Entrepreneurs fit NWA culture

Northwest Arkansas' startup community is gaining national attention.

Entrepreneur Magazine named the area one of nine great U.S. cities for tech startups in 2012, based on its proximity to a trio of headquarters of international companies, the availability of "angel" investors and several networking organizations and events. An angel investor provides financial backing for small startups or entrepreneurs.

The area's entrepreneurial community extends beyond technology, said Edward Haddock, Northwest Arkansas senior area manager for the U.S. Small Business Administration.

"What is an entrepreneur?" he asked. "Entrepreneurship is really just being a problem solver in any structure."

Jeff Amerine positioned himself in the middle of the startup ecosystem, helping businesses across the spectrum. Amerine's company, Startup Junkie Consulting, offers free assistance, events, networking and workspace to help entrepreneurs move their businesses forward.

Startup Junkie received a $500,000 award from the Small Business Administration to create the Retail, Supply Chain and Food Processing Cluster of the Ozarks Region. The company is also benefiting from a grant the Walton Family Foundation gave to Winrock International to help cover the costs for a Northwest Arkansas venture team.

"This allows us to be free to offer world-class service in a way we couldn't do if we had to charge them," Amerine said of Startup Junkie clients.

Local business owners still have trouble finding large investors to help a company grow in later stages, said Mike Malone, CEO of the Northwest Arkansas Council. A large investment could range from $500,000 to $5 million.

Local entrepreneur John James has been able to raise that kind of capital and hopes to help other companies achieve the success he had at Acumen Brands. James co-founded the firm and helped raise more than $100 million in funding. He stepped down as the company's CEO in September but remains on the board.

He said during a February interview he wanted to be more hands-on and now serves as an adviser for local investment firm NewRoad Ventures.

"About a year ago, I was struggling leading Acumen," he said. "You always have to be reinventing yourself.

James told a crowd of business leaders at the 21st Annual Business Forecast Lunch in January that he would like to see a $100 million fund created that would help bring in new entrepreneurs and keep current ones.

"We've been lucky that out-of-state investors will come in and let businesses stay here," Malone said.

Some companies that receive funding from out-of-state investors, such as CycleWood Solutions, have to relocate. The company creates compostable bags for garbage and yard waste, a project that started as part of a business plan competition at the University of Arkansas.

Co-founders Kevin Oden and Nhiem Cao were able to secure nearly $3 million from Trailblazer Capital in Dallas, but part of the deal included moving the company to Texas. The firm still has an office in the Genesis Technology Incubator at the Arkansas Research and Technology Park in Fayetteville, and the company's founders have said they would eventually like move the main operations back to Arkansas.

"You hate to lose any company," Malone said.

Connect

Bill Fox, business consultant with the Arkansas Small Business Technology and Development Center at the University of Arkansas, said his group has some clients who are in a technology business, but he is seeing growth people wanting to start independent retail and food services businesses. The center sees about 250 people each year.

"A lot of help they are requesting is assistance with businesses planning," he said. "They may want some market research. They may want some financing options."

Fox said his services don't compete with offerings from groups such as Startup Junkie.

"It's all interconnected. While we do work together on occasion, we also refer clients back and forth," he said. "Establishing a good resource base is important, and hopefully we are a part of that."

Haddock said the Small Business Administration works with groups across the country.

"When we look at Northwest Arkansas, we have a tight-knit community that shares resources, and that is fantastic," he said, adding that it is still a struggle to reach everyone who could use help.

Many people just don't know what assistance is available, he said.

Amerine hopes events hosted by Startup Junkie help people connect.

"We are trying to be a catalyst, keep everyone excited and engaged," he said. "We act as community organizers."

G60 is an "elevator pitch" competition that gives competitors 60 seconds to tell the audience about their businesses. Amerine said the format is like the product of Shark Tank and American Idol merging.

"Being able to tell a story in less than 60 seconds is the most powerful thing you could do," he said.

Startup Junkie hosts a G60 event about once a month in locations across the state. Two winners, one picked by a panel of judges and one by audience vote, win $1,000 each.

About 200 people attended a G60 event last month in Fayetteville to hear 32 presentations.

"It indicates people get it and are engaged," Amerine said.

