innovationIOWA Weekly 9.30.21

"I dream all of the time. I want you all to know that ever since I've been a little boy, I dream about things that I want to do. I would dream about making money and dream about giving the money away; I dream about helping people."

John Pappajohn recounted the familiar story of the dream he had to make Iowa the most entrepreneurial state in the nation for the attendees of the Sept. 23 event honoring the 25th anniversary of the five John Pappajohn Entrepreneurial Centers.

Born in Greece and raised in Mason City, Pappajohn’s Depression-era upbringing required him to quickly learn independence and how to navigate adversity, instilling skills he would need for his entrepreneurial future.

After starting his own business out of college and later organizing Equity Dynamics Inc. and his venture capital firm Pappajohn Capital Resources, Pappajohn was prepared to act in 1996 when he first had the idea to start the centers.

The centers, located on campuses of five colleges and universities across the state, have since supported and fostered entrepreneurship in Iowa among students, faculty and community members with numerous programs, competitions and resources.

"Tonight one of my dreams came true," Pappajohn said, acknowledging Iowa’s strides in entrepreneurship over the last 25 years.

A total of $25 million in funding from John and Mary Pappajohn has supported the centers throughout their lifetime, and at Thursday’s event John announced to the more than 300 attendees that another $10 million will be donated to the centers.

"This money is to perpetuate the growth of entrepreneurs in the state of Iowa, help young people learn how to make a living, help them to become smarter," Pappajohn said. "I just expect that things will get better. We’ve come a long way, and another $10 million I think will help because we learned much by the time we got here."

David Hensely, executive director of the University of Iowa JPEC, announced the Iowa JPEC’s Venture Mentoring Service at the anniversary event, which is launching as a pilot program at each of the five centers this fall. A portion of the $10 million donation will support the program.

Hensley said in an interview with the Business Record that the Venture Mentoring Service will connect early-stage companies with a network of Iowa’s serial entrepreneurs, business experts and investors. The goal is to unite the five centers around the collaborative program and to scale it statewide in spring 2022.

"Because we're doing this through the five centers, let’s say there’s somebody in north-central Iowa who has a medical technology, they'll be able to connect to the network through the University of Iowa and our medical school, our medtech entrepreneur venture programs," Hensley said. "We'll be able to connect entrepreneurs from anywhere across the state to the best talent that we have access to."

Hensley said the centers will use a hybrid model, allowing them to widen their pool of mentors even if they are out of state. The JPEC mentoring program is based on the Venture Mentoring Service at MIT — Pappajohn center staff members received training this summer from MIT in preparation for the launch.

Among other highlights from the event were speeches commemorating the anniversary and honoring the Pappajohn’s legacy from IEDA Executive Director Debi Durham, former Gov. Terry Branstad and Gov. Kim Reynolds, who ended her remarks by signing a proclamation designating Sept. 23 as John Pappajohn Entrepreneurial Day in Iowa.

The nine finalists of the Pappajohn Iowa Entrepreneurial Venture Competition were recognized and received their awards, with Ames-based Skroot Laboratory Inc. winning the first prize of $40,000.

Skroot is a biotechnology company whose main product is a wireless sensor that aids pharmaceutical manufacturing, particularly in the area of cell and protein therapy development. Founder and President Nigel Reuel, pictured at right holding the check, said Skroot’s technology negates the need for manual sampling to check the progress of cell growth, as the process risks introducing bacteria and disrupting the experiment.

Reuel, who is also an associate professor of chemical and biological engineering at Iowa State, said after experience with the pain point as a grad student at MIT and doing related research with his students, he saw a need for Skroot’s technology that he couldn’t ignore.

Skroot entered the venture competition last year and received an honorable mention. The team has received federal funding from the National Science Foundation and others, but Reuel said the winnings from this year’s competition will help propel them forward in new ways.

"The type of funds that John Pappajohn provides are helpful in terms of doing things like customer discovery and being able to maybe expand our product line beyond what we're currently working on," he said. "I think also just the publicity and presence that it brings [helps] because we've largely run on a shoestring budget. But before Thanksgiving, we want to raise a bridge round, so we have an opportunity for others to take an equity stake in our company. For this first-time offering, this allows people to know who we are and have a stamp of validation, which is great."

