Three business accelerators being launched in Eastern Iowa are just the beginning of a planned statewide network, say economic development officials.

In October, the Iowa Department of Economic Development entered into agreements with the NewVentures Center in Davenport, the Entrepreneurial Development Center of Cedar Rapids and Cedar Valley Valley Tech Works to provide technical assistance and support to start-up companies. These so-called business accelerators are designed to provide low-cost, private-sector expertise for business start-ups.

Now, the IDED is seeking bids from additional not-for-profit organizations to partner in what officials envision as a network of at least six accelerators throughout the state. The winning bidders will receive up to $175,000 over a three-year period to help cover their own start-up costs.

While Iowa already has many existing business assistance programs available to start-up companies, the accelerators will be targeted to “high-powered” businesses, said Mary Lawyer, the IDED’s chief of staff.

“What we’re looking for are the next manufacturing or biotech firms, or companies whose business ideas can be leveraged into high-paying jobs and that are on a scale that (existing programs through the Small Business Development Centers) can’t deal with,” she said.

Using a combination of technical assistance funds from the Grow Iowa Values Fund and community development funding, the IDED is providing $75,000 annually to each of the pilot centers for the next two years, with up to $25,000 in the third year to each. Each organization must provide a 100 percent funding match and sign an agreement to operate according to the state’s performance guidelines.

In Davenport, Dave Abbott formed the NewVentures Center about a year ago as a combination accelerator-incubator to work with companies in Eastern Iowa and Western Illinois. The accelerator is modeled on an approach that Oklahoma has used for the past seven years.

“We talked to well over 100 people with business proposals; out of that we’ve got a group of about 12 people that we’re working in earnest with,” said Abbott, who was formerly a senior vice president with Grain Processing Corp. of Muscatine. “It’s a months-long process to develop business strategy, to turn that into an investment-ready business plan.”

The companies NewVentures is working with range from entrepreneurs looking for ways to commercialize a prototype product to established companies that are on their second or third round of venture capital financing, he said.

“What we bring isn’t theory but a lot of practical experience that allows us to get in there and be part of their team, because we’ve started up and operated businesses as well,” Abbott said. “That’s what differentiates us from programs at the universities. They have the laboratory space, but there isn’t always good business experience available.”

Abbott said NewVentures’ fees are probably half what a for-profit consultant would charge. Generally, it also contracts with its client companies to receive an equity stake of about 5 percent. The majority of the accelerator’s funding comes from DavenportOne, a local economic development agency, “with the idea that if they’re successful that money will come back,” he said.

Whether there will be enough work for six accelerators in Iowa depends in part on the level of expertise they’ll bring to the table, Abbott said. The greater the expertise, the more an accelerator will serve as a regional destination for businesses, he said. NewVentures will probably serve a 50-50 mix of local and regional clients, he said.

Gregg Barcus, president of Emerging Growth Group LLC, an investor-backed for-profit company that operates a technology business incubator in Des Moines, said his company is already working on a comprehensive proposal for a Central Iowa accelerator.

“It’s just a very worthwhile thing,” he said. “It’s part of an infrastructure that’s needed to support the business start-ups that everyone wants to support. I think that this is a recognition that the state does have an interest in local support for this.”

Lawyer said the IDED is accepting bids on an ongoing basis.

“We’ll take applications until we’re satisfied that there’s either no longer money for the projects, or that we’ve covered the need in the state,” she said.

IN THE KNOW

Whether a region will have a business accelerator depends on the level of local interest and the existence of an organization with the proper expertise that can bid for the work, said Mary Lawyer, the Iowa Department of Economic Development’s chief of staff.

“We clearly want someone who has done this before,” she said. “They must clearly know where to go for start-up money; where to go if you need a project re-engineered; whom to turn to if you need management expertise. You need someone with all those connections, and that usually comes from having done it yourself.”

In addition to serving their respective regions, the accelerators would be responsible for assisting companies that receive funding through the IDED, Lawyer said. It’s also likely there would be referrals in both directions between the accelerators and the John Pappajohn Entrepreneurial Centers, she said.