Chris Berryhill, a 23-year-old University of Arkansas student, presented his idea of a GPS skateboard that would show users where skate parks and other amenities are anywhere in the world.

It was the first time Berryhill competed in an elevator pitch event.

"It's good practice," he said of presenting his idea. "I'm definitely in the idea stage now."

Events such as the ARK Challenge, a startup bootcamp, also help businesses in the early stages and connect participants to community business professionals as mentors. Challenge participants are focused on Northwest Arkansas' industries of retail, food processing and transportation and logistics.

"We can leverage all our corporate leadership," Amerine said. "We are going to keep tweaking the program."

The program was federally funded for the first two years as part of the Department of Commerce Jobs and Innovation Accelerator Challenge. An event in Little Rock was added to the one in Northwest Arkansas. Amerine said that in its third year, the program will focus on startups that are already established and ready to take business to the next level.

Develop

Startup Junkie also provides a place for entrepreneurs to work and hold meetings in its offices on the Fayetteville downtown square.

Leah Garrett, co-owner of Olive Loom Boutique in Fayetteville, recently visited the office to talk about the company's next steps.

"I've only met with Startup Junkie once, but I could see a growing relationship," she said. "We are talking about marketing and sales, and those are crucial."

Garrett and her mother, Lou Sharp, have expanded their locally produced clothing line since winning a local business plan competition, NWA StartUp Cup, in 2012. The competition ran for two years.

"StartUp Cup helped us establish our brand and get our name out," Garrett said.

She is considering taking part in another competition, this through the Small Business Administration and hosted locally by Startup Junkie.

InnovateHER: 2015 Innovating for Women Business Challenge starts with regional competitions with winners advancing to nationals and a chance to win the $30,000 prize. The program is designed to showcase "products and services that have a measurable impact on the lives of women and families, have the potential for commercialization and fill a need in the marketplace."

The University of Arkansas also plays a big part in developing companies, Haddock said.

Amerine has been part of the university's startup culture since 2008. He was part of the school's technology licensing office and served as associate vice provost for research and economic development and director of technology ventures before leaving those posts late last year. He still teaches an entrepreneurship class.

Many local companies, including CycleWood, were created in one of the university's entrepreneurship programs.

Fayetteville is also home to the Arkansas Research and Technology Park. The mission of the University of Arkansas Technology Development Foundation, which runs the park, is to stimulate a knowledge-based economy in the state by building and keeping the workforce.

The park recently celebrated its 10th university, and a report by the Center for Business and Economic Research at the University of Arkansas reports that the companies based there employed an average of 224 workers with labor income totaling $189.5 million between 2005 and last year.

The center had 38 public-private companies and 196 employees at the end of the university's fiscal 2014 in June.

Finance

Fox said banks are making more loans to small businesses than they were a few years ago.

"I think people are a little more optimistic and willing to take a few more risks," he said.

Haddock said the Small Business Administration approved 38 loans totaling $23.62 million to 21 existing and 17 new businesses in Benton, Washington, Crawford, Sebastian and Madison counties since Oct. 1. The loans created 146 and retained 232 jobs, he said.

Finding investors is getting a bit easier, too, Haddock said.

James said he is in the final stages of establishing a $5 million entrepreneurial residency program at the University of Arkansas in addition to helping build NewRoad Ventures' fund.

"We will try and start a company every month or every other month," he said last month.

James said the program will act as a business incubator -- a program designed to provide resources and services to startup companies.

The former family practice physician said the program will act like a medical residency program and function under a "see, do and teach" model.

He said he discussed his desire to see the $100 million fund created somewhat prematurely, but NewRoad Ventures has already invested more than $14 million of a $21 million fund in 13 startup companies over the past 18 months.

Managing Director Clete Brewer told the Arkansas Democrat-Gazette last month he thought the firm would be lucky to find three or four companies in Arkansas to invest in a year, but easily exceeded that number.

James said a lot of the companies that NewRoad Ventures invests in will fail, with just a handful providing a good return.

"But one of them will become J.B. Hunt, Tyson and Wal-Mart or, minimally, Acumen," James told the Democrat-Gazette in February. "We've got such a ripe area here."