Efforts to boost venture capital investments in Arkansas have received a lift from an inaugural report by the University of Arkansas that throws a spotlight on initiatives to provide more funding options for small businesses in the state.
The report, called the Arkansas Capital Scan, outlines several categories of funding that startups and small businesses typically rely on to support or expand operations. Entrepreneurial support organizations across the state should benefit from the study, the university said in releasing the 86-page report.
The Capital Scan is patterned after a similar survey conducted each year by the University of Oregon. The Arkansas report, which officials said they plan to publish every year, was developed by teams with the Sam M. Walton College of Business and the division of economic development.
Areas examined by the Arkansas team include an overview of angel and venture capital investments, crowdfunding, grants from governmental and philanthropic bodies along with loans from banks and credit unions.
The report, intended to be an annual publication, aims to assist policymakers, investors, and other stakeholders in identifying gaps and opportunities in support of small businesses.
"We know that 2020 was an anomalous year to be examining any part of the economy, and that was certainly the case for the flow of resources to small businesses and startups in Arkansas," Sarah Goforth, executive director of the university's Office of Entrepreneurship and Innovation, said in a news release announcing the project.
The report, she said, examines "how well are we faring in Arkansas in our ability to provide emergency support to small businesses, and how do we stack up against peer regions in our ability to capitalize high-growth, technology-based firms?"
Arkansas Capital Scan is organized by type of investment, including an examination of the regional, industry and demographic distribution of funding for the calendar year 2020. Because of the lack of historical data in Arkansas, researchers used data from Missouri, Oklahoma and Tennessee to compare capital flows in Arkansas.
"The ultimate objective of this report is to understand the flow of capital in Arkansas and identify potential areas where the ecosystem can be strengthened and funding gaps where capital flows could increase or be deployed more efficiently," the introduction says.
Top findings from the report include:
• New business applications in Arkansas grew at a historic rate even during the ongoing pandemic.
• Patent filings for technologies and angel/seed investment are trending up even though entrepreneurs report difficulty accessing sufficient seed capital for their businesses.
• Venture capital investment lags significantly for Arkansas companies compared with peer regions.
• Businesses in the life-sciences sector received a larger share of angel/seed deals in 2020 as venture capital investments flowed to diverse industries.
• Angel/seed investments were made into a relatively diverse array of founders compared with national averages yet 100% of the venture capital invested in Arkansas in 2020 went to companies founded by white men.
• Companies based in Northwest Arkansas and Little Rock received nearly all of the equity investments in the state.
• Banks are a significant source of commercial lending across Arkansas and dedicate a larger portion of their portfolios to commercial loans compared to the national average.
• Credit unions in particular serve as an important liquidity channel for Arkansas small businesses.
More than 20 students from the university helped compile the report using Pitchbook and U.S. Securities and Exchange Commission filings, interviews and surveys.
Researchers examined how investment money flowed into startups and support organizations, what funds were available and they were asked to identify funding gaps as well.
"Our hope is that by including students in the creative process of the Arkansas Capital Scan, we empower the next generation of finance professionals in Arkansas to understand how to navigate and improve the capital landscape for our founders," said Cash Acrey, managing director of the master's in finance program at the business college.
GROWING PANACEA
Panacea Financial of Little Rock has added six health care industry veterans to expand the company's commercial banking offerings to doctors across the nation.
The company's practice solutions division provides financial services to help start, build or expand their medical, dental or veterinary practices. The Panacea team will offer the lending and banking resources to provide financing for the initiatives.
"We now have a highly seasoned and experienced team that we believe will provide the strongest and fastest end-to-end practice finance health care vertical in the country," said Tyler Stafford, Panacea's chief executive officer and co-founder.
Panacea Financial began operations on Nov. 1 on Kavanaugh Boulevard with eight employees and has now expanded to l6, including 10 in satellite offices.
The company provides financial products and services -- personal loans, refinancing, free checking and savings accounts with no overdraft charges -- to doctors across the nation.
Panacea operates as a division of Sonabank, a community lender based in the Richmond area that is the fifth-largest bank in Virginia with nearly $10 billion in assets.
More information is available at panaceafinancial.com.
ROCK IT! ON SATURDAY
Rock It! Lab at the downtown Little Rock library will offer a pop-up store for shoppers looking for holiday gifts and an opportunity to support small businesses that are just starting operations.
The entrepreneurial organization, which targets underserved startups, will open the shop Saturday from 10 a.m.-5 p.m. on the ground floor of the Cox Building at 120 River Market Ave.
More than 20 up-and-coming vendors will offer goods, including nonperishable food items, hand-made jewelry, original artwork, clothing and housewares.
The Central Arkansas Library's parking lot will also serve as a mini food court with refreshments for sale from food trucks, including a coffee cart. The library also will offer discounts on books at The Galleries & Bookstore at 401 President Clinton Ave.
Column ideas or recommendations? Thoughts or musings that need pursuing? Contact me at amoreau@adgnewsroom.com or at (501) 378-3567.