Rural communities across the Heartland have faced incredible challenges due to the pandemic and will require targeted solutions to strengthen their economies. To do so, we must acknowledge the outsized influence entrepreneurs can have on our region’s prosperity.
Endeavor Insight, Endeavor’s “think tank,” assembled a team of economists and data scientists to provide data-backed insights on entrepreneurship and its influence on economic development, with contributions from the Endeavor Northwest Arkansas office. Increasing the number of entrepreneurial companies that scale in rural settings can strengthen local economies by attracting more outside revenue and increasing local productivity.
But there are significant challenges that Northwest Arkansas entrepreneurs face, like access to talent, capital and networks. Unless we harness digital technology to increase our connectivity, brand the benefits of our region’s quality of life, and coordinate with local policymakers to ensure an inclusive ecosystem, we will not succeed.
WE MUST DO BETTER TO BE BETTER
It is a challenge to attract the right managerial or tech expertise — a frequent pain point for Endeavor’s companies. The skills needed for a C-level executive of a 10-person company are different from those required for a 1,000-person company, and it can be difficult and expensive to train for these positions. But the pandemic has expanded the pool of remote talent available to entrepreneurs in our region, with 74% of companies planning to shift employees to remote work permanently. So areas like ours with a lower cost of living should expect an influx of highly skilled transplants.
Incentives that can attract talent need to be driven by local policy. The “Life Works Here” program launched in November 2020 by the Northwest Arkansas Council is investing over $1 million to do so, and it has received almost 30,000 applicants. But legislation like HB1570 thwarts our region’s best efforts to attract and retain diverse and inclusive talent contributing to the state’s economic growth. We must be better.
REDRAW THE MAP
Building more robust networks outside of an entrepreneur’s local area is critical to ensure honest and radical feedback on strategy and scale progression. Connecting neighboring cities like Tulsa, Okla., and Northwest Arkansas enables both regions to uplift each other up without competing for resources. Connecting Northwest Arkansas and Istanbul helps a company’s potential market expansion into the Middle East or Europe and solves local problems globally.
The increase in virtual meetings following the pandemic has made it easier than ever for founders to meet and maintain connections that will continue to play a significant role in building sustainable networks and ultimately shape an entrepreneur’s journey.
MIND THE GAP
Why is it hard for rural founders to raise capital? Most entrepreneurs who raised equity funding did so from coastal investors or in other large cities. As a result, the fundraising process often requires rural founders to spend a significant amount of time traveling or building relationships from afar.
Average venture capital terms have become larger by focusing on later stage rounds, adding additional hurdles for rural companies. Organizations like Rise of the Rest and the Ark Angel Alliance are working to fill a huge gap, but more remains to be done.
I firmly believe the next generation of innovation will not come from the coasts but rapidly growing areas like Northwest Arkansas, impacting all stages of entrepreneurship from inspiration to investment. The work being done by organizations like Endeavor to promote and support entrepreneurship in flyover states adds to the benefit of starting and building a business in rural cities across the Heartland.
Canem Arkan is the managing director of Endeavor Northwest Arkansas, launched in March 2019 as the sixth U.S. affiliate of Endeavor. Endeavor selects, mentors and supports high-growth entrepreneurs in 40 markets driving job creation, wealth creation and inspiration to underserved growth markets globally. The opinions expressed are those of the author.