Photo by Isaac Hackman Photography

Prior to the Pappajohn centers launching in 1996, entrepreneurship was not on the radar of many public and private organizations in Iowa. There were few educational opportunities, and resources were more focused on developing existing businesses and attracting new ones to the state.

"Even the term entrepreneurship wasn't really part of the standard vernacular," said David Hensely, executive director of the University of Iowa John Pappajohn Entrepreneurial Center. "On most college campuses there might have been a class or two in entrepreneurship, but there certainly weren't full academic programs and co-curricular programs."

Hensley left the state after graduating from the University of Iowa in the late 1980s because of the lack of opportunity at the time. But upon his return, some recognized the need for an interconnected ecosystem of resources in order to support entrepreneurship.

"People started to realize very quickly that it can't just be about trying to attract businesses to Iowa for economic development. We have to grow within, we have to start to build to grow. … We needed something to jump-start the ecosystem, and it was the creation of these centers," he said.

The centers’ impact started with educating students and telling them that entrepreneurship was an option, and over 25 years has evolved into the ecosystem Iowa knows today.

Hensley said as they have grown, the entrepreneur and startup communities in Iowa have built on what John Pappajohn started with the centers. The development of incubators and accelerators across the state is one way entrepreneurs are using the existing ecosystem to move it forward.

The other marker of success of Iowa’s entrepreneurs and the JPECs is that "high-potential" companies are starting in or coming to Iowa, Hensley said.

Attendees of the Pappajohn centers' 25th anniversary event heard the story of an entrepreneur from each of the five centers, including Spencer Stensrude, Executive Director of Ag Ventures Alliance. His association with the NIACC Pappajohn center stretches back to his middle school years when he had an idea but no one else to help him with it.

He has attended the NIACC JPEC’s Youth Entrepreneurial Academy program, participated in the business plan competitions and been a mentor to other businesses.

"What all of these things did, though, was to cement my belief that there has never been a better time in the history of humanity where you have more opportunity to be successful. … As long as you are in it and try, you have a better chance than you ever have before," Stensrude said in his speech Sept. 23.

Hensley said 25 years ago, Iowa was largely seen as an agriculture-focused, "meat and potatoes" economy. Now agriculture remains a foundational industry, he said, but with more influence from the entrepreneurial community.

Ag Ventures Alliance currently has 30 startups in its portfolio that all tie back to helping increase farmers' profitability.

Stensrude said in an interview that throughout his five years working for a venture capital firm, he has seen Iowa growing because of the state’s "natural advantage" in the industry with a presence from many major ag companies and strong universities.

In a sector that may seem overwhelmed with big companies, startups have speed and agility on their side, Stensrude said.

"At some point, large companies just can't move as quickly, and by the time you might get a new product approved and start working on it, a small team might already have the product built and being used by customers," he said. "This isn't unique to agriculture, but small innovative teams have an advantage in building new technology."

Looking forward, AI, cryptocurrency and blockchain are technologies Stensrude said we will see more of from agtech startups. He also hopes to see development of venture capital opportunities continue that will in turn support Iowa’s startup ecosystem.

Ahead of the Secure Iowa Conference in West Des Moines on Oct. 6, the Business Record spoke with the event’s keynote speaker Dustin Carmack, a technology fellow at the Heritage Foundation, about the changing cybersecurity landscape, the need for better information sharing between the public and private sectors, and how the state of Iowa and its businesses can better prepare for the possibility of a breach.

From ransomware attacks focused on gathering intelligence like the one on software company SolarWinds to ones targeting supply chains as in the Colonial Pipeline or JBS Foods attacks, all industries are vulnerable.

The conference comes on the heels of the recent hack of Iowa-based grain cooperative New Cooperative Inc., whose software powers about 40% of grain production and the feeding schedule of 11 million animals. Among other information, hackers of the Russian-linked BlackMatter group took source code for the co-op’s SoilMap product used in soil testing and mapping. Carmack said having both a prominent position in a supply chain and novel technologies make an organization attractive to ransomware groups.

