It’s been a long road for some Iowa startups raising capital this year. Valuations are trending down, both local and regional funds are slowing investments, and lead investors seem to be more discerning (and reticent) than ever before. Many of our portfolio companies have adjusted their strategies to reach short-term profitability as their highest priority – a shift in focus that’s required a reallocation of resources and some difficult trade-offs.
The venture landscape in Iowa is changing, and entrepreneurs are beginning to look outside the state for the capital they need to catalyze their continued growth. Regional investors are also starting to “look in” and take notice of Iowa’s increased entrepreneurial activity – see this year’s Best of the Midwest from M25. But this isn’t the only sign pointing to brighter days ahead.
Plains Angels recently announced a new investment fund in the state. Pi515 was selected to receive a grant from Microsoft’s TechSpark program to fund a Community Engagement Fellow who will spearhead local efforts to expand computer science education and digital transformation to Iowa’s youth. Maple Studios is opening its second location alongside Grace Technologies in the Quad Cities. And that $96 million Iowa was allocated as a part of the SSBCI funding last fall? All four programs are well underway, deploying capital at a healthy clip across the state.
Here at the InnoVenture Iowa Fund, our investment strategy and deployment timeline remain unchanged. We invested just over $1M in early-stage Iowa startup companies in Q2 (see the newest portfolio additions here) and we are pleased to report that deal flow has remained quite strong as we cruise through Q3. We will be hosting another InnoVenture Challenge in December – applications go live on September 1st (read more) – which will almost certainly give us exposure to even more fundable companies by the turn of the year.
Now that our portfolio of investments is established (and growing), we are beginning to map out a post-investment support framework for our founders and will be announcing a new hire specifically to support us in that effort. We’re already working with a few companies on follow-on funding, and for those startups still seeking a lead investor? Hang tight. Our team is formalizing our network of VC connections into a lead investor syndicate that will include quarterly virtual calls to spotlight Iowa startups raising capital.
That’s all for now! Back to work.