Yesterday I attended the Des Moines Business Record’s Power Breakfast series featuring an expert panel discussion on whether Central Iowans are too risk averse to start businesses. It was well attended and an excellent discussion on the topic, although the topic probably deserves more time and attention than is available in a breakfast. I applaud the Business Record for making the issue more visible.
As a lawyer working with startup businesses for the past 17 years, I’ve seen hundreds of people take the leap of faith to start their own businesses. So it’s a little hard for me to accept the notion that Central Iowans are "too" risk averse to start businesses. Try telling the startup business owner that couldn’t afford Christmas presents one year for his kids after he started his business that he’s too risk averse. Or, perhaps the retailer that struggled for three years in a difficult economy and personally guaranteed a lease. And, I wouldn’t want to tell the couple who invested their life savings in a franchise that they are risk averse.
Instead, when we say that Central Iowans are risk averse to startups, it seems what we are really referring to most of the time is the lack of investment capital available through angel investors and venture capitalists. Admittedly, It’s slim pickings in Iowa if you need significant capital. Many businesses end up going to the coasts for investments. During the panel discussion, someone mentioned that it will take a company like Dwolla making it big so that investors in Iowa would realize what they missed and hopefully invest in the "NEXT" startup. While they may happen, I think it’s more likely the owners and employees of a widely successful company will be the ones who will decide to invest themselves in the "NEXT" startup. But to date, Central Iowa just hasn’t had that widely successful venture that is poster child for the investment community.
One of the panelists, Christian Renaud, has an excellent post you should read on this subject. The comments are insightful as well. Christian is one of the founders of Startup City Des Moines and should be creditied as one of the leaders in bring awareness to an ever-improving startup community in Central Iowa.
But, as Iowans, I’d stop asking whether we are too this or too that. We aren’t Silicon Valley nor do we need to be. However, it would be terrific to see a greater flow of capital into startups.
So, what do you think? How do we continue to improve the startup community in Central Iowa?