When April Seggebruch launched Innovate Arkansas client firm Movista of Bentonville with Stan Zylowski in 2010, both freshly adorned with MBAs from the Walton College of Business at the University of Arkansas, the state’s tech startup scene was alive but only taking baby steps.
Going on five years later, that ecosystem is growing and settling into a robust adolescence.
Movista, which provides online field management and execution tools, now boasts multiple national clients and has attracted more than $600,000 in funding rounds since late 2013. Movista reports 300 percent growth in each of the past three years and projects even bigger growth in 2015. Currently, it employs 31 people in jobs that pay on average 60 percent more than the state’s median household income of $38,522 annually.
“We love to joke that we grew up on the entrepreneurial dirt road and northwest Arkansas folks are now born on the interstate,” Seggebruch told Arkansas Business in December 2012 of the region’s growth.
Both Seggebruch and Zylowski left promising careers in retail to launch Movista after hatching the idea for their tracking software in a Walton College classroom. Their vision prompted international entrepreneur/investor Permjot Valia in 2013 to include Movista among his potential “billion-dollar plays” in Arkansas.
Certainly, talent like Seggebruch and Zylowski has helped accelerate the growth of a bona fide tech startup ecosystem in the state, centered on Little Rock and northwest Arkansas. But the state’s commitment to help such homegrown talent turn ideas into viable startups has fueled that growth.
Movista found early nourishment in the form of seed funding from the Arkansas Science & Technology Authority and the Arkansas Development Finance Authority’s Arkansas Venture Capital Investment Trust funds, as well as mentoring and guidance from Innovate Arkansas, a joint venture of the Arkansas Economic Development Commission and Winrock International.
Without the services and funding provided by those agencies, Seggebruch admits, “We would not exist.”
Movista represents a prime example of the kind of investments made by AVCIT. Through 2013, the trust had invested roughly $28 million in 67 Arkansas small businesses and startups with an economic impact to the state estimated at $503.7 million.
“The entrepreneurial ecosystem is becoming stronger by the day, and we are proud of the Arkansas Venture Capital Investment Trust’s role in helping it expand,” said Brad Henry, ADFA vice president of development finance. “We are also very excited about the future of the companies in which we’ve invested. These companies are in turn creating jobs that pay higher than the state average and are thus helping to keep some of the most promising talent here in Arkansas.”
Innovate Arkansas Director Tom Dalton said his group works closely with ADFA’s financial assistance programs as it deals with new tech startups, including the successful ARK Challenge startup accelerator, which it administers.
“ADFA has been a consistent investor in the four ARK Challenge programs that have operated in northwest and central Arkansas,” he said. “As I look at the Arkansas Venture Capital Investment Trust companies, many are also Innovate Arkansas clients. That is an indication of the manner in which the state of Arkansas has supported the growth of new companies. AEDC, through its Innovate Arkansas initiative, supplied the mentorship and business-model development support, and ADFA, along with the Arkansas Science & Technology Authority, has been able to provide early-stage public investment funds for product development.”
Dalton said these initiatives have helped IA client companies raise $197 million in private capital investment over the past six years.
A recent study of AVCIT-funded companies by Applied Economics of Phoenix revealed a total economic impact on the state economy of $503.7 million (40 of the 67 funded companies participated), with that impact increasing each year.
The study also revealed:
- 710 jobs created with an annual payroll of $33.7 million. Including indirect jobs created to sell to AVCIT-funded companies and their employees, the economic impact is an estimated 2,800 jobs with $128.3 million in personal income over 10 years.
- Direct and indirect employees of those firms receiving AVCIT funding have accounted for roughly $9.6 million in state and local tax revenue since 2004. This doesn’t include sales, property and corporate income taxes from the participating companies themselves.
- AVCIT-funded businesses provide a return-on-investment of 1.49: For every $1 million invested through AVCIT, the state receives $1.49 million in economic impact.
- The average annual salary for jobs created by AVCIT-funded startups is $47,465.
ADFA President Gene Eagle stressed that most companies funded by the trust are early-stage startups and their combined economic impact is expected to increase, as is the state’s return on investment associated with them.
Plus, the success of the trust wouldn’t be possible without the team effort exhibited by public and private entities working together to move the state forward, he said.
“The success of the AVCIT is very much a team effort.”
That team includes the Arkansas General Assembly, the fountain from which all public funding flows; the Arkansas Science & Technology Authority; the Arkansas Department of Finance & Administration; AEDC; and AVCIT private partners Bank of the Ozarks, OG&E, Swepco, CenterPoint Energy, Simmons First National Bank and First National Bank of Fort Smith.
The AVCIT report summarizes:
“There have been notable increases in the magnitude of annual impacts over the past several years as the number of funds and the number of participating companies increase, and as startup companies begin to expand,” it said. “[ADFA] not only helps seed and expand local companies, but also supports job growth at other local supplier businesses. In addition, these new jobs generate increased payroll, spending and tax revenues that support the state’s economy now and into the future.”