Iowa Startups Built the First Computer in a Basement. Now…

The Proving Ground of Innovation

That statement needs to be explained; wasn’t ENIAC in 1945?? Some say Charles Babbage created the concept of a programmable computer in 1822. This is one that doesn’t make the articles of the history of the computer, and it should.

Between 1939 and 1942, in the basement of the physics building at Iowa State College, John Vincent Atanasoff and a graduate student named Clifford Berry built the world’s first automatic electronic digital computer, the Atanasoff–Berry Computer (ABC). They did not patent it and so decades later a federal judge had to settle a lawsuit by ruling, as the court record puts it, that “Eckert and Mauchly did not themselves first invent the automatic electronic digital computer,” Iowa invented the machine the entire startup economy runs on and then declined to mention it.

If you want one anecdote that explains both Iowa’s genius and startup ecosystem’s marketing problems, you just read it.

I bring this up because a group of people in central Iowa decided to spend their time studying my book, Startup Ecosystems: Understanding Why Startups Thrive and Ecosystems Fail, in a new regional study group hosted by Tej Dhawan of the Plains Angels investor network.

I do these assessments city by city; I have written deep dives on Kansas City, Houston, and Las Vegas, and I am genuinely interested that Iowa is the region that picked up a book whose arguments tend to be critical. Most places read startup books the way founders read pitch templates, hunting for the magic slide. Iowa picked up the one that says we’re doing it wrong and then scheduled meetings to work out what’s best. Then, Iowa announced an innovation-forward policy that will transform the role of universities. This has my attention so let me encourage that Iowa should also have yours.

Iowa’s Problem Is Not Theater, It Is the Opposite of Theater

Most cities mislead about innovation by overclaiming it. They stamp the word on the office park, the strategic plan, and the mayor’s brochure, and they hope nobody checks the SEC filings. I wrote a book about that reflex because it’s important to understand how hype indeed can cause outcomes but it can also drive disappointment in the mismatch. Regions of the world need to be careful of saying they’re tech friendly, innovative, or entrepreneurial, because that lacks context.

Iowa does the opposite, which is rare and, frankly, is an expensive path. At least, historically; Iowa builds the company, banks the exit, hires the engineers, and then says nothing because bragging feels rude. Tej Dhawan named the cost of that habit in the Business Record, across the state, “a perception still exists that entrepreneurs don’t have a real job.” Diana Wright, who works alongside him in the Iowa Startup Collective, put it even more directly in a podcast conversation with Midwest reporter Robert Leonard, about Iowa’s humility, noting that founders’ own friends often “didn’t even know those businesses were that successful.” When a region keeps its wins a secret, the next would-be founder never gets the proof that staying and building is a sane decision. Survivorship is a signal and Iowa tends to keep the signal in a drawer.

So yes, this is a positive piece, and here is why I can write one honestly while critically: Iowa does not have to invent an innovation story. It has to stop apologizing for the one it already lived. That is a far better problem than the one most of my clients have, and I would trade their problem for Iowa’s any day of the week.

The Recent News Is Good; Aerospace News Is a Test

If you are an investor sizing up where to put money, the last few months of Iowa news read well. Capital is forming, institutions are launching, and the people running them are saying the right things instead of billboard slogans. Liz Keehner, a partner at Next Level Ventures and president of the Iowa Venture Capital Association, has been direct about both halves of the story. In innovationIOWA’s coverage of Next Level’s third Iowa fund, she described a stubborn “gap of companies when they get ready to scale and they need that first Series A round.” And in her Q&A with America’s Cultivation Corridor, she described the potential, “the introduction you need is almost always one to two connections away from you.” Put those two quotes side by side and you have the entire Iowa thesis on one page. The connective tissue is excellent, but the growth-stage money is thin.

Close the second and the first compounds.

The most strategically loaded recent news is aerospace. NewBoCo has been chosen to lead ecosystem development for the new Iowa Aviation Technology Center, a regional effort to turn Cedar Rapids’ aerospace heritage, from Collins Radio to today’s Collins Aerospace, into workforce, innovation, and actual company formation. Eastern Iowa Airport director Marty Lenss framed it as the region choosing “to take ownership of our aerospace roots,” and the stated ambition is to make Iowa a global leader in aviation technology. This is great… we should also want Iowa’s leadership to understand what they just signed up for, because aerospace innovation runs through universities and federally funded research, and that is the single most broken machine in American innovation policy.