"Technology has done amazing things for yields and for production, but also it shows you when everything gets connected [it] eventually has massive vulnerabilities to understand," he said. "We're going to have to do a better job at really teaching folks up and down the line about maintaining and building good protections into their systems in the front end."

The agriculture industry is not typically seen as a common victim of cyberattacks, but with the New Cooperative hack, that could be changing.

"People think of banks, they think of the financial sector, they think of the government, but they don't think of your everyday farm system, and the thing is these commodity markets are rich. There's a ton of money and trade that moves through the systems," Carmack said. "Secretary [Tom] Vilsack, the head of the USDA, talked about how we need to double down on all of these different ag sectors, including these co-ops and others, and JBS, in the case of the meatpacking industry, need to do the same type of rigor that we’re doing for the pipeline, that we’re doing for the grid and electricity-wise."

Fending off cyberattacks starts with cyber hygiene, Carmack said. Adapting password management or eventually going passwordless and integrating multifactor authentication are strategies he said need to be applied across industries.

Secure Iowa is free to attend and registration is open until Oct. 5. Walk-in registrations are also welcome on the day of the event.

This Q&A has been lightly edited and condensed for clarity.

Can you summarize what is unique about the recent ransomware attacks seen in the U.S.?
In terms of the Colonial Pipeline attack, that emanated out of Russian territory from a ransomware group that had popped up within the last year called DarkSide. ... A lot of these ransomware groups have really taken off. It’s become a profitable business and it's almost ransomware and hacking ability-for-hire. An everyday hacker or even a rudimentary cyber-capable person could take this off the shelf and be able to use this type of software and ransomware to be able to do attacks. A lot of times you don't notice [these attacks] on an everyday basis because they generally go after libraries, small townships, small hospitals, schools, folks that either possibly have a lower level amount of cyber insurance, so they'll just go ahead and pay the ransom, and usually the amounts are relatively lower amounts so it doesn't raise a lot of eyebrows.

But Colonial kind of changed the paradigm a little bit in terms of the ransomware game in the sense that [DarkSide] attacked a pipeline that provided 45% of the East Coast, oil and gas up the seaboard, and in that case, they attacked the company's actual information infrastructure, not the operation technology. But in that case, they were worried that it could bleed over because once they're in their systems, you're not sure, and a lot of times there's very close interoperability between those systems. In that case, Colonial shut that down and they paid the ransom.

Why are more of these larger-scale attacks happening? What has changed in the cybersecurity landscape?
This is kind of where we look at the difference between a country's espionage capability, and then trying to gather intelligence on U.S. economic interest, or U.S. government business versus straight-up economic exercises. But with SolarWinds, certainly what raised a lot of eyebrows there was — and this is considered essentially a blind spot in the United States — we have a very open network. China has a great firewall, very difficult to penetrate, and they will try to keep really tight controls over their civilization and population, as it relates to internet activity. A lot of these countries are trying to almost close their digital borders. The U.S. is very wide open, it's great for us, technologically, it's very great for us economically and innovation-wise. But in the case of SolarWind, this was a campaign that I think it's been reported that possibly thousands of people with the Russian government have worked on this campaign and built it over a long period of time and they simply took advantage of using a domestic U.S. company to emanate the attack. So that's where kind of the game has changed.

You propose that responses to ransomware attacks can be improved if the public and private sectors work together. What could this partnership look like?
This is a debate that's really raging right now. There’s differences between the Senate and the House a little bit on how they want to tackle this, but I think there's bipartisan interest to look at it. This is something that we just don't know what we don't know, and the fact is, there's a lot of unreported ransomware attacks, and then people just pay out. The cyber insurance industry is under consistent duress now because of the scale of these attacks.

In the case of breach notifications, what the Senate wanted to do, they said you must report [an attack] I think it was between 24 and 72 hours. A lot of times, though, depending on the size and scale of your organization ... it may take a few days, and you may not have a good, accurate read on what’s exactly happening. So you want to give some flexibility, but you also don't want to allow companies off the hook in the sense that they are not reporting incidents to law enforcement [because] they need to be able to spread the word to other organizations to be aware of for future attacks. The concern from businesses in the past has been "What about our proprietary information, and are we going to get sued for this because customers are going to say you lacked cybersecurity and caused me some kind of harm," so we need some kind of liability protection. ... I don’t think the government needs any more information than they absolutely need. What they really need is the technical detail. All of this is really helpful information for [the Cybersecurity and Infrastructure Security Agency], and the FBI and others to start to essentially build dossiers on understanding where these different enemies and the syndicates are operating from.

