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SEP. 5, 2017 - VOL. 53 No. 12

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COVER STORY

Accelerating Entrepreneurship
Start-ups get a boost from investments by local businesses

By Jennie Doyen
the Sioux Falls Area Chamber of Commerce

Sioux Falls is recognized nationally as a great place for business. The city regularly receives recognition on national lists that consider factors such as job growth, cost of living, income and economic growth, education levels and more. In 2016, Forbes named Sioux Falls second best small metro for business and careers and MoneyRates ranked it as the seventh best city for young entrepreneurs. These accolades, among others, point to an environment in Sioux Falls that fosters entrepreneurship. In many respects, the start-up community is thriving.

Yet, there remains room for improvement. Among local business owners and entrepreneurs, it is commonly agreed that Sioux Falls has two main gaps in the start-up community: lack of access to early stage capital and a lack of mentorship and support programs. The Zeal Center for Entrepreneurship´s Growth Accelerator program is one attempt to stand in that gap and work toward meeting those needs.


The Sioux Falls Area Chamber of Commerce and the Sioux Falls Development Foundation, through their joint venture partnership Forward Sioux Falls, established Zeal in 2002 as the South Dakota Business and Technology Center (SDTBC). Zeal´s ecosystem of entrepreneurship brings the area´s most successful entrepreneurs and business leaders together with universities, venture capital sources and civic and government agencies to increase the speed to launch and success rate of early-stage companies.

Zeal ran its first accelerator program in 2009. The program was successful and several classes of start-ups took advantage of the opportunity for growth. Twenty-six companies completed the accelerator during the first six programs, and twenty of those companies were still in business in 2015 – an impressive program success rate of 77 percent.

Those results were a sign of the positive impact the accelerator was having on the community. But, just as the entrepreneurs served by Zeal are constantly looking for ways to tweak and improve their business model, Zeal leadership saw opportunities for improvement in the accelerator program model.

The original iteration of the accelerator accepted companies at all stages of business, up to 10 companies at a time. That program did not provide capital for the start-ups. The revised model, renamed the Growth Accelerator, narrows its focus to specifically seeking early-stage companies with proven customers and sales. In addition, only four start-ups at a time are accepted to the program.

Limiting the number of businesses allows for funding and more focused resources for the participants – a change Ryan Oines believes will make the accelerator even more successful. Oines has worked with multiple start-up companies, including three different businesses that were tenants at Zeal. He served as Entrepreneur-in-Residence with Zeal prior to taking on his current role as Interim Vice President at Zeal. He said the goal of the Growth Accelerator is to create a broader network that includes entrepreneurs and the local business community. "As the network grows, there will be more depth of opportunities and resources – ideally creating a cohesive environment that will continue to serve future entrepreneurs."


The accelerator supports entrepreneurs by connecting early-stage companies with resources within the community that can help them scale their company. Participants in this eighth program have access to $20,000 in seed funding, mentorship and coaching from professional partners and Zeal entrepreneurs-in-residence, branding and marketing strategy development from Lawrence & Schiller and access to the E@Z Co-working space sponsored by Interstate Office Products.

The intensive program runs for 12 weeks, including a one-day kickoff event and five bi-weekly sessions. The objective of the program is for each participant to develop a strategic, scalable plan to grow revenue and/or increase capacity. The program will culminate with a presentation pitch to potential investors to secure funding for the strategy developed during the accelerator program.

Zeal has chosen a convertible note as the investment vehicle for this year´s Accelerator participants. This gives the entrepreneur the option of repayment as a loan or converting the initial amount invested by Zeal into equity or ownership within the company. The goal is to help fund the early-stage company but not require that Zeal be a stakeholder if the resources are in place to pay off the investment in the form of a loan. This approach gives the entrepreneur options. It also allows the opportunity for Zeal to invest in the sustainability of the accelerator program for the future.

There is no doubt the seed money is an attractive piece of the Growth Accelerator. But almost all involved agree that the resources, mentorship and support offered to participants are equally – if not more – valuable elements of the program. Alex Guggenberger is the co-founder of Jobiki and a current accelerator participant. He said, "Being a young company with young co-founders, we were really looking forward to the intangible resources. The mentorships, teaching and guidance through the process of building Jobiki has made an amazing difference and we are hoping it continues as we move further along."


Fellow entrepreneur Brad Hartzler with Gravana agrees. "Already we have built amazing connections and relationships with others in the local entrepreneurial scene. We hope to take away a strong marketing strategy and a more focused business plan."