I have written three pieces on exactly this, and they should be required reading before any civic innovation plan. University tech transfer is built to fail founders; in Universities Taxing Innovation Instead of Commercializing It we find that roughly two dozen universities on the planet make a fortune licensing research IP, and everyone else is running a friction machine that calls itself a partner. Fixes to this are being explored, and the private sector tends to know what should be done, with things like pre-negotiated Master Collaboration Agreements so that joint research between the University of Iowa and Iowa State does not require a from-scratch IP fight every single time two professors collaborate. Commercialization is a transaction, while a startup is an organizational, behavioral, and market process, and treating the first as if it were the second guarantees mediocrity at both. Iowa’s aerospace ambition is real; whether it ships companies or just patents depends entirely on whether the universities involved decide to strip friction out of IP instead of taxing it.

With that criticism laid, let me turn our attention to the university development put forth by the state of Iowa, because that last paragraph isn’t an assessment of Iowa explicitly, it’s a generalization of what governments need to recognize about hard tech, deep tech, and tech transfer in their universities and research. It isn’t working as well as it should.

Iowa’s legislature just took a swing at the capital half of university challenges. Government relations attorney Jacob Schrader and startup lawyer Nick Bushelle report on Dentons’ Soapbox, Iowa Senate File 2453 would require Iowa State, the University of Iowa, and the University of Northern Iowa to invest at least one percent of their foundation-managed endowment assets into state-certified innovation funds. The three institutions hold more than $3.5 billion in endowment assets, and the non-partisan Legislative Services Agency estimates the bill would route roughly $39 million into Iowa innovation funds, all of which are already required to invest in Iowa-based startups. The bill keeps donor-intent and fiduciary protections intact, and while it awaits the Governor’s signature, it would take effect at the end of this year. Liz Keehner, on LinkedIn, framed exactly why this is the right kind of policy: “Iowa’s public universities produce strong research and talent. At the same time, university endowments are investing in out-of-state venture funds, backing innovation in other regions instead of Iowa.” Her conclusion is the governments officials should tattoo on the inside of their eyelids: “If we want to be competitive, we can’t afford to keep exporting our innovation, talent, and capital.”

This is what capital formation as policy architecture looks like when it is done well; not a government fund pretending to be a venture investor, but a structural redirection of capital that already exists to where it is more appropriately and meaningfully applied. It is the policy complement to the IP fix; one unlocks the science, the other reallocates the money that should back it into the local and sector specific investors that support entrepreneurs.

A Constellation, not a City

Iowa’s appetite for risk is not a tourism slogan; it is a competitive asset that the rest of the country too rarely hears about because the press is too localized. The computer story above is the headline, and the rest of the catalog backs it up. The Gazette’s “Curious Iowa” series runs through it: sliced bread, the literal yardstick of innovation, came out of Davenport, where Otto Rohwedder lost his original designs to a factory fire and spent ten years rebuilding them, which is founder grit denominated in stubbornness rather than dollars. George Nissen invented the modern trampoline as a University of Iowa gymnast and filed more than forty patents in his life. Christian Nelson invented the Eskimo Pie in Onawa. Wallace Carothers of Burlington invented nylon. George Gallup of Jefferson invented scientific polling and named it after himself, which is, I think, the least Iowan thing any Iowan has ever done. John Froelich built the first practical gasoline tractor in Waterloo and founded the company John Deere later bought. Pinterest founder Ben Silbermann grew up in Des Moines. A state that produced the computer, the tractor, scientific polling, and a multibillion-dollar social network is not an emerging market.

It is an established one with a publicist problem.

Geographically, Iowa is not one ecosystem, and it is a mistake to plan as if it were. Des Moines is the capital-city core, dense with insurance and financial services and home to most of the angel and venture infrastructure. The Cedar Rapids and Iowa City corridor pairs an aerospace and manufacturing base with a major research university. Ames is an agricultural-science engine wrapped around Iowa State and its research park. Each has a genuine identity. The danger is treating them as three towns competing for the same scarce attention rather than three nodes in one network, which is the exact failure we describe in How Startup Ecosystem Builders Start Ecosystems.

