Study Shows Where Arkansas Startups Are Growing and Where Funding Gaps Remain

Investors and startups at an Onward FX event (Photo provided by Northwest Arkansas Council)

A new Arkansas Capital Scan report by the Northwest Arkansas Council and University of Arkansas Office of Entrepreneurship & Innovation was released Thursday, outlining investment activity across the state.

A press release from the council announcing the report stated that the 2024 data reflects a mixed but resilient landscape.

Early equity rounds declined meaningfully, yet founders advanced by drawing on a broader mix of funding sources. Arkansas sustained a four-year pattern of steady venture activity, raising nearly $260 million across 18 deals.

Northwest Arkansas captured 92% of that investment.

Now in its fifth year, the Capital Scan tracks financial resources directed to Arkansas startup companies. The report is supported by the Walton Family Foundation, and covers angel and venture investment, crowdfunding and nondilutive federal grants.

Additional key findings include:

• Crowdfunding increased 37%, reaching founders in seven regions
• Nondilutive federal grants rose 15% to $16.9 million
• Angel and seed investments totaled just under $8 million, marking a meaningful decline from 2023

Onward FX

The press release stated that the decline in angel and seed investments is an opportunity to strengthen the front end of Arkansas’ startup pipeline. With that knowledge, the NWA Council is aiming to expand support for emerging companies across the state.

In 2024, the council launched VC Immersions to connect young companies with venture firms through curated meetings. In partnership with the Arkansas Economic Development Commission, the the model was evolved into Onward FX, a two-day founder-funder exchange designed to increase access to capital, mentorship and market opportunities across Arkansas.

Serafina Lalany, executive director of StartupNWA at the Northwest Arkansas Council, said in the release that the data shows meaningful progress, as well as persistent challenges in fueling young companies.

“The report shows an emerging ecosystem working through a tough year for early investment,” Lalany said in the press release. “The path forward is clear: strengthen capital access where it matters most. Steady venture activity highlights the growth-stage opportunity emerging in Arkansas, and programs like Onward FX help founders gain momentum at the earliest stages.”

Future Solutions

The report stated that further solutions for the decline are expected to come from updates to Arkansas’ securities law taking effect in 2026.

“Act 236 modernizes equity crowdfunding by increasing the amount companies may raise, widening local investor participation by simplifying compliance requirements,” the press release stated.

Entrepreneurship Support Organizations, including the Venture Center and university innovation programs, aim to complement these efforts by helping founders build skills, validate concepts and prepare for investment.

In a perspective piece included in Capital Scan 2024, Chad Brown, co-founder and managing partner of the Venture Center Arkansas Fund, also outlined opportunities emerging in several innovation-driven sectors.

“Arkansas’ entrepreneurial landscape continues to evolve with promising activity across multiple industries,” Brown said in the report. “Expanding access to early capital will help convert this momentum into lasting impact.”