A new report by UNL’s Bureau of Business Research shows that Nebraska’s efforts to become one of the nation’s best states for entrepreneurs and startups are paying off — in more ways than one.
The report — The Annual Economic Impact of Businesses Supported by Nebraska Business Innovation Act Programs — examined outcomes related to one of the state’s main grant opportunities for early-stage businesses, the Nebraska Business Innovation Act (BIA).
“The BIA was created by the legislature in 2012 to grow Nebraska’s startup climate,” said Joe Fox, Director of Business Development at the Nebraska Department of Economic Development (DED), which administers the BIA program on behalf of the State. “It allows us to support high-growth, high-tech and highly-innovative small businesses throughout their early stages of growth, from seed funding all the way to commercialization.”
The new report — the latest in a series of biennial analyses of the BIA program — examined outcomes related to businesses that have received BIA funding, from revenue generated to jobs created and their overall impact on the Nebraska economy.
Using survey data collected from 217 participating firms, researchers came to a number of notable conclusions. For example, surveyed BIA recipients report having created over 1,100 direct jobs since receiving a BIA grant, up from 640 in 2018, with an average wage of $67,074 per year — significantly higher than the state’s annual mean wage of $47,508. Their economic impact, which occurs, say, when businesses purchase supplies or their employees spend paychecks on groceries or housing, was estimated at over $517 million, up from $284.3 million in 2018. This is in addition to an annual state and local tax impact that grew from $1.22 million in 2014 to $11.7 million this year.
Fox says that while part of this growth is due to more businesses receiving grants over time, it’s also evidence that the program is doing what it’s intended to do; namely, funded business are going on to raise private capital from outside Nebraska, generate revenue and hire employees.
Dan Hoffman — CEO of Invest Nebraska, a nonprofit venture development organization that partners with DED to administer BIA’s seed fund program — says a big part of the success equation is the quality of the Nebraska startups applying for funds.
“The companies we’ve vetted and elected to support have gone on to generate around $175 million in outside capital investment,” Hoffman said, echoing report statistics showing that BIA grant recipients accrue around $5.75 in private investment funding per every $1 in State support while earning $9.77 per dollar in revenue. “The fact that these small, innovative startups are growing to a stage where they’re able to attract in-state angel investment, venture capital from outside Nebraska and start turning a profit is a testament to the success of the BIA, but also to the fact that we’re producing and attracting real entrepreneurial talent here in Nebraska.”
Omaha-based Lifeloop is one example of a BIA recipient that’s advanced from the startup phase to the big stage. A software company whose proprietary platform is utilized in senior living communities across the U.S., Lifeloop received its first BIA grant in 2015 for prototype development, followed shortly thereafter by $200,000 in seed investment funding. The number of communities adopting the Lifeloop software platform has grown from 35 to over 500 nationwide.
“The BIA Prototype Grant allowed us to build our software platform and validate it in the market,” said Amy Johnson, Lifeloop Cofounder and CEO. “We scaled the business with capital from the Nebraska Angels, Nelnet, and Invest Nebraska, providing us the means to grow our customer base and add employees. We currently have 20 employees in Omaha and continue to see exponential growth.”
Adjuvance Technologies, housed at Nebraska Innovation Campus in Lincoln, is another BIA recipient that’s experienced a surge in growth. After receiving a BIA seed investment in 2016, the company, which produces adjuvants that are added to vaccines to increase their effectiveness, stability and manufacturing efficiency, went on less than three years later to win a contract with the National Institute of Allergic and Infectious Diseases to engineer more effective flu vaccines. It followed that success in 2020 by raising the largest Series A venture capital round ever seen in Nebraska, a $20 million investment from Morningside Venture Investments Limited.
“After returning to Nebraska from California in 2013, it was my goal to start a biotech company in Nebraska,” said Dr. Tyler Martin, Adjuvance Technologies CEO. “The BIA programs convinced our private investors that the state was committed to entrepreneurship and building early-stage, innovative startups.”
From humble origins, Fox says interest in the BIA program itself has grown exponentially year after year, with many more companies seeking funds than are normally available. After expending all grants for 2020, he said, new opportunities will become available this July, with application guidelines available on his Department’s website.
“It’s a highly competitive program,” Fox said, “but we look forward to working with the next round of applicants and helping them hopefully make that huge leap with their business.”