The State Small Business Credit Initiative (SSBCI) provided an economic boost to states, when it launched in 2010.

After its mid-pandemic revival, as part of the American Rescue Plan Act, states got a much-needed lifeline to help thousands of small businesses stay afloat. State economic development offices use their portion of SSBCI funds to support SMBs in their areas with technical and financial assistance and even investment.‍

Now, many states are exploring the use of SSBCI funding to turn their regions into entrepreneurial ecosystems.

Specifically, more states are looking to create new startups using SSBCI matching dollars.

Why more states are considering using SSBCI dollars to launch startups at scale

Startup development was steadily on the rise in the two decades preceding the global pandemic, Federal Reserve research found. Then, COVID-19 halted that trend.

Businesses at all stages struggled, and there was little appetite from venture capital and private equity firms to invest in new companies, given the volatility at the time.

After the pandemic, applications for Employer Identification Numbers (EINs) to start new businesses rose significantly.

However, that startup boom has since slowed as well, according to recent Crunchbase research.

The Center for American Progress Senior Director, Economic Policy Brendan Duke wrote how a rise in entrepreneurship could “reverse decades of stagnant business formation, generating even more job creation, productivity growth, and wage growth over the coming years.”

It remains to be seen whether startup development will pick up again in 2025 and beyond.

What is clear, though, is that an increasingly popular method for building new companies is through venture studios, like those being developed at many corporations and universities.

But it’s not just corporations and universities creating studios. State agencies are also building them to drive growth and transformation in their areas.

One state in particular — Arkansas — is actually leveraging SSBCI funds to create multiple companies to solve for the longstanding challenge of attracting venture capital to their state.

Now, other state governments are taking notice of Arkansas’s success with exploring business concepts and launching new startups and want in on the act.

Fieldbook, a first-of-its-kind venture studio (i.e., the first U.S. Treasury-approved one) in Arkansas, was built by High Alpha Innovation using SSBCI matching dollars:

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• Arkansas recognized an opportunity to turn Arkansas into an entrepreneurial ecosystem and build new companies that tie into the state's most important value chain — retail — as opposed to solely investing in existing early-stage startups.

• The Arkansas Development Finance Authority (ADFA), which administers SSBCI funding in the state, partnered with High Alpha Innovation to discuss the parameters for venture studio creation.

• After conversations with ADFA leaders around the requirements to build startups using SSBCI dollars, we secured initial operating capital from VentureWell, backed by the Walton Family Foundation.

• Every dollar invested by the Foundation was matched by the state of Arkansas, thanks to the SSBCI. As additional Limited Partners are brought onboard, their investment is matched by the federal government. This allows for additional startup creation and follow-on investment in launched startups.

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In short, Arkansas has set the stage for transforming the state into a startup hub that will launch several technology companies tied to challenges facing Retail Value Chain stakeholders.

This ongoing startup creation through Fieldbook aims to attract VC investment and top talent to join new businesses launched and cultivate a stronger culture of entrepreneurship in Arkansas.

"You can't invest in what doesn't exist,” said High Alpha Innovation Director Ryan Larcom.

“Many states struggle with identifying startups that seem like strong bets to experience high levels of growth in terms of product development, employee headcount, customer acquisition, and, revenue," Ryan added. “Using SSBCI dollars to build their own startups empowers states to explore an untapped avenue for driving economic growth.”

‍How to replicate Fieldbook’s SSBCI-backed venture studio model in your state

High Alpha Innovation's venture studio playbook used to create Fieldbook can also be leveraged by other states looking to launch startups that address big problems.

All that's required to get started is to work with a venture-building partner that has strong expertise and experience with building studios that can help them:

1) Explore potential 'right-to-win' opportunities

Your state has a superpower, according to Fieldbook Managing Partner Josh Stanley.

"Whether it's hospitality, manufacturing, agriculture, or another sector, you can better support the industry that is deemed the economic engine and driver for your region by building a venture studio with SSBCI funding and launching new companies at scale," said Josh.

Through a venture studio, Josh added, your state can identify pain points for existing businesses in your 'right-to-win' industry, then explore tech startups you could create to address them.

"The Retail Value Chain is the biggest sector in Arkansas," said Josh. "We recognized a unique window of opportunity, with SSBCI funding made available for venture building to develop new software that could strengthen operations for organizations across the Retail Value Chain.

"With Fieldbook, we're building startups that will address big market gaps and issues."

2) Become a lightning rod that attracts top talent

Venture studios can bring in hundreds, if not thousands, of new jobs to your state over time.

Fieldbook's goal is to launch multiple Retail Value Chain SaaS companies in Arkansas in the next few years.

With those startups, Josh said he fully expects them to contribute to economic growth — not just through software sales but also by attracting top workers to the state.

"Competing with well-known startup hubs like San Francisco, Austin, New York, and Boston used to be a fantasy for other states, especially ones in the Midwest and South that aren’t considered ‘hot’ tech-development scenes," said Josh.

"Now, thanks to SSBCI matching dollars,” Josh noted, “regional and city leaders in other areas across the U.S. have the chance to establish their states as tech powerhouses."

It's not just a high quantity of employees states can attract with SSBCI-backed venture studios. It's also a high quality of workers, including executives who become founders at these companies.

High Alpha Innovation specializes in finding right-fit founders. Our philosophy?:

If you allow founders to focus on building their products and serving their customers and eliminate all distractions that can prevent them from moving their businesses forward, their odds of success short term and scalability long term grows immeasurably.

"The ideal approach is to invest the initial capital put into a studio into people,” said Ryan.

“By onboarding program managers, analysts, and other specialists, they can act as fractional experts who can be 'applied’ across multiple startup concepts,” Ryan continued. “This allows a studio to move through venture-building milestones faster and get to higher valuations faster."

3) Get VCs interested in backing their startups

The result of implementing a venture studio model with SSBCI funds is the launch of several companies that aim to solve big problems in the right-to-win industry in question.

And this is where the flywheel effect really sets in motion. Building several investible startups generates more outside capital interest. This, in time, yields more startup exits (IPOs, M&A, and the like).

And those exits lead to more money states can use to develop and launch more new companies and create new jobs.

Transforming into a top entrepreneurial ecosystem using SSBCI funding

Fieldbook is currently evaluating novel business concepts, the best of which will ultimately become new, potentially groundbreaking startups that benefit Retail Value Chain companies in Arkansas and beyond as well as their customers.

Leveraging the venture-building playbook High Alpha Innovation has used for corporations and universities, Arkansas can ensure the state is mentioned in the same breath as the startup hubs above and considered a premier place for tech talent to take on interesting work.

All the state had to do to put itself in this position was reallocate some of its SSBCI dollars to back the creation of new companies — ones that could help strengthen its entrepreneurial ecosystem.

"There's a convergence of unmatched expertise, resources, and entrepreneurial support in Arkansas right now, setting the stage for us to maintain our position on the Retail Value Chain throne for decades to come," Josh explained.

The same can be said for your state and its right-to-win industry — whether its manufacturing, energy, construction, or another sector — when you work with our venture-building experts and stand up a venture studio of your own.