$3 Million Seed-stage Investment Fund to Focus on Iowa Businesses
By Dave DeWitte, Reporter
CEDAR RAPIDS, Iowa - A Cedar Rapids-based fund management group has announced the formation of a $3 million seed-stage investment fund focusing on the creation and growth of Iowa-based businesses.
Iowa Seed Fund II LLC was launched by AccelerateIT LLC, a fund management group with EDC Inc., a Cedar Rapids-based business accelerator. It is a Qualified Community Seed Fund under Iowa law, allowing investors to receive a 20 percent state tax credit on their investment.
"Startup and early-stage capital is critical to the growth of new enterprise," said Curt Nelson, manager of AccelerateIT LLC.
Nelson, who is also CEO of EDC Inc., said the 75 percent to 85 percent of new businesses looking for seed capital fail to find it. The ability to provide investment through the Iowa Seed FUND II and collaboration with other funds in Iowa is one of the keys to building a stronger entrepreneurial community in the state, Nelson said.
The first seed fund established by AccelerateIT, Iowa Seed Fund I, was formed at the end of 2007 and had its fund fully committed by December 2010. Iowa SEED Fund I is not taking on any additional investments, but can make follow-on investments in companies in which it is already investing.
Iowa Seed Fund III has a larger number of investors, about 33, than Iowa Seed Fund I. The names of the investors are not made public.
Iowa Seed Fund II is designed to fill a gap in early-stage funding, to make equity investments in interstate commerce businesses based in Iowa, to invest in high growth potential companies and to serve as a catalyst to attract other investors to the companies.
Nelson said entrepreneurs typically begin by drawing on their own financial resources, then borrowing from family members and friends. When they have exhausted those connections, Nelson said, they have limited options for securing funding for things like early marketing, creation of product prototypes, or feasibility research.
The EDC and AccelerateIT hope to make the entrepreneurial community more successful by combining resources such as seed funding and mentoring, Nelson said.
Founded in 2003, the EDC has worked with over 500 businesses in an effort to increase local wealth for area reinvestment by growing and cultivating locally-based regional, national and international businesses.