How can the state of Iowa and businesses and organizations of any size prepare for a potential cyberattack?
The thing is it’s more opportunistic for a cybercriminal to go after smaller organizations, public administrations such as a city, hospital or school for lower amounts of money but consistently get paid and not raise as many alarms, and that's how they've been operating. That's why every organization or school needs to have an understanding of what that rainy-day environment looks like and they need to do a good job of building relationships with their state and federal entities. What we also have to understand is that the FBI field offices that are based in the region, they will have an army that can go in and help you per se on a rainy day, and they can do a lot better, provide you a lot of resources, and can be a very helpful cog in the wheel so that relationship needs to be built in many ways ahead of time to understand who to call, and have the opportunity to kind of keep it constant engagement with them.

I think one area that I've been focused on is looking at how we are building our cyber workforces. There are things that can be done from just even the ability to press into our local school systems and our universities the opportunity to build technology. And the type of technology degrees. A lot of these cyber jobs, you don't need some kind of cyber or computer science degree, you need to have the skill sets to tackle tough problems, and there's tons of opportunity, and there's tons of money to be made because every business needs it. We've got a federal workforce, that’s one thing I'm going to talk about too is the need to diversify our cyber workforce and understand what the impact of that is long term if we don't start getting ahead of that ball, especially those other countries and nation states that are investing heavily.

From the National Guard standpoint, units in some states have actually defined cyber units now, and so one of the opportunities there is we diversify the federal workforce, and in the case of more local and state-based cyber attacks or campaigns, the ability of a governor or law enforcement to call up essentially people that may be working for local companies that have cyber backgrounds to be called up to respond in a case of a lower-level cyber incident I think would be huge.

You were chief of staff for former Director of National Intelligence John Ratcliffe before coming to the Heritage Foundation. What were your takeaways from that experience?

It was an amazing opportunity and a window into how vast and intricate our government is, but [also] how we ought to be working from the same song sheet and how there are still challenges and silos. ODNI [the Office of the Director of National Intelligence] was created, especially in light of 20 years since 9/11, it was created to knock down silos to be able to tackle the threat of terrorism. I think in many ways now, we need to make sure that we're knocking down any silos, and I think there's really good people trying to do this. But my worry always is that at times, [action] in the interest of doing something bloats the bureaucracy versus actually putting the lead on target of the problem. That was one thing that I saw, that we were trying to do a good job of breaking down those barriers, removing unnecessary bureaucratic structures, and giving the opportunity to get good counsel and wise decision making in a more quick fashion.

IN THE NEWS

LightEdge Solutions acquiring Cavern Technologies
Des Moines-based LightEdge Solutions announced last week that it will acquire Cavern Technologies Inc., the largest provider of colocation data centers in Kansas City. A colocation data center serves as a third party where businesses can rent space to house their servers and networking equipment. Cavern’s rental options vary so customers from midmarket businesses to enterprises can use the space. The acquisition is the first for LightEdge under its new ownership by GI Partners. "This acquisition unlocks new opportunities for us and further positions LightEdge as a leading infrastructure provider in the Midwest," LightEdge CEO John Clune said in a release. "We are actively looking to expand our presence throughout the U.S. and are excited about the prospect of future acquisitions." Four of LightEdge’s seven data centers are in the Midwest, including one in Kansas City.

Devs Do Good hosting charity hackathon
Devs Do Good, a nonprofit founded by Valley High School student Connor Fogarty, will host a charity hackathon in West Des Moines on Nov. 6. Students interested in technology and computer science are invited to attend and partner with local nonprofits to create solutions using technology sourced and funded by Devs Do Good. The nonprofits will each pitch a project they need help with and students will select one to work on throughout the day. Devs Do Good is seeking three additional nonprofits to participate in the event. For more information and to register, visit the event page.

