#StartupsEverywhere: Iowa City, IA

#StartupsEverywhere Profile: Mark Nolte, President, Iowa City Area Development Group, and David K. Hensley, Executive Director, John Pappajohn Entrepreneurial Center

This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.

 David Hensley

David Hensley

Innovating in Iowa

Iowa City was the first capital city of Iowa; now Iowa City acts as the unofficial capital of entrepreneurship and education in Iowa. This week we chatted with two leaders of the Iowa City ecosystem to learn more the partnership between the University of Iowa and the Iowa City Area Development Group. While the ecosystem is strong, there’s still a need for policy changes to encourage additional entrepreneurship. Policies and programs to further increase access to investment capital and to attract and keep c-level talent would significantly enhance entrepreneurship activity in Iowa.  

Tell me about you.

David Hensley (DH): I’m the Executive Director of the John Pappajohn Entrepreneurial Center (Iowa JPEC) at the University of Iowa. Iowa JPEC was created in 1996 as a result of a gift from John and Mary Pappajohn. We strive to develop leaders and innovators who will launch companies and become innovative leaders within existing organizations.  We are trying to enhance the ecosystem across our campus, the state of Iowa, and the world.

Mark Nolte (MN): I started first in microenterprise, then helping people with disabilities get involved in entrepreneurship. In 2007, I joined Iowa City Area Development (ICAD). In my current role with the ICAD, I work to grow new companies, support existing firms and attract new businesses to the Iowa City / Cedar Rapids Region.  

Can you tell me more about your program?

DH: What I’m most proud of is that we have built a comprehensive entrepreneurship program—including a campus-wide academic program along with major outreach initiatives in K-12 education and community outreach. We support students, faculty and community members seeking to launch new ventures. Our outreach programs are focused on helping existing companies grow and prosper and enhance the overall economy.

MN: We are a community-based non-profit organization that is a public-private partnership. We are innovative as a traditional economic development organization, as we work with VR/AR/AV companies. We partner closely with the University, as it is an economic powerhouse, to blend economic development and innovation.

How has the ecosystem changed in the past 10 years?

MN: The size. 10 years ago, we only had a handful of startup companies in the Iowa City area. Now every waiter has an idea for startup that they want to talk about! Overall, it’s a cultural change that entrepreneurship is a viable option now. We are keeping young people in the area that used to leave to go to places like Chicago.

DH: I echo that. Entrepreneurship is a vital economic development tool. Beyond traditional methods of supporting entrepreneurship and innovation, the region is focused on infrastructure, workforce, housing and quality of life issues to support the new generation of entrepreneurs. Our ecosystem is getting more attention from outside the state, as well.

What’s the most exciting or important development that has happened to the Iowa City ecosystem in the last year?

DH: Collaboration. We are all working to maximize collective resources and leverage the outstanding research and resources available through the University of Iowa. The UI is also developing new strategies to accelerate the commercialization of faculty discoveries. This enhanced alignment and commitment is very exciting and is a catalyst for economic prosperity.

MN: There is no one giant thing. The ecosystem gets a little stronger, a little better, every year. It’s a midwestern approach — slow and steady approach. We have had some exits, which helps inspire more investing.

 Mark Nolte

Mark Nolte

What makes Iowa City an ideal place to start a company? What keeps entrepreneurs there?

DH:  Iowa Nice — Iowans willing to help one another whenever they can. We are able to leverage community members as well as UI alums to help our students, faculty and community members access the talent and support they need, regardless of the industry sector.  Our community is also highly educated and talented, which are key building blocks to foster innovation.

MN: There is so much support. We had a California entrepreneur work remotely with us and he was impressed that everyone wanted him to succeed. In San Francisco, you are just one of thousands. It is also cheaper to do business here.

What is the biggest challenge the Iowa City ecosystem still faces?

DH:
Like many communities, our technology entrepreneurs often struggle to secure early-stage funding to move their innovations towards something commercially-viable.

MN:  
A big challenge is rounding up early stage capital. We can attract talent, but it’s not perfect. We need more software developers, but that is a problem across the world. There’s a long way to go on support, mentoring, and angel investing.

What industries have historically thrived in Iowa? How has this shaped the ecosystem?

MN: Iowa as a state has been ag-focused, but Iowa City has been a hub for education assessment and educational technology. ACT was founded and is headquartered here and Pearson has a large operation in Iowa City. Ed tech is a fast growing industry. The University has been a driver in this growth.

Are there specific public policies or government initiatives that have enabled startup growth in the Iowa City?

DH:  State policies and programs have been created to encourage seed and angel investment in early stage companies. This helps our startups continue to advance and attract venture capital funding when needed.  

MN: The state carved out some entrepreneurial support from its traditional economic development money. They set up a range of funds available, from proof of commercial relevance to demonstration funds. There’s matched funding and some forgivable loans. We are asking legislature to dedicate more money to this.

There’s a choke point on money and talent. It’s way than better it was 10-15 years ago and moving in the right direction. There is still room for improvement.

How involved are your government representatives in the Iowa City startup space?

MN:  On a local level, the city council makes sure we have funding. From all levels of government, there’s a lot of trust to let the private sector do what it needs to do.

From a policy perspective, do you have any wish list items for your startup ecosystem?

DH: Policies and programs to further increase access to investment capital and to attract and keep c-level talent would significantly enhance entrepreneurship activity in Iowa.  

MN: We need more entrepreneur-focused economic development incentives. I’d hope for modernization of traditional incentives. There is a gap we need to fill for scaling.

I feel like we must incentivize early stage, high risk investment. There needs to be more carrots for investors. Similar to Vermont, I want to see Iowa encourage more technological talent to move here.

Engine works to ensure that policymakers look for insight from the startup ecosystem when they are considering programs and legislation that affect entrepreneurs. Together, our voice is louder and more effective. Many of our lawmakers do not have first-hand experience with the country's thriving startup ecosystem, so it’s our job to amplify that perspective. To nominate a person, company, or organization to be featured in our #StartupsEverywhere series, email jen@engine.is. Give us your feedback here.