Investment activity in Arkansas was mixed in 2024, new report shows

A new report tracking financial resources directed to Arkansas companies shows that investment activity was and remained focused in Northwest Arkansas, as entrepreneurs drew on a broader mix of funding sources in 2024.

The Northwest Arkansas Council and the University of Arkansas released Thursday (Dec. 11) the Arkansas Capital Scan 2024, developed in partnership with the UA’s Office of Entrepreneurship and Innovation (OEI) and supported by the Walton Family Foundation. The report, in its fifth year, covers angel and venture investment, crowdfunding and nondilutive federal grants.

“We’re proud to partner with the Northwest Arkansas Council to bring the Arkansas Capital Scan to founders, investors and policymakers,” OEI Executive Director Phil Shellhammer said. “The data show where capital flows are strongest, where new opportunities are emerging and how we can guide entrepreneurs toward the resources that help them grow.”

Angel and seed funding in Arkansas fell by 60%, but venture capital investment has remained steady over the past four years. Nondilutive sources of capital continue to increase and “now represent a critical pillar of innovation funding for Arkansas companies,” the report shows. “Both equity and non-dilutive dollars remain heavily clustered in a handful of regions, but crowdfunding continues to have broad reach.”

The Arkansas trends suggest entrepreneurs are adapting by relying less on early-stage equity, continuing to receive venture capital investments while securing a mix of capital to support growth in 2024, according to the report.

“The report shows an emerging ecosystem working through a tough year for early investment,” said Serafina Lalany, executive director of StartupNWA at the Northwest Arkansas Council. “The path forward is clear: strengthen capital access where it matters most. Steady venture activity highlights the growth-stage opportunity emerging in Arkansas, and programs like Onward FX help founders gain momentum at the earliest stages.”

In Arkansas, small businesses, or companies with less than $20 million in annual revenue, accounted for 48% of all employees in 2024. New business applications per capita dropped in Arkansas, Missouri, Oklahoma, and Tennessee last year. Among the four states, Arkansas has had the largest decrease over the past four years, down 15%.

The state’s angel and seed investments comprised 24 deals that raised $7.93 million in 2024. Compared with 2023, this was 8% fewer deals and a 62% decrease in investment. The deal sizes were also smaller than in 2023. The average investment in 2024 was $529,000, down from $1.04 million in 2023.

Over the past four years, 71% of the deals were for Northwest Arkansas companies. Northwest Arkansas-based companies accounted for 34% of the total angel and seed investments in 2024. The region saw a 70% increase in the number of deals but a 56% decrease in the amount raised in 2024 from 2023.

Over the same period, angel and seed investments in central Arkansas fell 58% in the number of deals and 95% in the amount raised. One deal in southeast Arkansas accounted for 54% of all angel and seed money raised in the state.

Venture capital deals in Arkansas declined by 22% to 18, and the amount raised fell by 27% to $260 million in 2024 from 2023. The deal count fell to its lowest level since the inaugural Arkansas Capital Scan in 2020, when there were six deals totaling $16.4 million.

The average deal size fell to $14.5 million in 2024 from $15.6 million in 2023. Northwest Arkansas companies accounted for 72% of the deals and 92% of the total capital raised in 2024. Central Arkansas had a 20% decrease in the number of deals and a 51% decline in the amount raised.

Bentonville-based retail technology company Crisp closed on a $72 million series B equity round and secured $29 million in debt financing in 2024. Springdale-based health care testing company NOWDiagnostics closed on a $22.5 million series B equity round in 2024. Fayetteville-based retail technology company Field Agent closed on a $17.5 million series B equity round in 2024.

The number of crowdfunding campaigns in Arkansas has been flat over the past few years, but the amount raised rose by 36.9% to $2.44 million in 2024 from $1.78 million in 2023. The increase was attributed to debt campaigns, which grew by 22.5%, and both debt- and product-based campaigns, which increased by 63.4% and 39.1%, respectively.

Most campaigns have taken place in Northwest Arkansas and central Arkansas. Northwest Arkansas led the increase in crowdfunding money raised by 80%. The region accounted for 64% of all successful campaigns and 66% of all money raised. The growth was attributed to three large campaigns, the largest of which raised nearly $800,000. Central Arkansas accounted for 29% of all campaigns and 28% of all money raised. Part of this was attributed to debt-based crowdfunding. Northwest and central Arkansas have Kiva Hubs, key platforms for business crowdfunding.

Bentonville-based website development company Font Awesome raised $754,000 in a Kickstarter campaign in 2024, exceeding its $30,000 goal. The money supported an expansion of Web Awesome, Font Awesome’s most popular free and open source library of web components. Little Rock-based tabletop games publisher Troll Lord Games raised $303,000 in its 2024 Kickstarter campaign, exceeding its $25,000 goal to support world building. Bentonville-based outdoor apparel company LIVSN Designs hosted its fifth Kickstarter campaign in 2024, raising $168,000 to create the Ecotrek Overalls.

The report shows a new state law will impact early-stage crowdfunding in Arkansas. Act 236, which amended the Arkansas Securities Act, will allow Arkansas-based companies to raise up to $10 million over 12 months without registering federally. The previous limit was $1 million. The act also lets non-accredited Arkansas residents invest up to $100,000 per offering, up from $5,000.

The state’s nondilutive federal funding comprised 15 awards that raised $16.98 million in 2024, down 25% in the number of awards but up 15% from the total amount raised in 2023. The funding included in the report comprises Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) awards, which are given in three phases. The 2024 increase was attributed to a greater share of the second phase of the awards being given. Northwest Arkansas received 73% of the state’s awards in 2024.

Fayetteville-based electronics manufacturer Ozark Integrated Circuits won three SBIR Phase II grants totaling $4.4 million in 2024. Little Rock-based health care technology company Nushores Biosciences won two SBIR Phase II grants totaling $4.3 million. Arktonics, a Fayetteville-based electronics company associated with the UA, won two STTR proposals from the Department of Defense worth a combined $2.95 million.

In a perspective piece included in Arkansas Capital Scan 2024, Chad Brown, co-founder and managing partner of the Venture Center Arkansas Fund, highlighted opportunities in several innovation-driven sectors.

“Arkansas’ entrepreneurial landscape continues to evolve with promising activity across multiple industries,” Brown said. “Expanding access to early capital will help convert this momentum into lasting impact.”