March 28, 2023

UA report marks funding disparities amongst Arkansas entrepreneurs

The College of Arkansas has launched the second version of a report that examines the funding choices obtainable to startups and small companies in Arkansas. Amid a nationwide surge in investments in 2021, equity-based investments in Arkansas considerably eclipsed 2020 ranges throughout all phases, together with seed, angel, early-stage enterprise capital and late-stage enterprise capital.

The brand new report, 2021 Arkansas Capital Scan, reveals the variety of enterprise capital offers in Arkansas doubled to 12, and their worth rose by 674.9% to $127.4 million from 2020. In the meantime, seed and angel investments elevated by 130% to $55.31 million. And 19 federal grants had been awarded to 13 Arkansas small companies and entrepreneurs totaling $6.99 million in funding.

The report additionally reveals that white male founders acquired about 90% of seed funding, whereas roughly the rest went to companies began by those that had been each girls and folks of coloration. Essentially the most important angel and seed funding was $9.7 million, which went to medical marijuana producer Good Day Farm in Pine Bluff. The enterprise additionally raised the second-largest spherical of enterprise capital funding of $31.2 million later within the 12 months. Fayetteville-based farmland funding agency AcreTrader raised $52 million in enterprise capital funding in 2021.

In response to a Tuesday (Feb. 7) information launch, the UA’s Workplace of Entrepreneurship and Innovation developed the report in partnership with the Division of Finance within the Sam M. Walton School of Enterprise. The report reveals that the demographic disparities in Arkansas had been additionally seen in neighboring states, equivalent to Missouri, Oklahoma and Tennessee.

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Among the many 11 Arkansas companies that acquired enterprise capital funding in 2021, all however one had been owned by white males. The opposite was established and owned by a person of coloration. No women-owned enterprise acquired enterprise capital funding that 12 months.

The report additionally famous geographic disparities, with Northwest Arkansas companies receiving essentially the most enterprise capital funding. Solely two companies in cities outdoors the area acquired enterprise capital offers.

In response to the discharge, the demographic and geographic disparities in enterprise capital may need “long-term repercussions on the constructing of wealth and general vitality of Arkansas’ financial system.” A examine by McKinsey Institute for Black Financial Mobility reveals that racial and gender wealth gaps might price the USA between 4% and 6% of projected GDP by 2028.

“We endeavored to develop a panorama scan in an effort to grasp deal move and establish gaps and alternatives for brand new packages and insurance policies to draw funding to Arkansas companies,” stated Tiffany Henry, educational designer of coaching and workshops within the Workplace of Entrepreneurship and Innovation, who supported the event of the report.

Following are different report insights:

  • Crowdfunding funding in Arkansas rose by 450% to $1.47 million in 2021 from $268,210 in 2020. Bentonville-based out of doors attire firm LIVSN Designs accounted for 34.9% of the 2021 complete and achieved the largest single crowdfunding increase in Arkansas.
  • Arkansas firms acquired $53.22 million in federal grants associated to COVID-19 aid in 2021. The 118 complete grants averaged $451,027 every.
  • Payroll Safety Program (PPP) loans in Arkansas fell to $1.69 billion in 2021 from $3.3 billion in 2020. Over the 2 years in Arkansas, 102,041 PPP loans totaled $4.99 billion.
  • Whole angel and seed funding going to central Arkansas companies greater than tripled.
  • The common angel/seed deal dimension surpassed the neighboring states of Missouri, Oklahoma and Tennessee.
  • Black girls in Arkansas outpace different demographic teams in enterprise creation however face a big wealth hole in comparison with firms of white males.
  • Angel/seed offers for ladies of coloration in Arkansas rose from 5 to 14.
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The Arkansas Capital Scan is predicted to be an annual report. The preliminary report was launched in 2021.