1 Million Cups Preview: Gravity Ventures Kristian Andersen (UPDATED)

Prolific designer, founder, and investor Kristian Andersen was scheduled to be the guest speaker at this Wednesday’s 1 Million Cups Little Rock event.

The winter weather and school delays have cancelled today’s meet-up, but you can still get a preview of Andersen’s activity in the Arkansas startup scene from his interview below.

Andersen, an active angel investor, is co-founder of Gravity Ventures, a seed-stage venture fund that invests in tech-focused startups. Among the fund’s investments are Acumen Holdings, Formspring, Formstack, NanoWatt, The Ark, Treatsie, DataRank, and Bourbon & Boots.

Talk Business & Politics Editor-in-Chief Roby Brock caught up online with Andersen for a preview of his soon-to-be-rescheduled 1 Million Cups talk.

TB&P: Gravity Ventures has been in Arkansas since 2010 and is now on its third Arkansas fund. How did GV-Arkansas launch and what is the sweet spot in the seed funding process that you occupy?

Kristian Andersen: After spending the bulk of my professional life in Indianapolis, my wife Brandi (a native Texan) and I decided to move to Conway (where I grew up) to raise our growing family. While in Indy, I had co-founded a seed-stage venture fund called Gravity Ventures with my business partner Mike Fitzgerald. The fund(s) were focused on providing seed-stage capital to high-potential, high-growth tech companies in the midwest. Shortly after moving back to Arkansas in 2009, I began to see a handful of promising companies struggling to raise that first, critical round of outside funding.

As luck would have it, I ended up having a serendipitous meeting with Ted Dickey and Mike Smith (of Innovate Arkansas) and we begin exploring the possibility of starting a Gravity Ventures fund in Arkansas to address the gap. Gravity Ventures is really focused on two things: 1) Providing seed-stage capital and support to emerging tech-companies and 2) Providing a forum for emerging investors to learn about the process of seed-stage investing while providing meaningful returns.

We are relentlessly focused on supporting the growth and maturation of the Arkansas startup ecosystem, with a focus on partnering with B2B SaaS, e-commerce, technology businesses. We knew there was a big opportunity here and we believed that if we jumped off the cliff, others would follow. John James, the co-founder of Acumen Brands, called Gravity’s Arkansas commitment the “most significant in the history of the previously desolate Arkansas startup scene.”

Since the formation of Gravity Ventures, many other investment groups (Natural State Angels, Tonic, Torch Fund, New Road Ventures, etc.) have emerged in the state that provide the critical capital, mentorship, and support that our state’s entrepreneurs so desperately need and deserve.

TB&P: You’ve worked with some of the most successful and high-profile startups in Arkansas. Are you drawn to the successful ones, are the successful ones drawn to you, or is there some other chemistry at work?

Andersen: Well, there is definitely some “chicken or the egg” science going on here, but the short answer is that we are drawn to the successful ones. Of course, over time, if you develop a reputation for working with winners, more winners will naturally be drawn to working with you. It’s better to be lucky than smart though – we had the opportunity to invest in a handful of really exceptional entrepreneurs early on, and that really helped us establish a good reputation in the Arkansas startup community.

In this business, it really is more about the jockey than the horse, and we were fortunate to connect with some really great founders in the early days of Gravity Ventures. Our goal is to be exceedingly easy to work with. We are extraordinarily “founder friendly” and seek to serve the best interests of our portfolio companies, which often means sacrificing short-term advantage in lieu of long-term gains.

TB&P: You split time between Arkansas and Indiana. What strikes you as an advantage that Arkansas has over Indy or other larger cities?

Andersen: When it comes to geography, everything is relative. Indianapolis is certainly further along in it’s maturation as a start-up hub. Indy boasts 200+ tech startups, a more robust funding landscape, a larger talent base, more higher-ed infrastructure, and a handful of very high-profile success stories (such as ExactTarget, Angie’s List, Aprimo, etc.) that really get the flywheel spinning.

With that being said, Arkansas has a number of innate advantages over many larger cities (especially those located in the rust belt).

First and foremost, I think the ambition level in Arkansas is really remarkable – and at the end of the day – building a successful startup ecosystem is largely a function of ambition. There is just an undeniable drive in the state to strive for something better. For decades, lacking the traditional trapping of a power economy, Arkansans have turned to entrepreneurship as a way to build a better life for themselves and their fellow citizens. The shear volume of entrepreneurial success stories in the state is really quite remarkable.

In addition, the biggest opportunities are to be found where others aren’t looking for them. I think there is an arbitrage opportunity in Arkansas right now. The vector and velocity of the state’s entrepreneurial activities far outstrip the amount of attention that it’s garnering from a national perspective. I think this is great news for both entrepreneurs and investors that are operating within the state.

Additionally, I would add that Arkansas has a huge lifestyle advantage. A decade ago that would not have been much of an advantage – as most entrepreneurs felt that they needed to live near the “centers of power”, e.g. The Bay Area and NYC, and to a lesser extent Austin, Boulder, Chicago and D.C., but that is no longer the case. Today, you can build a billion dollar plus company literally anywhere.

The cost of “starting up” is a fraction of what it used to be, talent can be accessed from anywhere, and the idea that you have to be in “The Valley” to build a world class technology company has been thoroughly debunked. That means, for the first time, founders can choose where they want to live (wherever that may be) and make hay. Once you realize that fact, many of Arkansas’ indigenous advantages (cost of living, outdoor/recreational opportunities, centralized location, etc.) begin to bubble up to the top.

Finally, I would add that there is a palpable “esprit de corps” in Arkansas. A powerful and dynamic community of designers, developers, entrepreneurs and professionals have galvanized around the idea that something special is happening in Arkansas. I see it everywhere I go. I know something special is happening when folks from out of state keep asking me “what’s in the water down there?”.