Iowa has had challenges with financing startups.
Fast-growing Iowa companies have limited access to capital and feel pressure to relocate where funding opportunities are more available. Because these types of companies can lead to strong job creation, the Iowa community should encourage these engines of growth.
Innovative Iowa companies are getting widespread attention. This ecosystem includes prominent business such as NewLink Genetics and Workiva, as well as emerging companies such as Businessolver and KemPharm.
There is more work to be done, however. Here are three ways Iowans can help the state’s young companies:
•First, Iowa needs more investment beyond venture capital, especially at the seed level. This stage is the earliest one for businesses, and it requires angels (individual investors) to mentor, mold and grow companies so they can obtain venture funding.
•Second, Iowans can buy the services or products of startups. Your dollars mean traction, excitement and jobs, which is another way of buying local.
•Third, Iowans can refer connections to startups. This assistance can open a door to a customer, a vendor or a partner, because getting introductions to people is one of the hardest things to do for a new company.
Iowa now has a significant funding tool for innovative Iowa companies. In 2013, Iowa lawmakers passed and the governor signed a law to create $8 million in annual tax credits for investors who put their money in funds that target early-stage companies in Iowa.
Next Level Ventures formed late last year under this program. It has since raised $30 million and led investment rounds that total over $9 million in three Iowa companies: BirdDog, Igor and Vida Diagnostics. These businesses are on track to create approximately 100 new jobs through 2016.
Startups are a key part of Iowa’s future, and capital is the fuel. You can be part of this community, and your participation will help Iowa be a better place for business.
CRAIG IBSEN is the Managing Principal of Des Moines-based venture capital firm Next Level Ventures.