ONE GOOD TECH READ
Startup aims to help landlords reward reliable tenants

WALL STREET JOURNAL: Do you remember wishing you would get paid to do your homework? Well, several startups are successfully pursuing the adult version of that by financially rewarding renters for things like paying rent on time and referring others to live in the same apartments. Watson Living Inc. recently raised a $2.5 million seed round and its counterpart Bilt Technologies Inc. has announced a $60 million growth round. The startups are popping up partly due to the overall rise in rent — median asking rent reached a record in the second quarter of 2021 at $1,228. Co-founder and COO of Watson’s Living Andrew Firestone said these startups are useful to landlords who are attempting to "build a brand." While the businesses could redefine the typically transactional relationship between tenants and landlords, its beta customers are concentrated in only "up and coming" metro areas and skepticism remains about long-term viability.

IN OTHER NEWS: (DES MOINES REGISTER) A closer look at the hack of New Cooperative Inc. and implications for agricultural supply chains; (SCIENTIFIC AMERICAN) Quantum computers could one day redefine what a computer means to us, but the term may go in one ear and out the other — find out once and for all what they are and why they matter; (NEW YORK TIMES) On Tech columnist Shira Ovide questions whether Big Tech companies' wealth actually hinders innovation for others.

By Michael Crumb | Senior Staff Writer

The Des Moines Area Regional Transit Authority is seeking public input on proposals for its future as the agency considers how it can best serve the community and its evolving needs.

The Business Record sat down recently with Luis Montoya, the chief planning officer for the agency that serves 11 member communities and Polk County, and Chief External Affairs Officer Erin Hockman to learn more about the proposals and what DART has planned as it reaches out to engage with the community about the proposals.

What’s important to consider is who rides DART, the reasons they ride DART, where the busiest routes are, where more service may be needed and areas where the agency can possibly transition to alternative, more cost-effective methods of providing service. Continue reading

By Kate Hayden | Staff Writer

BrokerTech Ventures outlines its mission through five "Towers of Operation": the BrokerTech Ventures Accelerator, early-stage investments, innovation, capital and media/communications. The company is the Business Record’s 2021 innovationLEADER Award recipient.

BrokerTech Ventures partners with 13 brokerage firms to serve startups designed to address specific needs of insurance agents and brokers. The team launched the inaugural five-week accelerator cohort virtually in 2020, graduating 12 international broker-centric startups. The accelerator offers more than $500,000 in seed funding, which is up to $50,000 each to accepted startups. In December, BrokerTech Ventures announced its first international partnership with Insurtech Israel, co-founding the Israeli InsurTech Accelerator in Tel Aviv using BrokerTech Venture’s program as a model.

BrokerTech Ventures is led by co-CEOs Dan Keough and Mike Victorson, chief operating officer Susan Hatten, executive director of the accelerator John Jackovin and executive sponsor Ellen Willadsen. Below, Hatten shares the organization’s approach to leadership. Continue reading

BUSINESS RECORD CALENDAR
UPCOMING EVENTS

Oct. 5: Iowa G2M Accelerator Pitch Day
The 2021 cohort of Iowa G2M’s accelerator program will present their pitches to potential investors and strategic partners in a virtual program on Oct. 5. The Iowa G2M Accelerator is designed as a "second stage" program supporting high tech startups that are developing innovative products and have participated in another accelerator or similar support program. The accelerator targets industry sectors such as bioscience, ag tech and advanced manufacturing.

The following companies will be presenting:
CartilaGen is developing a medical technology, exclusively licensed from the University of Iowa, for the prevention of post-traumatic osteoarthritis.
Classroom Clinic is developing a telehealth platform and provider network to provide students in rural school districts with improved mental health services.
FBB Biomed is creating blood and saliva tests to predict critical health outcomes.
Mazen Animal Health is developing orally delivered animal vaccines produced in corn.
Eitri Automation (formerly Sushi 3D) is developing a service platform for rapid and cost-effective design, production, and delivery of machined 3D prototype parts.

WHEN: 3-5:30 p.m.
WHERE: Virtual
The event is free but registration is required.

View our full calendar to see the latest curated business and community events, or suggest an event.

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