While a massive incentive package earlier this year wasn’t enough to get Panasonic to build a new eclectic car battery facility in the state, a new state-backed business accelerator program carries with it hopes that the next Panasonic can be built from the ground up in Oklahoma.
Or the next Amazon, or Tesla, or another company in an industry that hasn’t even been invented yet.
In recent years, Oklahoma has been more aggressive in going after new businesses, using hundreds of millions of dollars in tax breaks and other incentives. Most are aimed at attracting an established company and are the types of incentives that have been debated about how much economic gain they can really add to a state.
But a new $15 million business accelerator program, while much more modest than the nearly $700 million the state recently offered Panasonic, seeks to help launch a successful company, using a combination of public and private funds to boost the state’s startup culture.
“Where a company starts and grows, that is typically where that company stays,” said Nathaniel Harding, a partner at Cortado Ventures, an Oklahoma City-based venture capital firm that has pledged to invest its own money into the state’s new accelerator program.
Eight startups in OKC will go through the program in its first year
The state Legislature budgeted $15 million for the program that will launch a business accelerator in Oklahoma City, Tulsa, and a rural community. Each accelerator will offer startup businesses an intensive training program, with businesses that complete the program given the chance to earn additional public and private investments.
The state recently awarded the firm generator a contract to operate the Oklahoma City-based accelerator, while the Oklahoma Farm Bureau will oversee the rural-based program. Each has pledged to bring an additional $5 million in private investment to the table.
“We will be investing $100,000 into eight companies a year and they will all be based in Oklahoma City,” said Selena Skorman, director of entrepreneurship policy and partnerships at gener8tor. “We are going to have more capital flowing through Oklahoma City and we are going to be training startups to be very successful.”
The eight selected businesses will participate in a 12-week programme, which will include fundraising training and business mentorship.
Going through the cohort with other startup businesses is a chance to create more support, Skorman said.
“We really like to create that community feeling because it’s very easy to feel vulnerable as a startup,” Skorman said.
Oklahoma City’s accelerator program will be based at a facility in Bricktown, which could also house successful startups after they complete the program.
While eight companies will be selected during the first year, 24 startups are projected to go through the program by the third year, according to the contract generator has with the state.
Startups will be considered from all industries, but there will be a particular interest in biotechnology, energy diversification, aerospace and autonomous systems, according to gener8tor’s contract.
With programs in other cities already established, gener8tor hopes to connect Oklahoma-based startups not only with local investors but also with firms across the country.
“Our strength is being able to tap into our network,” Skorman said.
Accelerator program will add more venture capital to the state
Jennifer McGrail, the executive director of the Oklahoma Center for the Advancement of Science and Technology (OCAST), the state agency overseeing the accelerator program, said the program will help pump some much-needed seed capital into a state that has fallen behind.
“Oklahomans have always had such a pioneering spirit, they have always had innovative ideas, and these accelerators are really going to give us the opportunity to cultivate our own successful companies,” McGrail said.
Harding, the partner at Cortado Ventures, said the lack of venture capital, which is investment funds in startup companies, has stunted Oklahoma’s ability to grow its economy.
“My estimate is that in Oklahoma we should see about a billion (dollars) under management in venture capital, but instead we are a small fraction of that,” Harding said.
Massachusetts, California and New York lead the nation in venture capital funding, according to an analysis by Crunchbase, an investor news site. Oklahoma ranked in the bottom half of all states.
“When you can successfully build a business, you also create a subsector with its own suppliers and customers,” Harding said. “That’s really how you establish a diversified economy.”
The accelerator program is launching at a time when the startup industry has taken a hit in recent months, due largely to a stagnant economy and growing inflation.
Investments in tech startups decreased by 23% in the second quarter of this year, according to figures released by PitchBook.
But the commitments in place for both private and public funding through the accelerator program could help Oklahoma weather the tough economic times, state officials said.
McGrail, the executive director of OCAST, said a challenging economy can actually spur new developments.
“I think this program has the chance to address some of the supply chain issues happening in the state and solve real-world problems,” McGrail said.
Not only does the accelerator program attempt to leverage private investments, but the state could make additional investments through OCAST and other state-based investment portfolios.
Lawmakers approved the Invest in Oklahoma Act last year, which encourages state investment funds, such as the teacher’s pension fund and the Tobacco Settlement Endowment Trust, to invest up to 5% of their money into Oklahoma-based companies and investment firms.