The pandemic propelled innovation rates in Arkansas, a recent report from the University of Arkansas reveals. New business applications surged, corresponding with national trends. The rate of patents also climbed, continuing a trend that may indicate Arkansas is catching up to other states.
The number of business applications nearly doubled in Q3 and stayed high in Q4, with the growth coming from the small business sector, the report said. National data indicates a strong and continuing surge in entrepreneurship in 2020-2021.
The number of patent filed in Arkansas has climbed an average of 15% annually over the last five years, though Arkansas still lags nationally, with about 15 patents per 1,000 people. “Arkansas still has a ways to go before the production of patents is comparable to similar states,” said the report.
But, the VC Landscape Is Behind
But entrepreneurs report barriers to seed capital. Overall, Arkansas entrepreneurs raised $16.4 million across six deals – a small sliver of the nation’s venture capital funding. All of that went to companies led by white men, according to the report. $10 million of that went to Decatur-based Cooks Venture in an A round. The company says it raises a proprietary kind of slow-growth chicken via a process that takes into account the health of the animal and the health of the environment.
The report– called the Arkansas Capital Scan – examines the flow of capital to entrepreneurs in the state. The report’s team, which included more than 20 undergraduate and graduate students, studied data from sources such as the SEC, the Pitchbook and national and state databases, as well as original interviews and surveys. The team intends to produce the report annually, according to a release.
The data was analyzed by an advisory board of government officials, investors, ESO leaders and others in the entrepreneurship community to highlight meaningful takeaways.
Angel investments were slightly more diverse – though white men raised the most. 32.9% of Arkansas angel investments according to Pitchbook and survey data, went to underrepresented founders (demographics besides white men).
About 28% of Arkansas’ population identifies as a minority race and/or ethnicity. However 14.6% of all firms are owned by underrepresented founders, according to data from 2018. Also, underrepresented founders only received 2.5% of all business receipts in 2002, the most recent data available, according to the report.
People of color in Arkansas also received a far smaller percentage of loans from the Small Business Administration – a measure that does not “exhaustively cover all commercial bank lending of interest in the state,” but should “provide significant coverage of those firms that we consider to be in the scope of the Arkansas Capital Scan,” according to the report. Only 7.1% of the loans Arkansas entrepreneurs received went to people of color, while 59.4% of the loans went to white entrepreneurs (the rest went to entrepreneurs with an undetermined race and ethnicity).
Companies based in Northwest Arkansas and Little Rock attracted a majority of the funds, according to the report, and businesses focused on life sciences received a larger share of venture capital funding.