Making people and ideas findable

Is the 21 Fund Working?

This morning I had the pleasure of attending the 21 Fund breakfast thanks to an invite from Frank Leonard. Frank is a great networker and works with some incredible technology companies, like Scale Computing. At the end of the event, I got to spend some time with Steve Hourigan and it was really enlightening.

My personal experience with the 21 Fund sucked a couple years ago. We submitted, they rejected us by email with a generic explanation. We then contacted a few big shots in town who put a good word in for us... and were turned down again. Still a generic explanation. As a taxpayer, a citizen and a guy who's worked with the who's who of successful startups, I muttered quite a few nasty words under my breath!

I told Steve about the experience and added that our startup that they turned down is bootstrapped and very successful - there's a chance we could expand to 4 full-time positions and we just picked up a key client yesterday. Steve responded, "Guess you didn't need the money!"... I loved that response... but I'm not sure it's accurate. With an influx of funds, we could expand and maintain profitability. We've got a unique process that's a winner with our clients. In fact, we had our latest client fly us to Paris, France to assist them... pretty cool.

Enough about us... I just wanted to set the tone that I haven't been a big fan of the 21 Fund until our conversation with Steve today. He shared that the benefit of the fund really isn't the money as much as it is the education that they could be providing companies with the right resources. In fact, it honestly sounded to me like the money is the problem.

First, it's the center of attention for both politicians and business people. They think it's a general fund they should be able to take ideas to and cash out on. Not the case. As the site reads,

to stimulate the process of diversifying the State's economy by developing and commercializing advanced technologies in Indiana

Take note... Indiana... not Indianapolis! Steve's team is working on building relationships with entrepreneurs around the state, not just local here in Indianapolis. He's seeing a ton of opportunity to the North and have been spending time there. Steve wants to emphasize education more than the money associated with the initiative (my 2 cents: perhaps changing the name from 'fund' may change this perspective ;).

These are my observations by the way - and I hope I'm presenting Steve and the 21 Fund well. My experience with the 21 Fund stunk and we spent the next year wandering from private investors, to VCs and investment groups. The majority of them led us totally astray and it wasn't until we sat down with a specific entrepreneur here locally did we stop sinking money and time into the wrong direction and actually began building a business.

I'm excited now for the 21 Fund. I'm glad they're starting a road show to initiate opportunities around the state and I'm glad that they want to focus more on educating entrepreneurs. Coming up with innovative ideas is actually quite simple. Building businesses around them is the hard part!

Last word on this: People from the IEDC and 21 Fund talk a lot about 'innovation'. Many of the funded projects I've seen funded are remarkable innovations. Personally, I'm not sure this is a good business decision. Innovation is risky. Innovation is difficult. Innovation has a ton of competition.

The goal of the 21 Fund actually doesn't mention innovation. There are huge opportunities in growing companies here in Indiana that serve, support and develop strategies in the high tech industry. I hope the 21 Fund looks beyond innovation at companies like mine that help others to become 'high tech'!

Great event today! More coming later on the actual discussion from Bret Swanson, incredible insight into Indiana's tech economy. It's really going well!

Tags: 21, fund, hourigan, iedc, indiana, steve

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Comment by Lorraine Ball on June 11, 2010 at 9:18pm: The 21st Century fund was a major supporter of the startup weekend. They have already made a commitment to support at least one more this year, so I think they are starting to get it that our economy will be built on innovative companies of all sizes.

Comment by john blue on June 11, 2010 at 9:40am: Hi Doug,

Thanks for the detailed observations. I think what you personally observed is not what the general public hears/sees.

The name: The fund is titled "Indiana 21st Century Research and Technology Fund" which implies researchy (is that a word?) and technology like stuff, which most people associate with "innovation".

The proposal guidelines: The guideline actually states at the top "The Indiana 21st Century Research and Technology Fund (the “Fund’), ... is open to proposals from all public and private entities for technology-based commercialization activities encompassing science/technology creation, innovation, and transfer intended to have economic impact in Indiana." This sets the tone for "innovation" and that tech/research stuff.

Innovation sounds cool: Everyone uses the word innovation. Unfortunately, innovation is an overused word. The fund needs to look beyond innovation as a criteria for building businesses in Indiana.

Thanks again for the post.
John Blue

Comment by Douglas Karr on June 10, 2010 at 12:59pm: Brennan - great feedback. I think the 21 fund is in a transition phase. They're looking external to Indy for funding opportunities, but they also want to change their image from some kind of 'grant machine' to an organization that can help entrepreneurs. There are a few challenges - like resources. Steve's team is already stretched thin, with 3 less people they had before.

If you asked a business, a politician, or the folks at IEDC what the 21 Fund was, I think you'd get 3 different answers!

I'm a fan of what they're trying to achieve. They're especially needed since banks have all but stopped funding small business (we really need to pressure the Fed on this!) and many businesses require capital to even get started.

Perhaps, given your feedback, the 21 Fund should work on some hybrid model. They could fund innovative technologies, secure funding for some proven high tech businesses - AND force the businesses who utilize the funds to open their doors to other entrepreneurs to help them succeed.

I'm not sure what the right answer is - but this is an initiative that we must pressure our politicians to continue to support.

Comment by R. Brennan Knotts on June 10, 2010 at 12:12am: I really enjoyed this post and your commentary on the 21 Fund, although it has left me confused about what the 21 Fund's mission is - but I think that's the point. Their mission isn't what I thought it was or what most people think it is.

I'd be interested in hearing more about what "education" the 21 Fund is providing. I think the industry of educating entrepreneurs is already oversubscribed. I shudder to think how many productive hours have been wasted teaching a group of "entrepreneurs" the different ways to finance a startup. I say wasted because most people who consume this knowledge will never end up starting a business or are years away from using it.

Financing a startup is just one of those subjects that comes up a lot. There are plenty of others like which corporate entity to choose and how to hire your first employees.

This type of entrepreneur education feels good but it doesn't move the needle. This type of generic education is a Google search away and the doers, the people who start businesses and create value from nothing, don't usually get their entrepreneurship education from sitting in a classroom.

Most of the education someone needs when starting a business is very time sensitive and subject specific. For instance with Pocket Tales, my biggest issue today, June 9th, is redesigning our application UI. We also have a lingering issue of hiring a tech lead, and that is actually a place I think the 21 Fund could really help the state of Indiana.

How can we better match technical talent, whether it's software "technical" or medical "technical," with business talent to form stronger founding teams?

How can we imbue more people in Indiana with the attitude of "screw it, let's do it," instead of training them to sit in classrooms consuming knowledge, further delaying the act of creating until they know all the answers?

As you and I both know Doug, you never know all the answers. You only hope you can find the right answer when you need it, and you don't have the time or the resources to think much beyond today's bottleneck.

Just my two cents about most of the entrepreneur education I see.