New firm look­ing to mold star­tups

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - EMMA N. HURT

Rick Webb, a re­tired Wal- Mart ex­ec­u­tive, and Jean­nette Balleza Collins, for­mer di­rec­tor of the ARK Chal­lenge in­cu­ba­tor and co- founder of Tonic Re­gional Funds, re­cently formed what they are call­ing a “busi­ness in­cu­ba­tor.”

Grit Stu­dios is de­signed to nur­ture the startup ecosys­tem of North­west Arkansas by sup­port­ing young com­pa­nies as they build their busi­nesses by con­nect­ing those com­pa­nies to the re­gion’s tra­di­tional busi­nesses like Wal-Mart.

“One of the prob­lems is we are fund­ing early star­tups … and then we step back,” Webb, Grit’s di­rec­tor, said. “I want to put peo­ple around qual­i­fied star­tups and help them as they grow

and ad­dress their prob­lems.”

“We need more $20 mil­lion to $50 mil­lion busi­nesses in North­west Arkansas that are in the tech­ni­cal [in­dus­tries] where we can at­tract and keep tal­ent,” he said. For that to hap­pen, he ex­plained, young com­pa­nies need longer-term help.

Ad­di­tion­ally, he and Collins no­ticed that star­tups, in­vestors and en­ter­prise com­pa­nies of­ten do not un­der­stand each other’s per­spec­tives and needs.

For many of the early founders in Arkansas’ startup com­mu­nity, Collins said, “it’s been a hard road,” be­cause many in­vestors haven’t had “the nec­es­sary ap­petite and tol­er­ance for the type of risky in­vest­ments that are re­quired for truly scal­able tech com­pa­nies.”

Collins said Grit is look­ing to pro­vide “trans­parency” and “rules of en­gage­ment” in those in­ter­ac­tions.

“Grit is try­ing to ac­knowl­edge there is a gap and rep­re­sent not only the startup but the in­vestor and try to un­der­stand, ‘How do you give the in­vestor a se­cure port­fo­lio?’” Webb said.

“How do you help that founder be bet­ter pre­pared to not only pitch their idea but make sure their idea suc­ceeds and gets that re­turn? … “We’re try­ing to sit in the mid­dle right now,” Webb added.

Grit will open a co-work­ing space in the fall and ul­ti­mately will move to the his­toric Massey build­ing on the Ben­tonville square in 2018.

Grit of­fers three mem­ber­ships — star­tups with about a min­i­mum $1 mil­lion in pro­jected an­nual sales; groups that could sup­port star­tups in things like le­gal, mar­ket­ing and ac­count­ing; and tra­di­tional en­ter­prise busi­nesses like Wal-Mart.

But they will not turn away se­ri­ous en­trepreneurs based on the rev­enue thresh­old, Webb said.

Collins said the goal is to at­tract “life­long learn­ers in­ter­ested in build­ing long-lived ven­tures and be­com­ing ac­tive in a com­mu­nity of peers over the long haul.”

The pair plan to co­or­di­nate pub­lic events; ac­cel­er­a­tor pro­grams for star­tups; and struc­tured men­tor­ing and ex­ec­u­tive coach­ing.

Matthew Waller, dean of the Wal­ton Col­lege at the Uni­ver­sity of Arkansas in

Fayetteville, said the school de­cided to join Grit be­cause fos­ter­ing the re­gion’s busi­ness cli­mate “is in­te­gral to the mis­sion of the Wal­ton Col­lege.” Like Grit, the Wal­ton Col­lege is in­ter­ested in build­ing an ecosys­tem strong enough to at­tract com­pa­nies from other places to move to North­west Arkansas, he said.

By work­ing with the busi­ness school, Collins hopes Grit can “as­sist in cre­at­ing a dy­namic learn­ing en­vi­ron­ment that po­si­tions North­west Arkansas to at­tract, de­velop and re­tain re­source­ful prob­lem solvers who want to build com­pa­nies right here.”

Waller said the fac­ulty will be able to teach classes for startup founders tai­lored to their needs at a given time, on top­ics such as ac­count­ing or per­sonal fi­nance. Wal­ton Col­lege stu­dents will also gain ex­po­sure to lo­cal en­trepreneuri­als through Grit, and star­tups may find fu­ture em­ploy­ees among them.

“Grit Stu­dios does a few things — tar­get­ing a level of startup that none of the ex­ist­ing

[or­ga­ni­za­tions] are tar­get­ing as much, and two, maybe more im­por­tantly, they are not just pro­vid­ing fund­ing or con­sult­ing,” Waller said. “They are pro­vid­ing phys­i­cal space for busi­nesses to share ideas and re­sources.”

Michael Scheuer, founder, pres­i­dent and CEO of wrkr so­lu­tions, a San Fran­cisco startup that pro­vides work­force op­ti­miza­tion soft­ware and ser­vices, said he de­cided to join Grit be­cause his team views it “as a unique re­source

that of­fers ac­cess to a knowl­edge base that is chal­leng­ing to find in the Sil­i­con Val­ley.”

Of North­west Arkansas’ three For­tune 500 com­pa­nies, he said, “there’s no doubt that the en­tre­pre­neur­ial DNA from the founders of those com­pa­nies has per­me­ated the broader com­mu­nity.”

Jay Purchir, CEO of Ecoark in Rogers, said his team is at­tracted to Grit’s mis­sion of bring­ing jobs to North­west Arkansas. Ecoark is a hold­ing com­pany that ac­quires lo­cal com­pa­nies or com­pa­nies out of the area and of­ten brings them to North­west Arkansas.

“We’re happy to get in there, roll our sleeves up and work with en­trepreneurs to get to know them,” Purchir said. “As an added ben­e­fit, as we start to get to know th­ese com­pa­nies, there’s al­ways the po­ten­tial for us to make an of­fer to ac­quire them.”

Webb said in his early pro­fes­sional days, he had an older, knowl­edge­able part­ner who saved him from many mis­takes.

“We ended up in a place faster than I cer­tainly would have ended up by my­self,” Webb said. “How do you give that same part­ner to a startup founder who needs it? That’s what we’re try­ing to do.”

Webb said that for star­tups to suc­ceed, they need men­tor­ing beyond a short-term ac­cel­er­a­tor, and it’s im­por­tant for them to be ex­posed to older, es­tab­lished com­pa­nies in their in­dus­tries.

Wal- Mart has al­ready joined Grit and the in­cu­ba­tor is in talks with six other es­tab­lished busi­nesses, Webb said.

“We’re try­ing to pro­vide on­go­ing sup­port for qual­i­fied star­tups, so that ul­ti­mately we can look around in five to 10 years and see big busi­nesses that have grown up here and di­ver­si­fied the mar­ket,” said Webb.

NWA Demo­crat-Gazette/SPENCER TIREY

Jean­nette Balleza Collins and Rick Webb, founders of Grit Stu­dios, stand in their fu­ture of­fices on the sec­ond floor of the Massey Build­ing in Ben­tonville. The pair are work­ing with startup com­pa­nies to grow their busi­nesses.

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