Oct 21, 2021 - Business

Venture capital in Arkansas up 151% from 2020

Venture capital invested in <span style="background:#1085df;padding:2px 5px 1px;border-radius:5px;color:white;">NWA</span> and <span style="background:#ff7900;padding:2px 5px 1px;border-radius:5px;color:white;">Little Rock</span> metro area companies
Data: PitchBook & NVCA; Chart: Jacque Schrag/Axios

After largely taking a year off, angels are back in Arkansas. Angel investors.

What's happening: Venture capital invested in Arkansas companies through the third quarter was valued at an estimated $89.7 million. That's up 151% from $35.7 million for all of 2020.

  • The numbers, shared with Axios, are from PitchBook, a private equity database company.

Why it matters: Private investment gives startups and young companies resources to grow more rapidly, often before sales can catch up with the need to expand.

  • Since the investment usually comes with both risk and potential, investors stand to make a higher return.

By the numbers: An estimated 77% of the statewide total was invested in Northwest Arkansas companies in the first three quarters of the year.

  • Companies in the Little Rock metro, which includes North Little Rock and Conway, received the rest.
  • The number of deals in Arkansas remains low with only 18 so far this year in NWA and 5 in the Little Rock metro.
  • Still, the value of deals for 2021 is at an all-time high and will end well over the $71 million reported in 2019.

Zoom out: While investments in Arkansas slowed during 2020, they didn't miss a beat at the national level.

  • Total deal value in the U.S. through the third quarter of this year is estimated to be $54.7 billion, up about 24% from $44.2 billion in 2020.

Venture capital deals in Austin, Texas — a metro many like to compare with NWA — were valued at $3.78 billion so far this year.

Zoom in: The leader in NWA is Fayetteville's AcreTrader, a company that helps consumers invest in shares of farmland. The company has received about $18 million in venture capital this year, which is below PitchBook's estimate of $22 million.

  • AcreTrader's investor relations team told Axios the anomaly is probably due to how some of the company's investments (on behalf of its consumers) get reported in the news and then are inadvertently added to data used by PitchBook.

💭 Worth's thought bubble: Economists, entrepreneurs and those who consult entrepreneurs have told us there aren't enough investments made in NWA companies.

  • Given the disparity between values, our region has a long way to go to be competitive with economies at high-tech hubs across the country.

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