VC in Arkansas Is Unknown Quantity

How much venture capital is raised and invested in Arkansas? The world may never know.

Arkansas Capital Corporation Group has estimated last year’s venture capital level at $33 million, but Les Lane, vice president of the Arkansas Science & Technology Authority in Little Rock, said a reliable figure is hard to come by.

“We started looking at a lot things for the studies for the new economy, like how we track how much venture capital is raised or invested in Arkansas. What I can tell you is that it’s a mess,” Lane said. “There are six to eight reporting agencies”

The most consistent and reliable are MoneyTree and the National Venture Capital Report, Lane said. But shows Arkansas doing particularly well, despite anecdotal evidence that things are looking up.

“When we started looking at the numbers — not trying to make excuses for Arkansas — but all we were seeing was zeros. And so we just started informally … calling deal attorneys about deals that high net worth individuals might be doing.”

While Lane wasn’t looking for specific data, even collecting composite numbers and dollar values was “tough,” he said.

“At first they’re not sure why the state wants to know this, and we had to explain that we were trying to measure and see if Arkansas really wasn’t doing so well.

“What we ended up finding is that last year, in the second quarter alone, there was $10 million worth of deals done in Arkansas [but] the [published] reports had zeros across the board … “

Lane said he discovered that a venture capital fund in Dallas had done two deals in Arkansas in the last year — one with a telecom business in North Little Rock and another with an apparel business — yet neither showed up on any published reports. And U.S. Orthopedics in Little Rock, he said, “got a pretty successful round of funding.”

The Science and Tech Authority’s informal survey discovered something else disturbing: Even those companies that were receiving venture capital weren’t planning to become Arkansas-based publicly traded companies.

“Primarily, their exit strategy has been M&As,” he said.

The authority’s primary challenge, Lane said, is to get Arkansas on the venture capital radar screen, “to show people that there are options here that can be groomed. There’s venture capital from out of state that will fall in for good deals.

“This is a brand new source of capital to Arkansas and we just need to understand what the rules of the game are.”

Jeffrey Wood contributed to this report.