Fourteenth Edition: Startup Iowa Hot List
Meet the startups to support and watch in Iowa + beyond
Every month, I write a newsletter for Iowa entrepreneurs to get more connected to the strong networks of support in the Midwest (and beyond). Investors, entrepreneurs, mentors, corporate leaders, economic developers, researchers, and educators in and outside Iowa can dial in on the startup activity happening across the state while finding the next business to support.
Welcome to the 18 new Startup Iowa Hot List members who have joined us since the last edition. Join 479 intelligent, curious, and supportive startup champions by subscribing below.
State Funding Announcements
In May, Iowa Economic Development Authority announced eight startups that received financial assistance, including:
SoilSerdem awarded $32,000 for the Proof of Commercial Relevance
Varsity Music awarded $50,000 for the Proof of Commercial Relevance
Zymosense awarded $100,000 for the Demonstration Fund
UpVote awarded $50,000 for the Proof of Commercial Relevance
Distynct awarded $250,000 Innovation Acceleration Launch Fund
Haber Technologies awarded $250,000 Innovation Acceleration Launch Fund
Pitchly awarded $1,000,000 Innovation Acceleration Expansion Fund
SwineTech awarded $250,000 Innovation Acceleration Launch Fund
Closed Rounds
💰Continuum Ag (Washington, Iowa) closed an $800,000 seed round led by Grit Road Partners with participation from SVG Thrive, AgVentures Alliance, ISA Ventures, and others.
On the Horizon: Companies to Watch
Enceinte Health - Automates the charting of bowel, bladder, and weight information in skilled nursing facilities to reduce errors and improve the quality of residents' care
Foundations in Learning - Leverages the science of learning to make reading accessible for all students in their product, WordFlight
Gain Compliance - Builds software for insurance compliance reporting, leveraging the latest technology for regulators and insurers
Pathware - Develops an imaging platform to analyze biopsy samples at the point-of-care
SimplSupport - Designs a new platform for care, connecting trusted healthcare professionals with the community seeking private support and care solutions
VIDA Diagnostics - An imaging intelligence company accelerating respiratory clinical trials
Special Outlook: InnoVenture Iowa Fund
Investment director, Kaylee Williams, shares insights on startup investing and the $1.8M deployed (and counting) in Iowa startups
From the lens of an investment director sourcing good deals for the state, what has been your experience so far in the quality of deal flow in Iowa?
Great question! Deal flow was top of mind when I took this role last fall, and I have a lot to share on that front.
First, a bit of context: our goal is to invest approximately $4-5 million annually in early-stage Iowa startup companies, or just a little over $1 million each quarter. With an average check size of $250,000, we anticipate investing in 15-20 startups each year. Our committee meets monthly to evaluate and vote on investment opportunities. I'm pleased to share that we are right on schedule: InnoVenture Iowa has invested around $1 million every quarter since we launched the fund in October 2022. Our portfolio includes ten excellent companies across Iowa, 50% women-led and 25% rural.
All of this is contextually important when discussing deal flow because none of these investments can happen if we don't have consistent top-of-funnel startup activity, which means hearing new startup pitches and meeting founders for the first time.
When we launched the fund in October, I didn't know what to expect. I was prepared to do some serious outreach to raise awareness in an effort to source as many deals as I could, but I've been pleasantly surprised by the volume and quality of inbound deal flow we've received to date. I'm eight months into this role and only just now beginning my outbound work in earnest – in fact, we recently wrapped up our first statewide tour, the SSBCI Roadshow.
The deals we are reviewing are coming to us from many sources, including referrals from other VC funds in the state (most notably, ISAV, Next Level Ventures, Ag Startup Engine, UI Ventures, and Ag Startup Alliance) and through a statewide word-of-mouth network among entrepreneurs. Last year's InnoVenture Challenge was a huge boost – we received nearly 100 applications for the competition, a good percentage of whom were qualified to receive VC investment from InnoVenture Iowa. (For those who are curious about what those qualifications are, you can find them on our website.)
This is a good sign. High volume deal flow indicates that another early-stage VC fund was (and remains) necessary to help grow Iowa's startup ecosystem. I'm glad we're here, and the founders are, too.
What has surprised you the most in leading the first-ever VC state fund?
1. Iowans are building world-changing technologies right here in our backyard. See: Pyrone Systems, iotaMotion, Laminar Scientific, and Steel Therapeutics.
