In 2011, Nebraska was not a welcoming place for entrepreneurs in the high risk, high reward early-stage tech industry. The state ranked dead last in venture capital raised, at a whopping $0.
At that same time, Invest Nebraska was in its early years as a non-profit, providing operational and technical support to early-stage entrepreneurs around the state while looking for ways to improve Nebraska’s entrepreneurial ecosystem. Part of that effort included authoring a report for the Nebraska Legislature’s Innovation and Entrepreneurial Task Force, which reviewed existing state programs, conducted ecosystem surveys, analyzed policies of other states, and made recommendations to improve Nebraska’s entrepreneurial ecosystem.
With those recommendations in hand, the Nebraska Legislature unanimously passed the Business Innovation Act(BIA), providing an avenue to create grant and investment funding to “encourage and support the transfer of Nebraska-based technology and innovation in rural and urban areas of Nebraska in order to create high growth, high technological companies, small businesses, and microenterprises and to enhance creation of wealth and quality jobs.”
The impact of the BIA was swift. By 2015, Nebraska ranked 25th in the nation with $119 million in venture capital raised. That number was up to $185 million in 2020, which ranked 29th.
But the BIA on its own didn’t generate that capital. It did, however, create the seed funding to allow Invest Nebraska to become what it is today, an independent 501(c)3 non-profit that invest in early-stage innovative technology startups in the Nebraska.
“Our goal is to support the high-growth tech industry and to make Nebraska as welcoming of a place as it can be for that,” said Invest Nebraska Program Director Matt Foley.
Early-Stage tech companies have the potential for high growth, which makes them appealing for venture capital funds, but also carry fairly high risk in the early going. These startups often go through a period of low income but high expenses as they work through development. This stretch is sometimes referred to as the “Valley of Death” for startups and Invest Nebraska can be part of a bridge to help companies survive.
“We never invest alone,” said Foley. “Sometimes there’s local angel investors, other times different funds across the nation are involved.”
Nebraska Angels is one example of a local angel investor network. Spreading the investment out can be beneficial to the entrepreneurs as it helps connect with a wider network of resources and forcing them to refine their pitch and business model even further.
The idea of high-tech industry and multi-million-dollar investments may make it feel like this industry is geared towards “big cities”, but that’s a misconception. The global pandemic has helped to open a lot of eyes to that truth as companies across all industries discovered they and their employees could be effective and productive while working remotely. With this shift in work culture, Foley and Invest Nebraska hope that more entrepreneurs around the state will reach out for support, even if some of the concessions that come with venture capital ultimately prove to be a poor fit with their business model.
“We want you to reach out, and we don’t need anything formal to get the conversation started. We try to take every meeting possible to help educate, but not every business is a good business for venture capital investment,” said Foley. “If we continue down the road to investment, some of the more formal items will be fleshed out. We’ll need to see a pitch deck, hopefully a team, financials, projects business model, and some of the legal basics covered.”
For more information regarding Invest Nebraska, visit Home | Invest Nebraska.