AVF Rouses Unity in High-Tech Sect

Northwest Arkansas’ emerging high-tech business and research communities have for years sounded like the scarecrow in Frank Baum’s “The Wizard of Oz.”

Some people say to go this way. Some people say go that way.

On Nov. 7, the Arkansas Venture Forum will hold an event that it hopes will inspire the sectors to create a united voice and vision by bringing in economic evangelists who’ve been down this road before. The forum, titled “Building Arkansas’ Knowledge-Based Industries,” aims to unite Arkansas resources that can improve the state’s competitive edge for building an economically viable future.

Tim McFarland, AVF’s chairman, said the idea is to “go to school on the winners” by offering presenters who can tell success stories from places where knowledge-based industries have already become billion-dollar economic engines.

Featured speakers include Michael Cassidy, president and CEO of the nonprofit Georgia Research Alliance in Atlanta, and Carol Thompson, president of networking facilitator The Thompson Group in Austin, Texas. John White, Chancellor of the University of Arkansas, will also give the keynote address.

The forum will be held from 8:30 a.m. to 4:30 p.m. at the Fayetteville Town Center on the downtown square. An opening reception will be held from 5-7 p.m. on Nov. 6 in the lobby of The Bank of Fayetteville on the west side of the square.

Arkansas Capital Corporation Group is sponsoring the event, which will include 26 panelists.

“Those of us in the private sector need to know how we can complement research at the UA and what building blocks are needed so that over the next five to ten years we can accelerate the growth of knowledge-based companies,” McFarland said.

Strategically aligning the private sector and its financial capital and the educational sector and its intellectual capital has worked wonders in both Georgia and Texas, McFarland said.

Peachy in Georgia

The Georgia Research Alliance — which teams public and private support to spur research and the commercialization of resulting discoveries — has helped the state of Georgia go from flat job growth 12 years ago to a five-year stint among the nation’s top new high-tech job producers.

The alliance operates as a conduit to invest public monies in six research universities. Its goal is to build the research environments in which innovation-driven companies can develop. The organization was created by business leaders who raised private funds from foundations and private industry for what Cassidy called “self-enlightened reasons.”

Airlines, for instance, might want to invest if economic development would mean more passengers. Utilities could see the potential for more electric and gas customers. And their “come bets” paid off.

The state of Georgia has invested $300 million for infrastructure development through the alliance, Cassidy said. That helped attract another $1 billion in federal funds to recruit top researchers, special equipment and other tools.

“We’ve helped make our universities disproportionally competitive,” Cassidy said. “As a result, annual research enterprise has more than doubled. It’s gone from about $400 million to about $900 million today. And our goal is to move quickly to $1 billion.”

Private business may applaud that effort, Cassidy said. But business is more likely to cheer when it realizes that $500 million worth of capital investments in new businesses have sprung from that research. He said 75 innovation-driven companies related to the effort have produced 2,000 high-tech jobs in Georgia.

All that new capital flowing into Georgia businesses has had multiplier affects at the macro scale, too. Cassidy said state dollars drive research, which drives new enterprise and job growth, which attracts new capital, which cycles back into the tax base.

“It’s in the interest of business leaders to convert research activity into new companies that will attract additional industry to the state,” Cassidy said. “Without a doubt, our success has come from the business sector and state government getting on the same page.”

Waltzing in Texas

In 1988, Thompson was a board member of the Greater Austin Chamber of Commerce when she and 29 bankers, lawyers, mid-sized business owners, politicians and educators trekked to California. The leaders took a week out of their schedules, paid their own way and visited with 120 businesses throughout the Golden State — taking special care to hit spots like Silicon Valley Bank and Apple Computer.

Their mission was to tell Austin’s story and ask businesses to consider the heart of Texas if ever they decided to expand. Having such a diverse group, which she said included the University of Texas’ dean of engineering, made an impression. Austin already had momentum from landing Microelectronics and Computer Technology Corp. and Semitech Electronics during the early 1980s. But the real push came after the Chamber’s pilgrimage.

By 1992, 25 knowledge-based businesses expanded in Austin and 25 more relocated there. Despite an average age of 30.5 in the Austin area, a united university, government and business culture was able to recruit more seasoned executives to fill the need for CEOs and chief financial officers.

“The word that comes up again and again about our efforts here is collaborative,” Thompson said. “We asked companies that had already expanded her if we had done enough as a community to help them, and we as a group explained to other potential firms what we would do for them.”

Better internal communications among the 52,000-enrollment UT’s faculty, along with local CEOs who get involved in local politics and social events, have kept the revolution going, she said.

Arkie Problems

Ron Goforth, president of Fayetteville technology due diligence leader Beta Rubicon Inc., said the key element missing in Northwest Arkansas is a highly visible success story that the high-tech sector can hang its hat on. Most of the state’s viable tech firms started decades ago, and there hasn’t been much success importing new ones.

And a number of national studies bear out the fact that Arkansas has trailed in knowledge-based industry growth.

The state finished dead last in September’s Miliken Institute study, which tracks investments in science and technology. The State Science & Technology Institute, which measures commercialization of research discoveries, and the Progressive Policy Institute, which works to modernize politics to further technology, also rated Arkansas near the bottom of similar studies this year.

A recent report by Ron Foster, a research professor and director of the UA Graduate School’s Innovation Incubator, showed that Arkansas did receive eight Phase I Small Business Innovation Research grants out of 22 applications in 2001. That’s a 36 percent success rate, compared to a 16 percent rate nationally.

But, the state’s number of applications per capita (per 100,000 businesses) was 1.22, or well below the 6.7 national median set by Maine.

Making Progress

Calvin Goforth, president of Virtual Incubation Corp. in Fayetteville, said although the local knowledge-based sector still has hurdles to clear, he’s excited about the progress made just in the last year. His firm, which operates similar to an Internet-based business incubator such as the Genesis Technology Incubator in Fayetteville, has grown its client base from three firms to eight. Six of those derived from technology developed at the UA.

During 2001 there were 22 applications statewide for SBIR grants. VIC will apply for at least 20 this year just for its clients alone. And Calvin Goforth said he expects to have 15 companies that reach for 60 SBIR grants by 2003.

“There’s definitely been an increase in quality and quantity of research at the UA,” Calvin Goforth said. “The UA has started some fairly aggressive policies regarding commercialization of their intellectual policies, and with the mission of the UA now to be a ‘student-centered nationally competitive research university’ I think it’s clear the administration recognizes the importance of research and its affects.

“The importance of this forum is to bring people together to show them all of the opportunities that are out there if we harness seed funding and work together.”