TECH

Fund makes first Iowa investment

Marco Santana
msantana@dmreg.com

A new investment fund in Iowa will pour $4 million into a Des Moines-based technology company, helping the business more than triple its workforce.

Next Level Ventures has raised $30 million to invest in Iowa companies since debuting earlier this year and will make its first bet on recruitment firm BirdDog, officials told The Des Moines Register.

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"We have certain criteria we look for within Iowa," said Craig Ibsen, managing partner of Next Level. "A minimum of $1 million in revenue and an experienced management team. This opportunity had that in spades."

Next Level jumped into Iowa's investment community in February. It's the only fund in the state so far whose investors qualify for state tax credits — up to 25 percent of their total investment.

Lawmakers set up the tax credits last year to help fill a gap in the state's investment community that lies between state aid for startups and investment from large venture capital firms.

The gap is often considered a financing "valley of death," which before resulted in companies leaving Iowa in search of investors or shutting down altogether. The state makes $8 million in tax credits available annually — enough to spark $32 million in investment each year.

Mike Colwell, an investment veteran who runs the Business Innovation Zone for the Greater Des Moines Partnership, said the announcement was good news for Iowa's investment community.

"It's nice to see a new fund join in and one that is leveraging those tax credits," he said. "There is a lot of Iowa money in that fund and it's beneficial to Iowans. It also creates more interest in Iowa as a place to invest."

Colwell, an experienced investor who helped organize and run the investment group Plains Angels, said the state has seen growing momentum from entrepreneurs who now try to find ways to stay in Iowa to build technology businesses.

That is the plan for BirdDog.

Todd Skokan

CEO Todd Skokan said the company will increase its workforce from about 27 people at the end of July to 90 by the end of 2016. He expects the investment to help the company hire developers, as well as sales people in different parts of the country for BirdDog's products.

The company's revenue has grown 60 percent since last year, Skokan said.

BirdDog started as a company that built online job boards for skilled tradesmen, primarily in the construction industry.

Skokan said more than 100 industry firms use BirdDog's software, including the Associated General Contractors of Iowa, Rasmussen Group of Des Moines and a division of Ford Motor Co.

Skokan, who joined BirdDog in April 2013, said the company expects to outgrow its office space soon. BirdDog seeks to about triple its office space to 17,000 square feet.

He said the company needs to add workers and space to stay competitive.

Next Level wants more investments like BirdDog, growing companies that do the "hard work" to build their clients and revenue.

"Other firms will have their day in the sun," he said. "We hope to be part of a few more this year."