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Commentary Investing in Iowa Reports

Scott Hoekman: Starting Up the Future

February 20, 2020

Guest post by Scott Hoekman.

If Iowans were to go back to the beginning of 2010, then we would find a startup ecosystem just emerging from the recession. With the benefit of this time machine, we would be observing how the success stories of today were formed. As a great example, we would see how Workiva was initiating its path to go IPO and building the culture for scaling. We would also see how businesses (e.g., Banno, IDT, and SmartyPig) emerged as beacons for the entrepreneurial community.

Back to the future and now at the start of the new decade, Iowa has added onto that foundation and dramatically improved the startup community.

These ten, intriguing areas demonstrate some excellent opportunities to continue the progress:

  1. Over 30 members of the Iowa Venture Capital Association have come together to invest in Iowa; this group includes Ames Seed Capital which has been around since 1987 as well as a new VC fund associated with NewBoCo in Cedar Rapids. 

  2. John Pappajohn has an annual business plan competition to highlight startups across the state. 

  3. Speaking of Pappajohn, since 1996, he also has backed the Pappajohn Entrepreneurial Centers: Drake University in Des Moines; Iowa State University in Ames; NIACC in Mason City; University of Iowa in Iowa City; and University of Northern Iowa in Cedar Falls.

  4. On top of the Pappajohn Centers, there are school-connected organizations like the Ag Startup Engine and Startup Factory, both of which are in the Research Park at Iowa State University; Emerge at Simpson College; and the Venture School at the University of Iowa. These groups are providing a combination of incubation services, advice and capital. 

  5. There are now six accelerators in the state—AgriTech Accelerator in Des Moines, BrokerTech Ventures in Des Moines, Global Insurance Accelerator in Des Moines, Iowa Startup Accelerator in Cedar Rapids, Iowa EdTech Accelerator in Iowa City, and Techstars in Des Moines. They are all assisting startups to grow with mentors, customers, and relationships from all over the world. Here is a list of accelerators and incubators throughout the state.

  6. The government is also helping. Through the Iowa Economic Development Authority, the state of Iowa is providing some assistance to startups with grants and loans from $25,000 to $500,000 as well as ways to access funding for job training and other programs. 

  7. If you need help with financial modeling and raising capital, then there are two sessions—the Financial Model Seminar and the Raising Capital Seminar—on March 12 and March 23 respectively, in Des Moines. They will give you great pointers and a roadmap to pursue.

  8. For weekly networking and pitching possibilities, there are many connections formed at 1 Million Cups which is in six Iowa locations—Ames, Cedar Rapids, Cedar Valley, Des Moines, Iowa City, and Pocahontas. Community co-working is another way to share ideas and offices (wonderful examples are Gravitate in Des Moines and Mill Race in Cedar Falls). Clay & Milk has curated a good list of Iowa’s coworking spaces.

  9. One of the broadest and deepest organizations is the Technology Association of Iowa which has activities throughout the state including the useful Startup Seminar and the excellent Prometheus Awards which a must-attend event. This year, the “Oscars of Iowa Tech” is on April 9th.

  10. At Next Level Ventures, we are also helping the startup ecosystem. We are proud of our portfolio companies which will raise over $25 million in capital in 2020. In addition, we plan to invest in two more platform businesses in 2020 bringing our total number of Iowa investments to 17. To do this, we now make investments at the seed stage and with smaller checks. We can support entrepreneurs at the earliest levels with investments as low as $250,000. We have already started this process with three portfolio companies, and we are looking for more businesses across Iowa. 

There are resources available, and there is a welcoming environment ready to help you. Moreover, all of these efforts—via capital, corporate, government, and of course the founders and their teams—have formed companies across Iowa which we want to emulate. This means that when we all talk with people around the state, we hear a lot of excitement among the various businesses. That vitality forms a stronger economic base in Iowa, and that means the future remains bright for startups.

Scott Hoekman is the co-founder and Principal of Next Level Ventures.

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Scott Hoekman: Starting Up the Future | 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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