Building a World Class Innovation Machine, One Startup at a Time

The Association of Public and Land-grant Universities (APLU) announced Iowa State University as “Innovation” award finalists during its seventh annual Innovation & Economic Prosperity (IEP) University Awards held on November 11, 2018 at the association’s annual meeting in New Orleans, LA . The following ISU Startup Factory case study was submitted towards Iowa State's application.

Iowa State has a long history of transferring technology to the market place for the benefit of the public, from enabling data to be transmitted by fax machines to innovations that enhance food production and protect the food supply. Along with being well recognized for its innovative contributions to agriculture and biological sciences, biorenewable products, material sciences, advanced manufacturing, and data-driven science, ISU is also recognized as one of the top 100 universities in the world in the number of patents granted in the United States with 32 in 2017. However, during the self-study process for the IEP University designation conducted during 2015-2016, increased support for innovation infrastructure was noted as an area for improvement based on feedback from focus groups, conversations with stakeholders, and results from national surveys and a report from Battelle commissioned by a state economic development organization. To address this need, a new model for the ISU entrepreneurial ecosystem was launched in 2016, a key component of which is the Startup Factory, a pioneering 52-week “super accelerator” program designed to launch successful startup companies. The Startup Factory program is divided into two 26 week halves, with the first six months comprising a structured program with weekly meetings using a “flipped” classroom approach, where the cohort members are at the front of the room presenting, and members of the Startup Factory “teaching team” are at the back of the room providing feedback and guidance. The formal curriculum includes the following modules: Business Model Academy™—this eight-week long segment follows the I-Corps customer discovery model, but with an increased emphasis on determining product market fit and understanding the right hand side of the business model canvas; CEO Academy™—this segment focuses on the left hand side of the business model canvas, and exposes the cohort members to critical aspects of business operations. Presentations by teaching team members and outside experts are given on topics such as business legal structures, design thinking, intellectual property, business law and contracts, risk management, human resources, marketing, branding and public relations, and accounting and financial projections, etc.; Funding Academy™—during this segment, cohort members receive training on financing and venture capital, develop an investor pitch deck, and practice their presentations with local investment groups to obtain feedback and facilitate investor connections.

During the second half of the program, we meet on a regular basis with Startup Factory members and formalize the use of our mentor network by having mentors hold “board meetings” with the cohort members. The companies are tasked with providing reports on their progress and deliverables for the next meeting are agreed upon to help with accountability towards meeting goals and to assess each company’s progress and ongoing needs.

Cohort members are allocated space in the Startup Factory building, which occupies approximately 12,880 square feet on the second floor of the Vermeer Applied Technology Hub. This central location for entrepreneurial activities includes dedicated office space for startup companies, open collaboration space, access to meeting and conference rooms, and amenities, such as high speed internet access, kitchenette with appliances, and close proximity to Iowa State and other ISU Research Park features.

We have successfully recruited over twenty volunteer members to our teaching team during our first two years; this group, which includes investors, management consultants, entrepreneurs, financial experts, attorneys and others, attends our weekly sessions and brings a wide range of business expertise to our program. We have also developed our Mentor Network based on the MIT Ventures Mentoring Service and grown it to include over 35 mentors who can help fill in management gaps in Startup Factory companies. At the end of the program the goals are to have a business team in place (management, board of advisors, mentors, etc.), the business model validated, a sales process implemented, initial customer (or partner) signed, a minimum viable product developed, a refined investor pitch, and the company in a position to have already raised or be ready to raise capital. We aim to have two cohorts of approximately 10 companies complete the training each year. The inaugural cohort of 10 companies began on June 27, 2016, and we launched our fifth cohort on June 22, 2018; to date, 53 companies have started the program or completed the program, of which 44 are still active. Companies in these early cohorts represent a range of areas, such as advanced manufacturing, biotechnology, clean tech, and agriculture, food technology, and software development. Participating companies are based on ISU-developed technologies, student-developed innovations, and companies in the community with a relationship with ISU, such as working with ISU faculty members.

The Startup Factory program is seeing signs of real traction: since June 2016, companies in or which have completed the program have raised nearly $14 Million in venture financing (angel and institutional investment and state and federal SBIR/STTR funding). This success has been supported by state and federal funding to the Startup Factory, including a state of Iowa Entrepreneurial Investment Award (EIA) of $200,000 in 2016-2017 and a Department of Commerce i6 Challenge grant of $406,000 in 2017. In 2017, a second EIA award of $200,000 was made to bring the Startup Factory program to rural northwest Iowa in partnership with four regional SBDCs and community colleges, creating the Startup Factory Network. We piloted the program, in which cohort members follow the first six months of structured programming through a weekly webinar to enable remote participation then work with their host SBDC for the second half of the program, with a 10-team cohort. A second cohort of seven teams was launched on June 22 as part of a larger kickoff event that included the Ames-based cohort. The Startup Factory Network shows promise as a tool to help support rural entrepreneurs, who are often isolated, and help connect them with resources at the university and through the state which can facilitate growth.