CEDAR FALLS — The concept behind Red Cedar was to address a need: provide area startups with networks, resources, venture capital and a sense of belonging.
Other communities in Iowa had done this well, creating economic cultures that celebrate, include and support entrepreneurs. The elements existed, dispersed across the Cedar Valley through a variety of programs, initiatives, company grants and even private individuals.
These resources weren’t widely known by the majority of entrepreneurs. Instead, a large number of people with business ideas struggled to connect with advisers, resources and those who had walked similar paths.
To gain a foothold, Cedar Valley startups need “curated connections,” said Danny Laudick.
“If you’re developing a business idea and can connect you to an established entrepreneur, that’s incredibly helpful,” he explained. “If that entrepreneur will exchange emails or sit down with you to offer advice, even better. But after that initial connection, who makes sure there’s follow up? How do you determine if that was helpful? … Who’s job would that be?”
Nearly four years ago, Laudick and a group of other local entrepreneurs began exploring ways to provide that help. While attending a national business startup event, he and Trace Steffen, CEO of HowFactory, discussed the need.
“We realized we kept going to all these places where we were surrounded by other entrepreneurs,” said Laudick, who then worked for the Greater Cedar Valley Alliance and Chamber. “But here in the Cedar Valley, we were fairly isolated from that sort of environment. That sort of interaction isn’t built into the culture here.”
Their conversation expanded to include three more entrepreneurs. Together, they began identifying resources throughout the Cedar Valley — individuals, businesses and organizations with tools, information, funds and networks for startups. They also noted a general willingness to support local entrepreneurism, if given opportunities.
In assessing resources and talent, the group realized the metro area lacked coordinated access to resources and networking opportunities.
“There were entrepreneurs looking for a support system, and they didn’t know where they were,” said Laudick.
The five entrepreneurs decided to create the solution. They formed Red Cedar Cohort LLC, a nonprofit organization that would serve as the area’s startup catalyst.
Red Cedar started by offering startup events and opportunities and establishing Mill Race co-working space.
Using the former Cedar Falls Chamber of Commerce building at Main and First streets, Red Cedar provided shared space for existing and budding entrepreneurs to work individually and collaboratively. The company hoped the environment also might draw telecommuters, freelancers, business mentors and others.
“We wanted it to be a front door for entrepreneurs — to meet them where they are, literally and virtually,” said Laudick. “We wanted to create a beacon — a place those startups would feel at home.”
If the open workspace concept could foster collaboration and growth, the company and building names evoked the historic local energy sources, he added. “Red Cedar” was the original name of the Cedar River, while the city’s “Mill Race” once powered nearby businesses, according to the Cedar Falls Historical Society.
Red Cedar and Mill Race were intended to fuel a bigger goal, said Laudick: create a local culture that champions entrepreneurs and high-growth startups by “helping them learn faster and accelerate their growth.”
Red Cedar’s founders knew this was a tall order, he said. However, it took some time before they understood the full scope of their enterprise.
“We all had full-time jobs, and none of us were planning on actually starting this company,” he said. “However, we realized this was the best way to fulfill the vision we had.”
The founders figured things out as they went.
In return, Red Cedar gained insight into the elements needed to help the Cedar Valley entrepreneurial ecosystem thrive.
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“The biggest value we had was our ability to connect the institutions, cities, corporate partners and educators,” said Laudick. “In this area, there wasn’t much being done to put resources into early stage startups. We weren’t looking to start a business; we just wanted to solve the problem in the most effective way possible.”
By 2016, the success of Red Cedar’s events, strategic partnerships and co-working space helped the company move to the second floor of 200 State St. The new digs helped expand Mill Race’s physical space to offer more collaborative and individual work stations, meeting rooms and more.
This growth identified an issue: “It became clear that we needed someone dedicated to managing the growing, day-to-day needs of the company,” said Laudick, who became Red Cedar executive director in April 2017.
“I took the risk … because it made the most sense for me to do this,” he added. “It solved a problem and ensured we could help the people we wanted to help when we decided to create company.”
While Red Cedar has grown and evolved rapidly, its focus remains on public and private partnerships. Founding sponsors were the city of Cedar Falls, UNI Business and Community Services, Wartburg College, Hawkeye Community College and the Greater Cedar Valley Alliance and Chamber.
These partners provide the basis for resources like the Program Strategy, a startup roadmap that outlines the stages of concept and business development; and Regional Innovation Capacities, which explores the area’s intangible, tangible and business climate assets.
“We want to be a first contact for all stages for building a company,” said Laudick. “We have a structured path; we want to connect you with networks and get you connected to the right resources.”
This includes Red Cedar’s Regional Innovation Partnership, which works with organizations and businesses to maximize strengths and fill gaps.
“There are 15 capacities around innovation; there’s no one organization that can do all of those,” said Laudick. “Everyone plays a role. We’re here to be the connective tissues between all stakeholders and resources.”
In February, the company launched Red Cedar Seed Fund to selected provide high-potential, early-stage area startups with capital.
“If lack of seed funding were the main reason an up-and-coming idea or company couldn’t make it, that would truly be unfortunate,” said Ann Lyons, broker/owner at Oakridge Realtors. “We need to prevent that from happening.”
Initial investors are individual and corporate entities, including eight local investors and one from Des Moines.
During the next three years, the fund will divide $200,000 per year among up to eight startups. Selection criteria is based on business plans and needs.
Nick Evens, president of The Veridian Group Inc., believes the program will have lasting benefits.
“The job of a seed fund is to jump start an idea/product/service/entrepreneur that might not otherwise be able to fund the startup costs themselves,” said Evens. “Without seed funding, many companies we know today would not exist.”
In addition to capital, startups will be surrounded by a network of mentors and coaches, said Laudick.
“The Seed Fund provides companies with connection to a group of experienced, serial entrepreneurs who can provide advice, support and connections,” he said. “Our goal is to help these companies grow, and capital is just one of the components to help with that journey.”
The funds first recipients emphasize innovation. Terraoak (www.terraoak.com) focuses on renewable energy solutions and products. Its initial offering is a patented, smokeless cook stove that can convert heat energy to electricity. Meanwhile, Stratafolio (www.stratafolio.com) offers cloud-based commercial real estate asset management software.
“The Seed Fund addresses a gap we had identified in our region,” said Laudick. “However, the relationships are more important than the resources. Red Cedar has come this far because it pulls together cities, colleges, groups, organizations and businesses to build a network that’s still9 evolving.”