2. Entrepreneurship has brought significant wealth into our state. We like to talk about the "winners" - Dwolla, Workiva, VIDA Diagnostics - but startups also bring excellent capital and create wealth for Iowans when they fundraise (see Ben Milne’s Who's Investing in Iowa? blog post). Even our legislators flex their entrepreneurial chops: InnoVenture Iowa is just one piece of the pending $96 million in federal (SSBCI) funding to help Iowa startups grow.
3. Startups tend to create high-paying jobs. There is a perception that startups are staffed by unpaid (or underpaid) twenty-somethings writing code in basements and garages. While that is sometimes the case, most startups leverage the capital they raise to attract great talent - and great talent is expensive.
4. Our state isn't just innovating in agriculture! We are home to some truly exciting startups in medical innovation, advanced manufacturing, edtech, and heck, we even have Lola's and Blk and Bold creating, scaling, and perfecting their recipes right here in Iowa.
5. Many Iowans would be surprised at the volume and quality of startup activity happening here. I meet with an average of 3-5 new startups each week – these entrepreneurs are building all around the state in bioscience, advanced manufacturing, and information technology.
Is there anything Iowa startups are doing particularly well compared to founders building elsewhere?
I hope to answer this question from a somewhat unique perspective, as I have been both an operator within a scaling startup company and (now) a venture capitalist seeking to invest in startups with high growth potential.
Building in Iowa is unlike building anywhere else: we are highly collaborative, enjoy a civic pride that is unmatched in other communities, and nurture an underdog mentality that (for the most part) serves us.
Founders in Iowa are willing to make connections for one another, and we benefit from the relationships that our peers, mentors, and colleagues make for us. Initiatives like the MIT REAP program, Maple Studios' new startup studio, and the creation of new VC funds like BrokerTech Ventures and InnoVenture Iowa are all bellwethers for even better days to come.
I think it's important to note that we have several active community builders who work hard to create platforms for Iowa startups to tell their stories: people like Ben McDougal, author of YDNTB, Midwest Regional Rep for 1MC and organizer of the Web3 Meetup group, Justin Brady, host of the Iowa Podcast and Sarah Diehn, Digital News Editor for the Business Record.
As a VC working with founders daily, I am consistently impressed with their professionalism, eagerness to learn, and optimism about the future. It is a treat to uncover all the amazing innovations that are created right here in Iowa. While we don't (and can't) invest in every startup we encounter, we do our best to serve as a vector for additional resources, support, and funding opportunities to help these companies scale.
Looking ahead to the remainder of 2023, how many startup investments are you projecting?
We anticipate investing in approximately 6-8 more startups before the end of 2023. If any readers want to stay in the loop on our investments as we go along, sign up for our newsletter to receive our quarterly updates.
Upcoming Events
📅 June 27 - Business Startup Speaker Series: Human Resources 101 for Starting a Business (Cedar Rapids)
📅 June 27 - TechTalk: Fractional Leadership (Clear Lake)
📅 June 28 - web3dsm meetup (Des Moines)
📅 July 12 - Raising Capital for Startups (Des Moines)
📅 July 18 - innovationIOWA panel discussion (Des Moines)
📅 July 24-26 - TechHub Live Conference (Des Moines)
📅 August 1 - CYstarters Demo Day at ISU (Ames)
📅 August 24 - Wells Blue Bunny: The Story of a Legacy Family Business (Virtual)
Have an event to share that would be great for the state to know about? Reach out!
Story + Sound Bites
🔊The Bourbon State is…Iowa? Rob Taylor of Revelton Distillery (The Entrepreneur’s Ethic Podcast)
🔊The Art of Climate Dialogue: Stories for Iowa (The EcoTheatre Lab)
🗞️What *is* a farm? Notes on farming from the perspective of a non-farmer agrotourist (Warmly, Iowa)
🗞️The Size of Firms and Nature of Innovation (What’s New Under the Sun)
🗞️Keeping the Music Alive: Sam Summers (The Iowa Stater)
🗞️Digital coaching efforts span Iowa (innovationIOWA)
What’s in a name? The Startup Iowa Hot List is specially curated with a rush of urgency to read just before the news cools. See a company you are interested in helping? Please act and support entrepreneurs that may be featured on this list and those close by, impacting our local communities and neighborhoods.
Entrepreneurship has always been a community sport.
Want to be featured in the next Startup Iowa Hot List? Reach out to Diana at dwright@dsmpartnership.com.