Iowa founders should ‘dream bigger’
Kaylee Williams, investment director at InnoVenture Iowa, Iowa’s first publicly backed venture capital fund, recently shared this advice for startup founders:
“I would just say, dream bigger,” said Williams during a panel event at Maple Studios on April 2.
“Seriously, my biggest critique of Iowa founders is we don’t dream big enough. … Tell us how you’re going to change the world with your products, your service.”
She challenged founders to “really think about” whether they can expand into other markets or find another revenue source they haven’t considered.
“And surround yourself with mentors who challenge you all the time to continue going and to continue thinking bigger,” she said. “Don’t lean back, lean in. Don’t rest on your laurels. There’s no reason that the next billion-dollar company can’t come from Iowa. In fact, there are a lot of indications that it will.”
Williams’ remarks came at an event that kicked off a series of startup funding panels, each featuring different investor groups and startup sectors exploring diverse funding opportunities in Iowa.
State-based funding programs and venture capital funds were represented on the panel, including Ag Startup Engine, Next Level Ventures, the Iowa Economic Development Authority and Iowa’s Public Innovation Continuum, which is funded by IEDA and managed by VentureNet Iowa.
Liz Keehner, principal at Des Moines venture capital firm Next Level Ventures, also had advice for entrepreneurs.
“I heard this quote that founders have to have a little bit of insanity,” she said. “Not totally crazy, but a little bit of insanity. I always say that you have to show me that you have enough conviction in your vision and get me bought in.”
She also said her firm cannot vet whether or not a business is viable “without the validation of customer dollars.”
“What we want to do is say, ‘Fantastic, you’ve proven there’s a problem. You have the solution that your customers want. They’re paying you for it. Hopefully they are paying you a nice price. You’ve got great margins and we’re now saying we can accelerate that. Instead of you getting yourself to market in maybe five years, we can get you to market in a year and a half or two years, and then we can go bigger, right?’”
She advised entrepreneurs to start small and be “very customer-focused.” Understand the problem and “show me why you’re now the team that’s going to go and solve that problem.”
Megan Brandt, director at Maple Studios, a startup studio for early-stage industrial technology companies, moderated the event. She asked panelists how a company knows if it’s ready for venture capital.
Ag Startup Engine Partner Mikayla Mooney said founders need to think about where they want their company to be five or 10 years down the road, because that’s what will dictate the kind of financing they take.
“If you’re thinking, ‘Hey, I want to build this up and at some point I want the company to sell, and I’m going to have a big payday down the road,’ venture capital is probably more applicable,” Mooney said. “But if you’re thinking, ‘Hey, I want this to be something where I have a good salary, it’s sustaining my family, and I’m just going to keep running it forever, and so maybe my kids take it over,’ … that’s not really something most investors are interested in.”
Mooney also said it’s important that founders have a plan for how they will spend venture capital money and what milestones they need to reach to move the business to the next step.
Also, it’s important to talk to potential customers and find out if the market will “actually buy this product,” Mooney said.
Keehner said Next Level Ventures funds are typically 10-year funds.
“And so it’s not only the expectations of: Are you a business that is going to sell or go [public] within that time frame, but how quickly are you going to do that?” she said.
“We’re looking for companies that are going to go on and earn tens of millions of revenue … but are selling into a market that’s worth hundreds of millions, if not a billion,” she said. “That’s kind of the good rule of thumb -– is [it] a billion-dollar market opportunity?”
She said software was a “great venture-backable business.”
“Because Adobe is a great example where I can sell millions of licenses a year, right? And that’s the idea behind venture is we’re looking to add fuel to these companies that have potential to become the next $1 million, $500 million, $1 billion company, right?
“Unicorn-chasing is a term for a reason,” she added. “That’s what we’re after. And we believe that that can happen here in Iowa.”