Cadron Creek Capital tops $1.5 million, seeks to alter Conway’s startup landscape

by Todd Jones (tejones1971@gmail.com) 179 views 

Cadron Creek Capital co-founders include (from left) Jeff Standridge, Kenny Kinley, and David Grimes.

Some 50 years ago various businesses and residents in Conway were able to see new possibilities with the soon-to-be constructed Interstate 40. They developed the Conway Development Corporation to begin buying land along the proposed route.

The corporation launched in 1959, seven years before the interstate began construction. The result was several areas near the interstate were developed helping attract and establish companies such as Kimberly-Clark, Tokusen, Conway Industrial Park, Acxiom, the Conway Airport and many more businesses.

The effects of this strategic development changed the city’s landscape for business and industry for over fifty years.

In 2015, Cadron Creek Capital had the same epiphany for what could be a tech-based, startup hub of activity in Conway. On Dec, 31, Cadron Creek Capital announced it had closed its first round of funding with more than $1,525,000. The investors and the fund hope to change the landscape of Conway moving forward making the city a major player among startups in Arkansas.

THE BEGINNINGS

Startup Conway Steering Team formed in 2013 according to Cadron Creek Capital co-founder Jeff Standridge. Their first foray into the startup space was with the Startup Launchpad in 2014 during Toad Suck Daze.

The steering committee had more in mind than just an event. They wanted to know what entrepreneurs needed to be successful. Over a six month period, the committee met with and interviewed entrepreneurs, investors, and startup advisors to find out the things that startups need. Cadron Creek co-founder Jeff Standridge said they learned that most entrepreneurs need three basic things:
• Access to expertise in the form of programs, mentors, advisors, etc.;
• Access to capital in the form of seed-stage venture funding; and
• Access to startup ecosystem “and an opportunity to connect and network with other startup founders.”

With that as guidance they began the process of putting Conway on the startup map. During the April 2015 annual meeting of the Conway Chamber of Commerce, Standridge announced the pending formation of Cadron Creek Capital to help fulfill these needs.

“Well, there’s nothing like the accountability that comes along with announcing in a room full of 1,000 people that you’re going to do something,” Standridge said.

Co-founders of the fund include both Kenny Kinley of Edafio Technologies and David Grimes, CFO of American Management Corporation. By August, the fund had invested in its first startups.

STARTUP FUNDING IN ARKANSAS
Startup funding has changed in the past 10 years according to Venture Capitalist Kristian Andersen, who has invested in several Arkansas-based companies, including Pathagility of Conway.

“There has been a change in the economics of starting up a technology-based company. Starting a startup requires a fraction of the capital that was required eight, ten years ago,” he said.

Andersen said starting a tech-based company a decade ago would require 5-10 times as much capital as it does today. He also said entrepreneurship has become a viable career path.

“Tech entrepreneurship has become a truly viable career path, and an entrepreneur can launch from anywhere in the country. There has been a significant shift in the culture of risk, and now, tech entrepreneurship has become a credible profession,” he explained.

This dynamic, according to Andersen, has allowed more regional based funds to have a significant impact in tech startups.

Andersen also is the co-founder of Gravity Ventures in Central Arkansas. He said Cadron Creek Capital is an early stage seed fund like Gravity Ventures. Other Arkansas Seed Funds include Tonic Fund, The Torch Fund, Hayseed Ventures and Fund for Arkansas’ Future.

According to Andersen, the difference between a seed fund and an angel group is that the seed fund will make investment decisions at the fund-level, as opposed to angel groups, which are comprised of individual investors that make autonomous investment decisions.

For Cadron Creek investments, an interested startup is generally vetted by the co-founders prior to pitching to the entire fund membership, Standridge said. Following the pitch, a vote is taken by the membership as to whether to take the next steps – due diligence – in the investment consideration process. This includes reviewing financials and the business plan. The ultimate decision to invest is made by a majority vote of the full membership following due diligence. The fund meets on the first Tuesday of each month.

According to Standridge, there are three main objectives to meet before investing:
• The deal must generate a significant return for investors;
• It must elevate the overall investment acumen in the community; and
• It should create local jobs by encouraging start-up companies to launch and/or settle in the area.

Spencer Jones is the CEO and Co-founder of LineGard Med. Jones’ company is one of the first investments of Cadron Creek Capital. Jones said the fund was a valuable part of his company’s strategy in addition to the funding support.

“Finding local capital for a seed round is difficult, and finding true value-add investors is even harder. Cadron Creek’s versatile membership brought strategic insight right in my hometown of Conway,” Jones said. “From the start to finish, their diligence was efficient and founder friendly, and their members immediately began providing expert support. CCC really is a huge asset for central Arkansas, and a perfect compliment to the entrepreneurial initiatives taking place in the state.”

Jones’ is one of the several companies already in the CCC portfolio. Others include LiveAnew, Broadband Development Group, DivvyHQ, Apptegy, and Hayseed Ventures.

CONWAY ENVIRONMENT, PARTNERS

Standridge said the qualities Conway has for startups include higher education available (3 colleges), a progressive downtown environment, and the “technological DNA” of such companies as Acxiom, HP, Rock-Pond Solutions, and Metova, all who have a presence or headquarters in Conway.

In addition, Cadron Creek Capital is working with University of Central Arkansas College of Business and the Innovation and Entrepreneurship program. Dr. Michael Hargis, dean of the UCA College of Business, said Cadron Creek is playing a vital role in promoting a startup ecosystem.

“Access to capital and effective mentor networks encourage and attract entrepreneurs,”  Hargis said. “In addition, it is necessary to build a talent pool to staff these growing businesses and contribute to the innovation pipeline – this system includes relevant academic programs, conferences, events, and other skill-building activities. Access to capital (both human and financial) leads to long-term economic development and strengthens communities.”

UCA’s innovation and entrepreneurship major and minor programs are designed to provide a consistent pipeline of talent to the emerging startup ecosystem. Several UCA students in recent years have started businesses locally while others have moved on to start innovative businesses in other areas of the country.

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