Iowa Venture Capital Association promotes collaboration over competition

Originally published on We Create Here

When it comes to venture capital, Iowa will never be Silicon Valley — and maybe that's a good thing.

But a new association is promoting collaboration instead of competition between many start-ups.

'Here, all of the investors understand that in order to create the entrepreneurial community we want, and to see a return on our investment, we need to be active players,' said Ravi Patel, one of the founders of Iowa City-based Built By Iowa, which invests in early-stage technology start-ups. 'It's very friendly, we all know one another.'

To that end, Built By Iowa and Des Moines-based Next Level Ventures are teaming up to launch the Iowa Venture Capital Association. Modeled after the National Venture Capital Association and similar groups in neighboring states, the IAVCA hopes to give local investors and investor groups a chance to work together on deals, share knowledge and learn together.

'There are certainly proprietary opportunities,' said Craig Ibsen, the managing principal of Next Level Ventures. 'But I would say nine of 10 opportunities that walk through any investor's door aren't going to be a perfect fit, and those are the ones we want to refer on to another investor.'

The Midwest Investors Summit, held in November before the Iowa Startup Accelerator's launch, was a first attempt at collaboration. Investors from Iowa, Illinois, Nebraska, Minnesota and beyond attended the session to network and share ideas. Built By Iowa invested $150,000 in Iowa Startup Accelerator graduates later that night, and Patel, a candidate in the U.S. House First District race and president of Hawkeye Hotels, said he has seen far-ranging 'ripples' of collaboration from that initial meeting.

The IAVCA plans to have at least one statewide summit per year, in addition to smaller gatherings and educational opportunities.

From an entrepreneur's point of view, Eric Engelmann, managing director of the Iowa Startup Accelerator, said more collaboration between investor groups would be helpful. Several of the 10 companies that launched from the Iowa Startup Accelerator in November have been focused on seeking private investment, facing varying processes, due diligence requirement,s and timelines working with different potential investors.

Total venture capital investment totaled an estimated $43.8 billion in 2014, its highest level since 2000, according to the National Venture Capital Association.

'Having disparate groups of investors from around the state collaborating is critical for getting deals done,' Engelmann said. 'The issue isn't that there's not money, the issue is that the process is complicated and painful for both entrepreneurs and investors because it is fragmented.'

According to the National Venture Capital Association, U.S. investment totaled $43.8 billion in 2014, the highest level since 2000.

Nearly 75 percent of the venture capital investment went to three states: California, Massachusetts, and New York. However, prominent national investors have been advocating for a change in that trend, including AOL co-founder Steve Case who brought his 'Rise of the Rest' road trip to Iowa last fall.

'We have to demonstrate that this is more than a pop culture phenomenon, and that this is an economic development engine that's going to be here for generations to come,' Patel said.