Winrock International of North Little Rock and Cartwheel Startup Studio of Bentonville announced Thursday the launch of their new accelerator program funded by $1.2 million from the Walton Family Foundation.
The 12-month pilot project, “Cartwheel: A Next Generation Business Accelerator,” aims to produce two software-as-a-service startups in northwest Arkansas. Its goal is to identify and validate the most promising new business concepts in the region and help them become profitable enterprises.
Although preliminary work began in October, the project ends Dec. 31, 2022.
Cartwheel CEO and Managing Partner Joshua Stanley told Arkansas Business late Thursday that, unlike a traditional accelerator where entrepreneurs apply to participate, this project will utilize the “startup studio” model of beginning with ideas instead of with people and already formed companies.
Using that model, Cartwheel works with local business owners to figure out where a problem exists that is not being solved by anyone, where there is an opportunity for a new company to solve it. Another source of ideas is efforts like hackathons, such as the one it is hosting along with partners Arkansas Children’s, Startup Junkie Consulting, HealthTech Arkansas and the Office of Entrepreneurship and Innovation in the Walton College of Business at the University of Arkansas. At that, software developers across the state will compete in building products and/or services for use in the pediatric healthcare field.
Cartwheel’s team of six, and any contractors the firm decides to hire as needed, then validates that the idea is a good one. They do that through processes like potential customer interviews and pilot programs. One of the last steps in the process, he said, is to name a co-founder or “entrepreneur in residence” i.e. someone that along with Cartwheel would own the business and take it to the next level.
Stanley said this model offers a financially safer path to entrepreneurship. Instead of foregoing a salary for up to two years to get a startup off the ground, someone with an entrepreneurial mindset can have a salary on their first day with a startup kicked off by Cartwheel, he said.
While that person focuses on customers and the products or services, Cartwheel would handle back office tasks, Stanley said.
With the project announced Thursday, Cartwheel will initially identify 20 business ideas for screening and review by experienced technology entrepreneurs, then narrow those to the two that could be the basis for the most viable and high-potential new companies. CEOs and co-founders will be recruited for the final two firms, which will receive help with raising capital and more.
Stanley said in a news release, “We’re seeking to pull the known ‘90% failure rate of startups’ up to the pre-formation phase to produce new companies that have the highest probability of success.”
The project “presupposes that companies must innovate around the pain points they face every day,” added Winrock CEO and President Rodney Ferguson. “Our goal is to seek and develop the best, most enterprising software services concepts – those that solve pain points and unlock new opportunities for business growth and development. And we’re doing it right here in Arkansas.”
Stanley also told Arkansas Business that success for this project is proving that that startup studio model works and getting funding for the same kind of project for three or more years.
“One company making it all the way through to seed round would be fantastic. But, if nothing else, just prove yes, we could stand up to businesses, co-found them out of the region,” he said. “This is a model worth rinse and repeating.”
Organizers say the accelerator addresses one of the most significant gaps in the region’s existing entrepreneurial ecosystem: the need to increase early-stage business development, attract startup-founding talent, and directly activate pre-seed to seed venture capital funding in the region.
“Bringing and attracting startups and early-stage companies to the region is a big part of how we grow long term, or how do we turn this into Austin in the next 10 years? Let’s continue that and let’s form new businesses out of this region and tap into this existing talent that’s been here,” Stanley told Arkansas Business. “We’re ready for a Cambrian explosion here. We’re like right there. So what can we do to help tip the scale a little bit faster? I think let’s build a few technology startups, found them from the ground up here in this region, and go find local co-founders.”
Cartwheel’s role in the project will be to assist with market experimentation, go-to-market strategy and business plans, software-as-a-service product development, preparing pitch decks for investor validation and other startup-building and training activities as well as obtaining funding. Stanley founded Cartwheel in February after interviewing 12 different startup studios from across the globe. Before, he was president at software firm RevUnit of Bentonville. Talks with the foundation about this project began in March, he said.
Winrock’s Innovate Arkansas will assist with business acceleration, talent recruitment and capital raising, including strategic studio decisions, network connections and deal-structuring for each new company.
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