The Growth Accelerator is sponsored through partnerships with The First National Bank in Sioux Falls, Eide Bailly LLP, Lawrence & Schiller, Inc. and Woods, Fuller, Schultz & Smith P.C. Each company is not only providing program funding, but also supporting the entrepreneurs by offering expert advice and business resources.

"The financial and in-kind investment each of these partners has chosen to make contributes greatly to the overall potential success of the start-ups," said Oines. "By sharing their expertise, industry experience and lessons learned – and even offering introductions to potential customers – these companies are supporting our local entrepreneurs."

Oines notes that Zeal partners are choosing to invest their time and money without the expectation of a direct return. "These companies are genuinely excited to be part of the growth of this community."

Eide Bailly has a history of partnering with Zeal. Keith Severson, a partner at Eide Bailly, previously served as a board member and assisted in the transition from SDTBC to Zeal. He calls the Growth Accelerator a critical component in the development of Sioux Falls´ entrepreneurial community. Severson said, "For me, just being able to participate in the accelerator program and spend time with entrepreneurs and maybe share a little advice along the way, provides another great opportunity to give back to the community."

According to Oines, established businesses can support the entrepreneurial community in a variety of ways. Efforts such as supporting industry-related internships and training programs, sharing best practices and being willing to serve as initial customers for start-up companies are all valuable components that help support the entrepreneurship and create opportunities for sustainability. When all members of the community share experiences and knowledge, it fosters a progressive culture. "All stories need to be shared – successes and failures," Oines said. "A true spirit of collaboration on all levels will not only set our community apart but also create opportunities that we didn´t know existed."


"It is all about nurturing the culture," Severson stated. "Those of us established in business remember back when we were starting and those specific programs and people that helped us find our way. For an entrepreneur, it is much harder and a very lonely process. Organizations like Zeal, the Chamber and Augustana University are doing their part, but other programs need to be continually developed to foster our sense of culture in building a more dynamic entrepreneurial community. As momentum continues to build, it just becomes part of what we do and who we are."

Oines states that collaboration is the key to strengthening ties between the entrepreneur community and the broader Sioux Falls business community. "The capstone on effective collaboration is genuine leadership; leadership shown through mentoring, example and application," Oines asserted. "Our community must recognize not only that leadership exists in many forms, but also that isolated leadership fragments the spirit of community."

Jeremy Keckler, business banking manager at The First National Bank in Sioux Falls, is optimistic about the growing connections in Sioux Falls. He said, "We know it´s not there yet, but we´ve assumed more responsibility in better melding our business communities. It remains our goal to maximize resources to accelerate the growth of businesses in our community."



Current Growth Accelerator Participants

Four companies were competitively selected to participate in this year´s Growth Accelerator program. Each is an early-stage company with demonstrated sales, poised for rapid growth. Following successful completion of the 12 week course, each entrepreneur will pitch to potential investors for funding of the strategy developed during the Growth Accelerator program.


Bravo Youth Sports
Scott Perkins

Bravo Youth Sports sells a product called The Bravo Board. It is a lightweight, portable LED message center combined with a scoreboard. The Bravo Board is ideal for youth and club sports teams for any sport that requires a combination of time, score and period. The board allows the team to generate revenue with customized advertisements.


Gravana
Kelly Andrews, Derek Hackett, Brad Hartzler & Amanda Olinger

"We applied for the Zeal Accelerator program because we wanted to improve our company, we wanted to expand our marketing and customer base, and we hoped to improve our technology systems."

Gravana is a grammar curriculum that improves students´ ability to communicate. Through in-person or online lessons, students learn grammar principles and master them through application. Gravana began in 2012 as a summer tutoring program and expanded to a licensed classroom and district curriculum. It is now expanding to an online interface intended to create a learning management ecosystem.


Jobiki
Alex and Nathan Guggenberger

"Zeal saw something in us and is really helping us drive our strengths forward and give us the resources we need to excel."

Jobiki intends to change the way millennials and others looks for work. Instead of looking for a job, people can look for and discover companies that match their interests, desires and lifestyle. Companies will use Jobiki to recruit potential employees in a new and interactive way.


Well365
Trisha Dohn

"The accelerator program is equipping me with more tools, resources and connections needed to grow my business."

Well365 is an independent, corporate wellness company offering customized wellness programs that promote and improve health and well-being for employees at companies of all sizes and in all industries. Wellness and managed care programs are integral aspects to maintaining a safe, productive and positive work environment. Well365 uses an intuitive and customized online portal, as well as in-person health coaching, along with many other programs.


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