State sees growth in venture capital

Venture capital is an essential economic engine that drives entrepreneurship, the growth and development of new companies and job creation across the globe. Private equity investments in businesses have exploded in the post-pandemic economy — though they’re down this year – and Arkansas businesses have been along for the ride.

Since 2020, venture capital investments in Arkansas have quadrupled to $270.8 million last year, up 117% from 2021, and the expanded funding mostly is pouring into Northwest Arkansas, which attracted 65% of the investments in 26 companies across the state, a report released last week indicates. The Northwest region and Central Arkansas draw 95% of investments in the state.

Not surprisingly, given that Walmart and Tyson headquarters are in the region, the consumer products and services sector gained the most private funding, bringing in about 34% — one in every three dollars invested — of venture capital money.

While the two biggest population centers in Arkansas are eating up most of the private-equity investments, the single largest investment, and the only one in northeast Arkansas, was earned by Infinite Enzymes, a biotech enzyme company in Jonesboro.

“This important research underscores the significant investments being made to develop a community of founders and investors in Northwest Arkansas, but we have a long way to go,” said Nelson Peacock, president and CEO of the Northwest Arkansas Council. “We’re striving to make Northwest Arkansas one of the best places in the country for startups, and this report provides important tools for Arkansas leaders to consider to develop effective policies and strategies to drive innovation and economic success across the state.”

While Arkansas experienced an uptick in venture capital funding, investments internationally have been sliding.

Venture Capital investments globally were down 35% in 2022 at $423.2 billion and are projected lower this year as private-equity dollars are just below $194 billion through the third quarter, according to an analysis by CB Insights, which manages a business analytics and global database that provides market intelligence on investments in private companies.

Statewide numbers were released last week by the University of Arkansas Office of Entrepreneurship and Innovation, which conducts the annual capital scan report with support from the Walton Family Foundation. The scan outlines the availability of early and growth-stage capital for Arkansas-based startups and small businesses and highlights the growing entrepreneurial ecosystem in the state.

“And while not all small businesses and startups are seeking venture capital or bank loans, the flow of capital to early-stage companies is a good proxy for the health of an entrepreneurial community,” said Sarah Goforth, executive director of

the university’s program.

Crowdfunding, which refers to efforts to raise substantial capital through multiple individual contributions, also increased in Arkansas last year, jumping 92% from $2.8 million in 2021.

While registering impressive gains, Arkansas still lags behind many other states — including those in the region such as Missouri and Tennessee — that are bringing in billions of dollars in venture capital investments.

Investments in Arkansas are mostly dedicated to consumer-packaging businesses while neighboring states are making greater improvements in funding information technology companies, which drove upward of 45% of all deals in Missouri, Tennessee, and Oklahoma but only 25% in Arkansas.

Applications to start a new business in Arkansas, another sign of a healthy entrepreneurial environment, also increased nearly 50% in 2022, compared with 2019, the scan reported. Nearly 38,000 businesses filed applications in Arkansas last year and the majority of those were in the Little Rock region, which recorded 9,770 new business listings. Yet the state still ranks below average, coming in at 30th in the nation in per-capita business applications.

INNOVATORS WANTED

Entrepreneurs, economic development leaders and investors can connect across sectors through a two-day online summit that promotes equitable access to capital and resources nationwide.

The SBA Innovation Ecosystem Summit, led by the federal small business agency, offers collaborative sessions along with curated content and programming that will feature keynotes, panels and breakout sessions. SBA’s goal is to develop a thriving innovation ecosystem — that includes underrepresented communities — to drive business growth and development and job creation.

Virtual sessions are scheduled for Wednesday and Thursday beginning at 9 a.m. Details are available at sba.gov.

“The Innovation Ecosystem Summit brings together leaders across the public and private sectors working every day to strengthen the relationships between local and national innovation and entrepreneurship networks,” said Bailey DeVries, associate administrator for investment and innovation.

MORE RITTER EXPANSIONS

Ritter Communications of Jonesboro is investing $2.4 million to expand to neighborhoods in Pine Bluff and White Hall in Jefferson County.

The broadband service offers speeds up to 5 gigs. “RightFiber’s multi-gig technology makes it the right choice for families and homes with multiple smart devices,” Ritter Communications Chief Executive Officer Alan Morse said in announcing the project.

Community leaders applauded the initiative.

“Ritter Communications is bringing Pine Bluff citizens what we need to live, work and enjoy entertainment in today’s highly connected world,” Mayor Shirley Washington said.

“Dependable, high-speed internet is a necessary utility for all people and communities to thrive,” said White Hall Mayor Noel Foster.