story by Kim Souza
ksouza@thecitywire.com
The ARK Challenge, a business accelerator program that has helped companies like Q-Box, MineWhat and Overwatch get off the ground in recent years, has been discontinued because of lack of funding, according to Phyl Amerine, co-founder of Startup Junkie and longtime supporter of the ARK Challenge and other accelerators in the region and state.
The ARK Challenge was funded through Innovate Arkansas, a program of Winrock International. Tom Dalton, program director at Winrock International, told The City Wire Tuesday (Aug. 11) that the first two years for the ARK Challenge in Northwest Arkansas were federally funded in a one-time grant over two years.
The ARK Challenge was designed to offer up to $150,000 in optional funding in two “winners” of each of the two 14-week boot camps as of September 2013. Three winners were chosen in Northwest Arkansas in the first two years. In that time the ARK Challenge offered $900,000 to six start-up companies. That money was raised from private and public funds. Three of the those six companies are still active.
“The state economic team was so impressed with the results and energy from those first two years, that the Arkansas Economic Development Commission, along with private money, funded the next two sessions, one in Northwest Arkansas and the last one in central Arkansas,” Dalton said. “I can tell you that Innovate Arkansas remains committed to funding accelerators in the future, but I can not say where they may take place or the specific industries that any future accelerator may serve.”
There are two other privately run accelerators that will soon accept applications for startups. In Northwest Arkansas, Startup Junkie Consulting is launching the 2.7.0. accelerator that will take place for nearly 2 months, involve 7 companies and zero boundaries, according to Haley Cleous, associate consultant with Startup Junkie. Startup Junkie recently secured $50,000 in funding from the Small Business Administration specifically to support a local growth accelerator program in Fayetteville.
Warwick Sabin, director of the Innovation Hub in Little Rock, told The City Wire that central Arkansas will have news to report on this front next month.
The lack of continued funding was not a surprise to those active in the startup world. It seems the resource most lacking in startup ecosystems are funding sources and investors with the expertise and patience required to fund startups.
Sabin said the ARK Challenge accelerators could be deemed successful for a number of reasons. He said they helped create important roots for a startup ecosystem in Fayetteville and Little Rock, but they also provided fertilizer on that ground.
“In central Arkansas we just had the one ARK Challenge and we couldn’t be more proud of the winner. He has gotten FDA approval for the medical device he created as a result of the ARK Challenge,” Sabin said.
Sabin said the attention ARK Challenge brought to central Arkansas helped spark more interest in the region growing its entrepreneurial wings. He said the Innovation Hub and the technology park are each linked to the need which was made apparent by the ARK Challenge accelerator.
Mark Brandon, co-founder of Q-box, one of the inaugural winners in the first ARK Challenge held in Fayetteville, said the accelerator helped build a strong network of talented founders and service providers that remain connected.
“In my case, my co-founder Ben Hundley was part of the first ARK Challenge and his company (Mass Vector) didn’t get funding that first year, so he joined our team and that has made a huge difference for Q-box. We have just raised a seven-figure round of funding from our time in the Alchemist Accelerator in San Fransisco and we will be hiring more people in our Fayetteville office in the coming weeks,” Brandon said.
Brandon was not surprised to see the ARK Challenge disband. The local face of the ARK Challenge since its inception, Jeannette Balleza Collins, has stepped away from this organization to pursue other interests. He said the ARK Challenge’s legacy is the connectedness that remains between the startup founders, mentors and angel investment groups who supported the effort with time and expertise.
Brandon said sustaining accelerators is challenging because the program is only as good as the investor audience that can pick up the companies and keep them going with capital for needed expansion. Without a veteran capital investment fund in Arkansas, ARK Challenge relied on smaller angel enterprises. Brandon said he raised some money in Arkansas, but after nearly three years of hitting the wall, he went to San Francisco’s Alchemist Accelerator and reached the higher levels of capital Qbox needed to fund its expansion.
“I keep a small team in San Francisco, but it looks like I can find the talent I need to fill out the new roles in Q-box here in Fayetteville, where I still live and work,” Brandon said.