professor, Management & Entrepreneurship Department in the Tippie College of Business.

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New startup funding opportunities coming to Johnson County | 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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