Arkansas Competes with Major Tech Hubs for Entrepreneurs and Startups

Serafina Lalany, executive director of StartupNWA: “We’re starting to see a dramatic change in our region around access to capital.” (Michael Woods)

Arkansas’ technology ecosystem may be just getting started, but it’s already competing with major hubs like Silicon Valley, Atlanta and Washington, D.C., to attract entrepreneurs.

Moving to Arkansas is the “best startup hack any founder could do,” according to Sober Sidekick founder Chris Thompson, who relocated his home and his company from Los Angeles to Bentonville two-and-a-half years ago.

Thompson, along with many more founders who have relocated to Arkansas, represents a growing trend of technology entrepreneurs who are discovering that the state offers enough advantages for growing their companies that it’s worth moving to.

Of course, the tech migration isn’t happening by accident.

It’s the result of concentrated efforts by organizations like StartupNWA, the Venture Center, ARise and Startup Junkie’s Fuel Accelerator and Conductor, which are actively cultivating a community designed to attract tech companies and help them thrive.

Innovation-heavy northwest Arkansas is leading a lot of the charge. While the Northwest Arkansas Council’s StartupNWA is building an entrepreneurial network by offering a breadth of resources and growing funding opportunities to tech founders, programs like the Fuel Accelerator are focused on bringing tech companies to the region and showing what the state has to offer.

Fuel is exclusively in person, meaning founders who participate spend the 10-week program in Bentonville. It’s also free.

“We require these startups to move into the area, and for them to get to be in person and make the connections here, it makes all the difference,” said Grace Gill, Fuel Accelerators’ operations manager. “One of our main goals is to help bring these companies into the area, one for their success, but also for us to build out that tech ecosystem.”

The program has directly contributed to nine startup relocations, with four in the past two years. It currently hosts two accelerator programs a year — one in artificial intelligence and machine learning and the other in health technology.

Venture Capital

While Arkansas can’t yet match the sheer volume of venture capital available in other states, progress is being made to connect Arkansas startups with investors.

“We’re starting to see a dramatic change in our region around access to capital,” said Serafina Lalany, executive director of StartupNWA. “The things that we’re working on specifically at StartupNWA [are] bringing Silicon Valley to us.”

Lalany said StartupNWA has helped 12 startups raise their first institutional rounds in the past 11 months through its VC Immersions program, which brings investors to Arkansas rather than sending founders elsewhere.

She said the organization brings 20-40 investors to meet with local entrepreneurs and stakeholders a few times a year.

“Before they’ve even come into town, they have a roster full of meetings,” Lalany said. “They’re meeting with local angels; they’re meeting with our community through a big event. Last cycle, we had over 231 one-on-one meetings, and we saw so many deal[s] come out of that. So the curation is really the secret sauce here, and really understanding how to matchmake both sides of the market.”

Fuel has also helped raise more than $240 million in funding for its participants.

And founders directly benefit from this approach.

“So many venture capitalists come through Bentonville, and that has given me opportunities to pitch,” Thompson said. “I get a front-row seat and easy access.”

Though the state needs to bring in outside funding, there are efforts to raise venture capital at home. Ark Angel Alliance and the recently announced Venture Center Arkansas Fund are just two examples.

“We’re focused on venture scale. We believe it’s one of the greatest vehicles for growth in our region,” Lalany said. “These are companies that are doubling and tripling year over year. Often they are prioritizing growth over profitability, and that means you need to bring in outside capital.”

Building a Flywheel

But Arkansas is implementing more than funding. According to Lalany, StartupNWA has three goals: increasing access to capital, storytelling about the region’s tech successes, and providing physical space for innovation through their new incubator, Onward HQ in downtown Bentonville.

The incubator hosts multiple events a week, bringing in industry experts to work hands-on with companies on their specific challenges. These range from specialized programs addressing operational hurdles to more casual events like coffee meetups and “ask me anything” sessions with visiting venture capitalists.

“We want to be that front door,” Lalany said of the space, which has already reached capacity after launching in January.

Fuel has similar goals, or what Gill calls the “three C’s”: curriculum, capital and connections.

Rajat Paharia, founder of Ask Steve of Bella Vista and a former Google employee for nearly a decade, said Arkansas offered a supportive network that’s not easy to find.

“There seems to be a focus on startups and entrepreneurs and growing that here, so super excited about that,” Paharia said. “And then the community here is just much smaller, so you get to know everybody, and everybody’s super supportive.”

Thompson was also impressed by the region’s community and accessibility.

“Within the first couple of trips, I had a pretty good sense in terms of ‘who are the people I need to build relationships with,’ and then how to reach them is very easy and accessible,” he said. “I was able to get so much more value out of my time.”

Lalany and Paharia said Arkansas has the momentum to create a “flywheel,” or a momentum that grows over time, leading to self-sustaining growth.

“There’s been a number of concentrated investments over the last five years. What that creates in our region is a flywheel effect. It causes startup formation to grow — it’s a hockey stick-type growth.” Lalany said. “Now we have a number of early-stage startups in our region, and we’re really focused on accelerating them to the next level. We work across all of those incubators and accelerators, all of the programming, to be that stage to help those companies scale and stay here while they do so.”

Despite the progress, Arkansas is still early in its development as a technology hub. But those working in the region are optimistic about its trajectory. “This is not a siloed community,” Gill said. “The growth and the opportunities will only continue.”

And for Lalany, the vision is clear.  “It’s happening. It feels underground, but when you sit here at Onward HQ, you see it every day. The coolest technologies are born out of our region. I think we are a stone’s throw away from being recognized as the global leader.”