“Why are all of you people here?” asked a smiling Mike Colwell, feigning dismay at the assembled throng before him. Colwell, Executive Director of Square One DSM and Entrepreneurial Initiatives of the Greater Des Moines Partnership, had finally conceded to allow the tables to be turned and assume the guest’s chair. “Every month I send out a survey asking who you would like to see interviewed and too often the answer is me, well today is that day, one time only, should be fun,” he explained, and with little further ado introduced his inquisitor, Co-Founder, with Colwell, of Plains Angels, serial entrepreneur, and pillar of the Des Moines start-up Community, Tej Dhawan.
The next hour was a blend of conversation and interview, and often involved the audience, which held a large representation of the Des Moines entrepreneurial ecosystem including many previously featured guests of the event. Colwell and Dhawan proceeded to deliver a “state of the ecosystem” assessment. The topics were diverse and many, a few highlights included:
The Ever-lasting Need for Pre-School
“The idea that start-ups are something new is silly,” Colwell observed. He did admit that the pace of technological advancement has altered the incubation time frame but truth be told, the whole of economic history is a story of start-ups that grew. To punctuate his point he reminded the audience that the very building that they were all in (The Ruan Building) was the corporate office of a company that began with one man and a pick-up truck.
With that continuous movement from start-up to midsize and beyond, the duo agreed that at some level there will always be a need for a place where people can connect with others, receive mentorship, learn and grow as they seek to found a new business.
Maintaining and nurturing a diverse ecosystem of support must continue to be a priority for Des Moines. Colwell made the point that true support doesn’t focus on the raw numbers of start-ups assisted, but rather on identifying entrepreneurs with potential and providing them with the connections and resources they need
With the proliferations of terms associated with investment dollars, seed, pre-seed, super-seed, some founders are losing sight of the realities of raising money. “Call it what you want, make the case for the investment,” urged Colwell while Dhawan cautioned, “A lot of people think that raising money is a successful milestone but really it’s just the beginning, not the end.” Simplifying the overabundance of nomenclature the duo explained that seed investors are concerned about tomorrow; venture investors are concerned about next year.
Successes and Failures
“The successful ones know how to execute day on day, they have a plan and execute it. Strategy is important, but execution is everything,” declared Colwell, while shaking his head at those he sees who simply won’t give the financials the attention they are due. “If you are not willing to manage the financials, why are you in business? No investor is interested in investing in somebody who doesn’t care about the numbers,” he chastised.
Colwell identified failing to research the market as the biggest mistake he sees among early stage entrepreneurs. It often results in the erroneous conclusion that you’re the first to arrive at an idea that is already well into development by others. For the serial founder Dhawan, building a product before selling it is the biggest commonly seen mistake. If you can’t sell it, if it is not what the market wants, why build it?
With more than 2800 accelerators world-wide there is somewhat of a glut and Colwell cautions entrepreneurs against pursuing a berth in one without examining the value proposition. He sees little need locally for another general accelerator but could get behind the idea of another market focused program along the lines of the Global Insurance Accelerator. “An Ag-tech focus in Ames or a Medical-Tech focus in Iowa City makes a lot of sense,” he observed citing the retail focused accelerator being funded by Target in Minneapolis.
A Great Idea
“I don’t believe in the law of large numbers for start-ups. Just because 100 people have an idea does not mean that any will succeed,” said Colwell rejecting a shotgun approach to encouraging start-up proliferation in the community. “An idea is such a small component of the Start-Up. You have to have one, but you also have to assume someone else has it, has more money, a better team and is ahead of you, now go.”
“Get used to failing, failing is good, it’s how you learn,” said Colwell observing that Midwesterners are not good at failure and as a consequence many start-ups struggle on past the point where the plug should have been pulled.
Random Observations on the Des Moines Community
Dhawan and Colwell expressed disappointment that a year-long short course on angel investing presented by Plains Angels, BrownWinick and others was well attended by investors but ignored by the entrepreneurs who would be seeking that investment.
While Plains Angels, a local investment consortium founded by Colwell and Dhawan, has not solved the investment drought that once plagued Des Moines, it has done much to accelerate the fundraising process for entrepreneurs by providing a local audience and connectivity to regional and national investors as well.
While there is a perception that the local start-up scene is tech laden, the reality is much different, and while many featured businesses utilize technology, few are truly technology companies.
“The end goal is not to count start-ups, but to build networks, and the most important network is the entrepreneurs talking to one another,” said Colwell, and towards that end the Des Moines community has gained traction in recent years. Still Colwell expresses concerns about whether it can reach or maintain critical mass. The size of the audience and the length of the post event conversations would suggest that mass is near.