You’ve got 60 seconds to pitch your business idea to a few hundred audience members. If they like yours more than others, you’ll get a cash prize. You’ll get a surge of validation that might encourage you to pursue your idea. Most importantly, you might be introduced to people who can help make your dream a reality.
That’s the concept behind “Gone in 60 Seconds,” which is one of numerous entrepreneur-friendly efforts in the state that didn’t exist a few years ago.
Born in August 2011 and held about 10 times across the state so far, “Gone in 60 Seconds” gives 20 participants a chance to pitch their ideas before a voting audience. The winner typically wins up to $1,000. As the event’s creator, Jeff Amerine, describes it as “a mating, if you will, of ‘Shark Tank’ and ‘American Idol.’”
According to David Moody, an entrepreneur who volunteers with the event, the real goal is to get a lot of ideas into the big end of an economic funnel so that startups – new, scalable companies – flow out the other side. “Gone in 60 Seconds” is one of numerous efforts that are part of what he calls an “entrepreneurial ecosystem.”
Other parts of that ecosystem include:
– The Donald W. Reynolds Governor’s Cup, sponsored by Arkansas Capital Corporation, a business plan competition for college and graduate students;
– The Ark Challenge, a business accelerator program for technology startups;
– Startup Arkansas, which connects entrepreneurs with each other and is part of the Startup America Partnership;
– Innovate Arkansas, a joint venture of the Arkansas Economic Development Commission and Winrock International that encourages tech-based jobs in Arkansas.
An entrepreneur himself, Amerine’s job is helping the University of Arkansas commercialize intellectual property created by its research. He says the push for tech-based entrepreneurship really began picking up steam in 2004 with the release of a report by the Milken Institute ranking Arkansas 49th regarding its position in the knowledge-based economy. In response, business leaders along with the Arkansas Economic Development Commission created Accelerate Arkansas with the goal of helping Arkansas achieve per capita income parity with the national average by 2020. A number of bills were passed in the 2005 and 2007 sessions designed to improve the state’s knowledge-based climate.
Amerine said other economic factors came into play to encourage the growth of entrepreneurship during this time period. A number of the state’s flagship employers reached maturity, so they no longer were adding jobs at a rapid pace. The real estate market boom ended, which meant investors had to look elsewhere to make money. The tougher economy meant good jobs were not always available with established employers.
“This kind of economic adversity motivates people to become the CEOs of their own destiny and actually go out and create something on their own because they can’t just assume they can check into a big organization and have a good quality of life forever,” he said.
Amerine said there’s no better place to start certain businesses – in retail and supply chain technology or university spinoffs, for example – than Northwest Arkansas.
“We’ve gone in the last five years from wilderness to civilization in every sense, locally. It’s remarkable the difference. … Five years ago, 10 years ago, there was nothing like that that was even in the realm of possibility,” Amerine said.
Eric Mathews, 33, is trying to plant and grow scalable startups in Memphis. The graduate of Pulaski Academy started Memphis-based “Launch Your City,” soon to be rebranded as “Startco,” after working as head of corporate research and development for the FedEx Institute of Technology at the University of Memphis. He was wondering why there were so few local tech startups, so he surveyed the community and found business incubators that weren’t full and venture capital firms that weren’t investing locally.
“That’s the ‘If you build it, they will come’ method, and it obviously wasn’t working,” he said.
Mathews decided to fill that pipeline. “Launch Your City” invests in early stage ventures and then shepherds them through the process of becoming viable. Budding entrepreneurs who survive that early stage move into an “accelerator” phase where they are provided seed capital, mentors and a three-month entrepreneurship boot camp. If they advance, they have access to more capital. Once an idea takes root, “Launch Your City” becomes an investor.
“About 300 ideas got screened last year; 50 got serious; 25 got some form of capital; eight got significant follow-on rounds,” he said. “We gave them about 2,000 mentor hours, maybe a hundred professional connections for them. That’s close to $6 million raised by portfolio last year that went through that pipeline there just to get to the point where they could be into an incubator and be candidates for significant follow-on rounds.”
Mathews said “Launch Your City” invests in teams, not ideas, because ideas will change before they take root. He himself is an entrepreneur in that he and his extended family own two companies in the central Arkansas area: Maple Leaf Awning and Canvas and National Custom Hollow Metal. During the past few years, he’s seen the entire entrepreneurship process firsthand. Asked what leads to success, he cited two factors: persistence and complete dedication.
“Being an entrepreneur is an irrational choice,” he said. “Everything is stacked against you. There are incumbents that always have more money, more resources and all of the knowledge. When you start out trying to solve a problem in a unique way, everything is unknown, and you have nothing, and you have to build it from there. So it’s an irrational choice to do so, and you need to set yourself up to succeed.”
Like Mathews, Lee Watson, 28, of Conway is another young entrepreneur seeing the power of connection as the key to success. Matthews started Clarovista, a consulting company that helps companies with branding and data analytics.
And like Mathews, Watson is working with other entrepreneurs. He’s volunteering with Startup Arkansas, which held its Startup Weekend in April when entrepreneurs met, formed teams and pitched ideas. “The goal there is to kind of connect the dots in Arkansas. … It’s really a network of entrepreneurs helping other entrepreneurs,” he said.
If the recession encouraged entrepreneurs, what will happen as the economy improves? According to the annual Kauffman Index of Entrepreneurial Activity, the nation’s business creation rate declined in 2012 – from .32 percent of adults to .30 percent – at the same time the unemployment rate dropped. The reason, Kauffman said, was that as more jobs became available, fewer people felt the need to start businesses.
Could better times lead to fewer entrepreneurs in Arkansas? Maybe, but when it comes to startup companies, quality is more important than quantity. At one point, Wal-Mart might loosely have been called a startup. Today, it employs 2.2 million people. True, Sam Walton accomplished that without winning a contest, but could the next great Arkansas company be built with help from an entrepreneurial ecosystem? It can’t hurt.
“Two or three years ago, I only knew of a handful of startups in the state,” Watson said. “I mean, you could count them on your fingers. Now there’s a ton. So it’s exciting to see that happen.”
Editor’s note: This story appears in the latest magazine issue of Talk Business Arkansas, which you can read online at this link.