The Arkansas Economic Development Commission has a pretty straightforward goal: grow economic opportunities for all Arkansans. Esperanza Massana Crane serves as the director of small business and entrepreneurship development for AEDC. She said there are three different ways they create economic opportunity.
“Job creation, when we attract companies into the state,” Crane said. “Expansion of jobs, whenever we work with companies and help them expand. Then the third piece, which is the small business and entrepreneurship development, which is helping our small business and entrepreneurship base start, grow and flourish in the state.”
One way to help small businesses start, grow, and flourish is through awarding grants. Aayush Thakur is the CEO and a co-founder of FR8Relay, a logistics technology company based in Bentonville. He said in Arkansas, if a company receives the Small Business Innovation Research grant on a federal level, then they are eligible for supplemental funding from the state of Arkansas.
Thakur’s business is working to use technology to optimize logistics and freight transportation. The company started in Memphis, and he said being there seemed like the right place to be because of the mix of intermodal transportation that exists there: for example, FedEx is based in Memphis, and they used planes, trains, and trucks to move items. Other major train freight companies like BNSF and Norfolk Southern have railyards in Memphis, too.
“That's kind of where we started to look at okay, can we compete with rail?” Thakur said. “And we realized very quickly, no, we can't compete with that. So we said ‘Okay, let's back up and see where we can go.’ At that time, there was another program that it was happening here in Arkansas.”
Thakur said AEDC has been incredibly helpful since making the move across the Mississippi River.
“The moment we moved to Arkansas, AEDC has been around to support us,” Thakur said. “We moved [to Arkansas] in 2020, and we were very happy that we moved here in January. Everything was going smoothly. And then in April, COVID happened and we were like, ‘Oh crap, what do we do?’”
Well, they ended up joining Fuel Accelerator, a 10-week program run by Startup Junkie matches tech startups with the needed partners to grow their business.
“And that’s where we were a nice fit because Arkansas has so much trucking.”
Crane said that the federally funded Small Business Innovation research grants are very competitive, and they want to incentivize businesses who are receiving these grants to grow here in Arkansas.
“The program was created to leverage federal SBIR grants to stimulate innovation in the state and ultimately create high paying jobs. The state of Arkansas provides matching grants to these federal grants. So as a business, if you have applied for a federal SBIR grant than the state can match the SBIR grants phase one or two."
The SBIR grants are awarded in 2 phases. Phase 1 establishes the technical merit, feasibility, and commercial potential of a product or business. Those are for 6 months. Phase 2 is a continuation of that research and is awarded for 2 years. In Arkansas, the AEDC will match phase 1 grants up to $50,000, and phase 2 grants up to $100,000.
One of the benefits to being a company focusing on optimizing logistics and long haul trucking in Northwest Arkansas is the proximity to huge companies involved in the business. Whether it’s trucking companies like J.B. Hunt and ArcBest, or companies who move a lot of products like Tyson or Walmart, Thakur said his company is in a good location, not just because they are giant companies, but because they are always forward looking.
“They are innovative in the aspects that occur,” Thakur said. “They’re slow to change just because of the size of the their operations, but they are always on the look for new technologies.”
Crane said another way small businesses can benefit from services provided by AEDC is to enroll in part of their annual matchmaking events.
“Which is where we bring in buyers from the state, local and federal government and private sector,” Crane said. “These businesses have the opportunity to have 15 minute meetings with these buyers.”
These buyers range from everything to businesses looking to hire catering companies to the state of Arkansas looking to … well, hire catering companies. Crane said public utilities like Central Arkansas Water, government agencies like the Little Rock Air Force Base, and multinational corporations like Tyson Foods at these events looking for Arkansas-owned companies to do business with.
“To put in a plug for the certification that we offer," Crane said, "when the state of Arkansas awards contracts, if you have anything up to $20,000 you can purchase directly with any vendor. But, anything that is more than $20,000 for the state of Arkansas, you have to require three quotes. However, if you're certified if you're a certified business owner, you can go directly with a certified business owner to do the transaction with them up to $40,000. So for example, if I am a minority and woman owned legal firm, and let's say you are the Department of Health needing some legal services for a project for $35,000, you can go directly with me. All those contracts are brought to the table at the matchmaking event to find vendors that happen to be minority and or women owned or service disabled veteran, which falls under the category of minority.”
Thakur said the SBIR funding that their company was awarded by the state will go towards non-technical that they need to pay for.
“Like if you need to do bookkeeping for the company if you need to,” Thakur said. “That’s where the supplemental grant from the state allows us to supplement the administrative costs that we have.”
There are two primary ways startups get funded: venture capital, and non-diluted funding. If you’ve ever seen an episode of Shark Tank, you might be familiar with the idea of “diluted funding.” Say someone has a business that is valued at one million dollars. An investor might offer to give the company another million dollars, but he wants to be a part owner of that company if he gives that much money. Non diluted funding, like grants, offer money to the company without diluting the ownership share."
Thakur said non-diluted funding is a better fit for his company for a few reasons.
“As you are aware we are not California or New York or Boston, in Arkansas," Thakur said. "There's less funding opportunities available through venture capital here and not all companies aligned with that. We are a very deep tech company where you know, we require we are needed we need to do a lot of study and research before we can have a product that actually works.”
Lucky for him, he has found great success at the federal and state level to acquire non-diluted funding until their product is ready to roll out.
Ozarks at Large transcripts are created on a rush deadline by reporters. This text may not be in its final form and may be updated or revised in the future. The authoritative record of KUAF programming is the audio record.