I'm at a large round table with a group of Arkansas business and civic leaders. We're sharing lunch and discussing economic development.
Sitting next to me is attorney Bryan Hosto, who has invested heavily in real estate in downtown Little Rock. Hosto mentions an entity that hasn't received the credit it deserves--the Fund for Arkansas' Future (FAF).
"I was close to it, having volunteered for almost 15 years, but often I read about an Arkansas success story that FAF was a big part of," Hosto says. "FAF is never mentioned. The vision of Dr. Mary Good, along with people like John Steuri, was implemented by James Hendren and Jeff Stinson. It was then supported by others. These were the very people who spawned the Little Rock Technology Park and the Venture Center."
FAF and a predecessor organization known as Venture Capital Investors were the state's first organized sources of investment capital for startup companies. They inspired what are now a number of early-stage funds across the state.
Good, who died in 2019 at age 88, was an internationally known chemist. When Bill Clinton was president, Good served four years as undersecretary for technology in the U.S. Department of Commerce. She helped businesses across the country improve productivity and innovation. She also chaired the National Science and Technology Council's Committee on Technological Innovation.
Good earlier was a professor of chemistry at the University of New Orleans and a professor of materials science at Louisiana State University, where she achieved the university's highest professional rank, Boyd Professor. She was appointed to the National Science Board by President Jimmy Carter in 1980 and reappointed by President Ronald Reagan in 1986. She chaired that board from 1988-91, when she received an appointment from President George H.W. Bush to the President's Council of Advisers on Science and Technology.
In 1999, Good convinced the University of Arkansas System's Board of Trustees and the Arkansas Legislature to create the University of Arkansas at Little Rock's College of Engineering and Information Technology, which was known as the UALR Cyber College in its early days. It grew from about 300 students in existing departments to more than 1,100 students by 2012 while developing nationally recognized programs in system engineering, information quality, nanotechnology and construction management.
Also in 1999, Good recruited business leaders such as Steuri and Bill Bowen to help her start an angel investment organization, VCI.
"VCI was somewhat of a misnomer since it wasn't a venture capital firm at all," Hosto says. "It was more of an investing club in which members looked at deals. Each member made his or her own decision as to whether to invest in a company."
VCI had about 20 members who invested in companies such as Safe Foods Corp. of North Little Rock, which used technology developed by the University of Arkansas for Medical Sciences to kill food-borne pathogens. When Good went to UALR as founding dean of the school she had helped create, Stinson began administering VCI. In 2003, Steuri suggested an alternative structure. He wanted members to travel the state and ask those with high net worth to invest.
"With a pool of committed capital, the fund reviewed potential investments and became the single investor in startup companies as opposed to members writing checks," Hosto says. "The fund concept made investing easier. It alleviated the need to corral members for investment. It also allowed us to provide sufficient capital."
Hosto says Hendren and Stinson did "a heroic amount of work" in 2004-05 as they raised money for the fund. There were 57 investors who committed $6.6 million. From 2005-12, the fund invested almost $6 million in 18 tech-based startups. A second fund known as FAF2 was launched in 2013. That fund had 65 investors and raised about $5.5 million.
"This time, there was quite a bit more investment from northwest Arkansas than had been the case with the first fund," Hosto says. "Along the way, much of the work was conducted by the investment committee, which we like to say was 'Shark Tank' before there was a television show with that name. These investors volunteered their time to hear pitches from startups, assist Jeff Stinson with due diligence and make decisions as to the terms for each investment."
One of the success stories for FAF2 was Apptegy. The company, a software developer that provides mobile apps and websites for school districts across the country, is housed in a nondescript warehouse in Little Rock's Riverdale neighborhood. In January, it was announced that the company's workforce will increase from 400 to 700 during the next several years.
Jeston George, the 44-year-old Apptegy founder, launched the company from his bedroom in 2015. He thinks Apptegy will employ more than 1,000 people in Arkansas a decade from now. George wanted to know when a nephew's school programs were being held. He soon realized that school districts lacked a centralized tool for sharing information with families.
"Without FAF and without that initial vision and leadership from Dr. Good, it's hard to see how some of our state's entrepreneurial success stories would have happened," Hosto says. "We're proud to have done our part. After 15 years of investing in and working with Arkansas entrepreneurs, we believe we succeeded with our tagline of 'do some good, have some fun and make some money.'"
Senior Editor Rex Nelson's column appears regularly in the Arkansas Democrat-Gazette. He's also the author of the Southern Fried blog at rexnelsonsouthernfried.com.