UI duo's startup gets spotlight in state group's seasonal report

UI duo's startup gets spotlight in state group's seasonal report

Small wins. Those are what Amber Agriculture co-founder Lucas Frye said a startup needs in order to keep going once it's gotten off the ground.

It's easier for some. Frye and Joey Varikooty founded their startup in 2015 while at the University of Illinois, after they met at the 54.io, a three-day hackathon meant to help create and guide startup teams.

Varikooty, an undergradute engineering student at the time, had the tech — a wireless sensor that monitors moisture levels. And with a background in agriculture and working toward an MBA, Frye saw the application — grain storage.

In two years, the duo graduated, won the grand prize at the Cozad New Venture Competition and secured initial funding from the early-stage venture capital investment firm IllinoisVENTURES. In 2017, they were named the top startup at the Consumer Electronic's Show, pegged as the largest such trade show.

"It's a uniquely Illinois story," Frye said.

Their success has also landed them a spotlight in this spring's University Innovation Index, a seasonal report published by the Illinois Science and Technology Coalition that analyzes and gives insight on technology-based economic activity in the state.

The report found that Amber Agriculture is one of 942 startups founded in the past five years by faculty and students from Illinois universities. It's "the largest volume of startup activity since our survey began, and more than double the amount of the previous five-year period (2009-2013)," the report says.

That's because over the past decade, universities in the state have created and grown their own startup ecosystems by managing incubators, entrepreneurial hubs and early-stage funding like the UI's EnterpriseWorks incubator, UI LABS and IllinoisVENTURES.

And it's easy for Frye to point the finger at the UI as one of the reasons for their early success.

"It's because we came out of the UI ecosystem that we've had those small wins and we've been able to serve the market over time," Frye said. "And the biggest benefit by far has been the alumni network. There are four or five Illini founders that we talk to, and they provide feedback. They help us think of different steps to building out the enterprise."

But even with those resources, startups here have to rely on a much slower growth process than in Silicon Valley.

Andrew Singer, a UI professor and co-founder of OceanComm, which commercialized the first video-capable wireless underwater modem, said that a lot of the companies that get started, build and grow in Champaign-Urbana do so organically, "usually bootstrapping."

"You don't just go into a $5 million venture deal," he said. "You have to find how you fit into the larger business ecosystem; you have to find contracts with customers. You can't hire a lot of people without knowing what you're doing."

Despite the difficulty, Singer finds that, in the long run, having a slower process makes these new companies smarter. They have a lot more value to them, he said, rather than hype. Because of this, he doesn't find surprising the index's finding that 73.9 percent of the 942 startups have remained active in the past five years.

"We've been advocating that you shouldn't start a company until you have the business model to get to the next step," he said. "You shouldn't start a business until you have a pathway. And typically here companies spend a lot more time thinking about what they want to do and understanding how to do it. Whether you're venture-backed or not, you still have to figure out how to make money."

However, getting more money doesn't always mean Illinois gets another big tech company. Although nearly 8 in 10 startups that receive funding stay in the state, the index found startups that have raised more than $5 million are "significantly more like to be located outside the state" — about 61.8 percent of them, in fact. Higher-level funding just doesn't exist in the same way early-stage funding does.

Still, Singer believes universities in the state are setting new entrepreneurs up for success.

"It's great to see that more and more faculty and students are getting engaged in the entrepreneurship ecosystem," he said.

"We get more and more students that come here because of that ecosystem. It's a great sign of where we're headed."

The University Innovation Index by the numbers

942

Startups founded in the past five years by faculty and students from Illinois universities.

73.9%

The number of startups that have remained active in the past five years. Twenty-five percent are inactive, and another 1.2 percent have been acquired by other companies.

$877.5 million

Outside funding over the past five years that has gone to university-supported startups. That's triple the total from 2010-2014.

28%

Startups in Illinois founded by women, compared with 17 percent nationally.8 in 10 Startups that receive funding and stay in Illinois. But those that receive higher-level funding often leave the state.