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Kaylee Williams was hired in August as investment director for the InnoVenture Iowa Fund, which has $30 million to invest in early-stage, Iowa-based startups in the industries of bioscience, advanced manufacturing and information technology. Williams said the fund will be ready to start making deals in January 2023 and it already has about 30 startups in its sights.
Williams will be responsible for vetting startups and bringing the best candidates for investment to the fund’s investment committee, a group of individuals with experience in private industry that will make the final decisions about where the fund invests its capital.
The fund will also distribute capital through the InnoVenture Challenge, an annual, statewide pitch competition. InnoVenture Iowa and BioConnect Iowa announced today they will partner to host the event where three startups will pitch their businesses to win one $100,000 non-equity award from the InnoVenture Iowa Fund. Applications open today and close Nov. 15. The competition is set for Dec. 7 at the Temple Theater in Des Moines.
"We are hungry for deals, and we are using this pitch competition as a way to expand our awareness [among> startups across the state," Williams said. "We are being very intentional about making sure that startups in Dubuque, in Council Bluffs, in Clear Lake, in Mount Pleasant know that this competition is happening, that we want them to apply, and that at the end of the day, we're going to give the best company a $100,000 check."
How InnoVenture Iowa came together
Many hands have been involved in getting the InnoVenture Iowa Fund ready for its launch.
The Iowa Economic Development Authority and Bioconnect Iowa formulated the idea for the fund and worked together on Iowa’s proposal for the SSBCI funding, Williams said. The state cannot hold equity in private companies, so IEDA has contracted with Bioconnect Iowa to administer the funds to the InnoVenture Iowa Fund, which is an independent company.
Williams said Bioconnect Iowa does not have any oversight over the fund. However, it will act as a partner to produce the InnoVenture Challenge. Bioconnect Iowa’s history of administering the state's SBIR and STTR programs is one reason the state chose to contract with the nonprofit, Anne Price, Bioconnect Iowa’s SBIR/STTR statewide program coordinator, said.
Iowa is not the only state to have a public venture capital fund. In the Midwest, Nebraska has the Nebraska Seed Investment Fund and Missouri has its Innovation, Development, and Entrepreneurial Advancement (IDEA) Fund.
The InnoVenture Iowa Fund will function under a co-investment model, meaning the InnoVenture Iowa Fund will never be the lead investor on a startup’s fundraising round, but it will co-invest with other VC firms.
Williams said the need for the new venture capital fund in the state stems from a gap in funding among Iowa’s early-stage startups that was identified in a 2017 report commissioned by IEDA.
Adding another $30 million of capital in Iowa means that it and the capital from existing VC firms can be more widely disbursed, Williams said. Positioning the InnoVenture Iowa Fund as a co-investor that is available to carry some of the investment burden could also smooth the way for other VC firms in and outside of Iowa to invest in more Iowa companies.
"[InnoVenture Iowa> can say we're in for $250,000, and therefore, if the company is raising a $1 million round, we know there's less of the [round> to be filled by the other investors in the state," Williams said.
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