The ARK Challenge is back, this time with business accelerators operating in two parts of the state and a higher bar for entry for some of the participants.
A 14-week business-acceleration program, the ARK Challenge invites teams from all over the world to participate. It will be held for the first time in both Northwest Arkansas and central Arkansas this year. During its first two years, the program was based in Fayetteville and it helped establish several technology-based companies that are still in operation and growing.
The program in central Arkansas will follow a strategy developed in Northwest Arkansas, where up to 15 fledgling companies participated. This year, in Northwest Arkansas, up to five startup companies that have already established a solid business plan, a product and demonstrated customer demand will be selected to take part.
The accelerator teams will work with mentors and will meet key business contacts as they develop their business strategies and tactics. The winners of the central Arkansas program will receive a cash prize, while those in Northwest Arkansas will have an opportunity to court key investors and obtain valuable contracts.
The ARK business accelerator program began in March 2012 and runs the ARK Challenge. The ARK accelerator is one of 20 projects that the U.S. Department of Commerce selected for federal funding, with the ARK receiving $2.1 million in public grants and matching funds from Winrock International, the University of Arkansas, Economic Development Administration and Small Business Administration.
The funding is exhausted, but Tom Dalton, director of Innovate Arkansas and one of the program’s mentors, said state money is available through the Arkansas Economic Development Commission and private funding has been lined up for use in direct investment in the startup companies.
In 2013, 92 businesses from 15 countries and 15 states applied to participate in the ARK Challenge. In 2012, the first year of the program, 15 participants were selected from more than83 applications from 14 countries and 14 states.
This summer, up to five established companies will be selected to participate in the Northwest Arkansas phase of the program. Those companies will receive $50,000 in seed funding for a 6 percent equity stake.
“We want to home in on companies that have a greater degree of traction,” Dalton said of the Northwest Arkansas group.
Selected companies will work closely with mentors and major Northwest Arkansas companies focused in the arenas of retail and logistics. At the end of the program, companies will be featured as part of a Demo Day, where they’ll be able to pitch to investors or vie for contracts with interested companies.
Jeannette Balleza Collins, the program’s director since its inception, will focus on the Northwest Arkansas group.
She said the business accelerator is a highly stressful environment. Focusing on just five companies in the program she’s ramrodding will put the most effort into companies that have the best chance of overall success.
“We want to get a way from the idea that this is a competition,” she said. “We’re looking for businesses that can sustain themselves.”
The deadline for companies to apply to the Northwest Arkansas program is May 12. Applications are available at arkchallenge.org.
State Rep. Warwick Sabin, D-Little Rock, will lead the business accelerator program in central Arkansas. Sabin is the executive director of the Arkansas Regional Innovation Hub.
The central Arkansas program will look more like the first years of the ARK Challenge, with from up to 10 companies participating and each receiving about $20,000 in seed money for a 6 percent equity stake.
When the central Arkansas program is complete, companies will present their businesses to potential investors in a Demo Day where the top ones will receive additional funding in exchange for equity. In the last ARK Challenge, three companies were chosen for a $150,000 investment in the form of an uncapped convertible note.
Sabin said its not been finalized how much and in what manner the prize money will be distributed on Demo Day, but it will be similar to the early Northwest Arkansas model.
The companies selected for the central Arkansas program will focus on information technology and data analysis for the government, banking and health-care sectors. A deadline has not been set for application for the central Arkansas accelerator.
Business, Pages 19 on 04/14/2014