Northwest Arkansas captured the majority of venture capital activity in the state in 2023, according to the Arkansas Capital Scan 2023. The report shows the region’s leadership in venture funding while identifying critical gaps in early-stage capital.

The report reveals a 12% decline in statewide venture capital investment compared to 2022, with 12 deals totaling $106.4 million. In Northwest Arkansas, the average deal size dropped by 13.6%, underscoring the need to expand early-stage funding and support pre-revenue startups. Despite these challenges, the region continues to drive investment in high-growth sectors like health care and IT.

“Arkansas Capital Scan shows where Northwest Arkansas stands and where we can go,” said Nelson Peacock, president and CEO of the Northwest Arkansas Council. “While there are challenges, the report highlights clear opportunities to strengthen the entrepreneurial ecosystem and solidify the region’s position as an innovation hub.”

Now in its fourth year, the Capital Scan project, developed in partnership with the University of Arkansas Office of Entrepreneurship and Innovation (OEI) with support from the Walton Family Foundation, continues to illuminate the availability of early- and growth-stage capital for Arkansas-based startups and small businesses, providing insights into the state’s economic resilience and shifting investment landscape. 

Key findings from the report include:

• Northwest Arkansas leads the state in both the number and value of venture capital deals, demonstrating its growing influence in Arkansas’ startup ecosystem.
• Early-stage funding remains a critical gap, with a drop in average deal size and limited pre-revenue funding options.
• Diverse founders received 24.5% of venture capital dollars statewide, reflecting progress in equitable access to funding.

The Northwest Arkansas Council is leveraging the findings of the Arkansas Capital Scan 2023 to refine its strategic efforts and expand programs aimed at addressing funding gaps. 

The Venture Capital Immersions Series connects national and global investors with Northwest Arkansas startups through curated events that include meetings with founders, regional tours and firsthand exposure to the region’s innovation ecosystem. These events aim to strengthen relationships between investors and local entrepreneurs, creating new opportunities for capital investment.

In partnership with OEI, the Council also developed the StartupNWA Hub as a centralized platform for entrepreneurs, offering access to mentors, funding opportunities and collaboration spaces to support startups at all stages.

Building on this momentum, the Council is exploring additional efforts to position Northwest Arkansas as a leader in venture capital and innovation. By fostering collaboration among stakeholders, attracting external investment and creating pathways for early-stage funding, the Council is advancing its vision of a more resilient and inclusive entrepreneurial ecosystem.

“The venture capital landscape in Arkansas is challenging but ripe with potential,” said Serafina Lalany, executive director of StartupNWA at the Northwest Arkansas Council. “By strategically increasing capital access and fostering innovation, the state is paving the way for a resilient and prosperous future.”

Phil Shellhammer, executive director of the University of Arkansas Office of Entrepreneurship and Innovation, emphasized the importance of partnerships. “Arkansas Capital Scan underscores the need to connect investors with innovative startups in our community. Addressing early-stage funding gaps will ensure Northwest Arkansas remains a competitive environment for entrepreneurs,” he said.

As Arkansas’ entrepreneurial ecosystem continues to grow, Northwest Arkansas is taking bold steps to address funding challenges and create opportunities for innovation-driven growth.

To access the full Arkansas Capital Scan 2023, please visit this link.