Report: Venture capital investment dips 12% in Arkansas
A new report shows a 12% decline in statewide venture capital investment in 2023 from 2022, with 12 deals totaling $106.4 million. Northwest Arkansas captured most of the venture capital activity in Arkansas last year.
On Thursday (Dec. 12), the Northwest Arkansas Council released the Arkansas Capital Scan 2023. In its fourth year, the Capital Scan project was developed in partnership with the University of Arkansas Office of Entrepreneurship & Innovation (OEI) and supported by the Walton Family Foundation. The reports show the availability of early- and growth-stage capital for Arkansas-based startups and small businesses.
The new report shows Northwest Arkansas leads the state in venture funding but identified gaps in early-stage capital. The average deal size in Northwest Arkansas fell by 13.6% in 2023 compared to 2022. Yet the region continues to see investment in high-growth sectors such as health care and information technology.
“Arkansas Capital Scan shows where Northwest Arkansas stands and where we can go,” said Nelson Peacock, president and CEO of the Northwest Arkansas Council. “While there are challenges, the report highlights clear opportunities to strengthen the entrepreneurial ecosystem and solidify the region’s position as an innovation hub.”
Following are some of the report’s findings.
• Northwest Arkansas leads the state in the number and value of venture capital deals.
• Early-stage funding continues to be lacking, with a decline in average deal size and limited pre-revenue funding options.
• Diverse founders received 24.5% of venture capital money statewide.
The Northwest Arkansas Council will use the new report to refine its efforts and expand programs to address funding gaps. Existing programs like StartupNWA’s VC Immersions series and the StartupNWA Hub are expected to help entrepreneurs identify funding opportunities.
“The venture capital landscape in Arkansas is challenging but ripe with potential,” said Serafina Lalany, executive director of StartupNWA at the Northwest Arkansas Council. “By strategically increasing capital access and fostering innovation, the state is paving the way for a resilient and prosperous future.”
Phil Shellhammer, executive director of the University of Arkansas Office of Entrepreneurship and Innovation, noted the importance of partnerships. “Arkansas Capital Scan underscores the need to connect investors with innovative startups in our community. Addressing early-stage funding gaps will ensure Northwest Arkansas remains a competitive environment for entrepreneurs,” he said.