“Seventeen years ago, there were precisely two groups that were involved in any way, shape or form in angel investing or venture capital in Arkansas,” says Jeff Amerine, founder and managing director of Startup Junkie, an entrepreneur support organization based in Fayetteville.
“It was pretty much a greenfield.”
Fast forward to 2021, when a Heartland Forward study ranked Arkansas’ entrepreneurial environment a meager 46th in the nation. Amerine says that report changed the landscape in Arkansas and led to initiatives including Accelerate Arkansas, the Arkansas Research Alliance and the ESTEM school in Little Rock.
Four years later, the state’s tech sector is no longer in its infancy, but Amerine says access to capital still has a ways to go.
“We’re still at the end of the beginning,” Amerine says. “It’s going to be a long, multigenerational journey.”
While there are more organized angel groups and early-stage VC firms operating in or focusing on Arkansas than there were two decades ago, Amerine says the biggest funding gaps startups face are still in the pre-seed and seed stages. That’s not particularly uncommon — “it’s a lot easier to get into Harvard than to raise venture capital,” Amerine says — and it does slow many would-be entrepreneurs.
“The other challenge, I would say, here, is support from knowledgeable people that know how to scale. It’s one thing to go from zero to $1 million; but how do you get from there to $10 million?” Amerine says. “That’s less about capital, but more about time.”
Amerine estimates that across all the entrepreneur support organizations in Arkansas, startups based in the state receive $8-10 million annually in funded support. However, he said the coaching, mentoring, training and other programs ESOs offer often are even more valuable than monetary backing.
Strong state and institutional support sets Arkansas’ startup culture apart from traditional tech hubs like Silicon Valley. Amerine says startups that are related to industries Arkansans know well have experienced the most success in raising VC.
“If you’re building something people are familiar with — so, for example, retail tech, supply chain tech, dual-use DoD stuff, medical devices, fintech, cybersecurity, harsh environment electronics — all those things, there’s competency locally,” Amerine says. “We won’t invest in anything we don’t understand or if we don’t think we can be helpful to their network.”
Looking ahead, Amerine says the outdoor technology and lithium industries hold much promise for future innovation in Arkansas.
“I think this macro trend toward generative AI and (machine learning) has opened a lot of really interesting opportunities; most investing funds have that as a focus area,” Amerine adds. “There are two types of businesses: those that embrace AI and ML, and those that go out of business, so getting in at an early stage with that is really important.”
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