The Economy, and What Ecosystem Should Actually Do in Iowa

Iowa’s economy is productive and diversified, and it is underleveraged for startups. I use the word productive on purpose. Iowa is the second-largest agricultural exporting state in the country, and as Liz Keehner noted to the Cultivation Corridor, nearly one in five Iowans is employed because of agriculture and ag-related industry. Add a financial-services and insurance cluster in Des Moines, an advanced-manufacturing base, a bioscience sector, and the Cedar Rapids aerospace cluster, and Iowa has something most second-tier ecosystems simply do not: real anchor employers, in real sectors, that give a potential founder somewhere to land if the venture dies. That fallback is what makes the decision to take a risk a rational one rather than a reckless one; explained in Startups Draw Talent and Opportunity to Cities, anchor employers and startup ecosystems are two gears a city has to run at the same time.

Government’s role in Iowa is mostly designed correctly, which is not a sentence I write often. The Iowa Economic Development Authority runs an Innovation Continuum with Proof of Commercial Relevance grants, a Demonstration Fund for market-ready technology, an Innovation Fund Tax Credit, and Seed Investor Tax Credits. The smartest piece of it is InnoVenture Iowa, a publicly capitalized co-investment fund that, by design, only invests after a startup has already secured a private lead investor. That structure is right; it means public money follows private validation rather than substituting for it, which is the difference between capital behaving as a signal and capital behaving as a gift.

The honest caution, and the IVCA itself has raised it, is that an ecosystem leaning hard on tax credits and public co-investment is leaning on development capital in a job that calls for risk capital. Government’s job is to remove friction and de-risk the edges, not to be the venture market. Iowa mostly gets this; it just needs more genuinely private risk capital sitting next to the public stack.

As for notable companies, Iowa’s roster is a Fortune 500 list hiding behind good manners. Principal Financial Group, Casey’s General Stores, John Deere’s tractor operations in Waterloo, Vermeer in Pella, HNI, and the agricultural genetics rooted in Pioneer Hi-Bred anchor the legacy economy. On the venture side, Dwolla pioneered digital payments out of Des Moines years before Venmo; Workiva grew into a public software company from Ames; Roboflow, co-founded by Iowa’s Brad Dwyer, became a serious computer-vision platform; and exits from Harris Vaccines and Smart Ag recycled founder wealth straight back into Iowa’s ag-innovation pipeline. The companies exist, the story connecting them does not, and that is a fixable problem.

Startup Ecosystems, Pointed at Iowa, in Six Parts

Here is how each one lands when you aim it at Iowa.

Part One of the book Startup Ecosystems, the lie of innovation, mostly misses Iowa, and that itself is worth noticing, because Iowa does not run innovation theater. Iowa, in fact, might need a bit more theater. Where it does land is Chapter Five and our work on universities and the commercialization myth; Iowa’s research universities produce genuine science, and the open question is whether they restructure IP to let it become companies or let it age in patent portfolios.

Part Two of the book tends to be important everywhere because it covers the things we refuse to distinguish; the importance of distinction in incubators vs. accelerators, new businesses vs. startups, angel investors vs. business investors, and so forth. This is Iowa’s strong section; it has real anchor employers and does not generally confuse startups with small businesses. The opportunity comes to light later in what we cover in this part; risk capital versus development capital, because Iowa’s instinct under scarcity is to reach for public and tax-credit dollars. The proposed university policy is a step in the right direction, pushing funds back into private sector allocations where research is further encouraged (or pressured) to commercialize into companies.

As though the end of Part Two flows into why I wrote Part Three, capital is a signal not a gift, Iowa helps us understand why the clearest near-term opportunity is in fixing expectations of capital allocation; capital naturally follows demonstrated value, and Iowa’s discipline around capital efficiency is exactly the founder behavior that pulls outside money in once the local Series A gap closes. When that process is interfered with by regulation, public funding, or wishful thinking, startups actually suffer because the capital allocated is misleading and misrepresenting value created. Fixing the struggle founders claim in finding capital, isn’t a matter of making it more publicly available, it’s addressing the infrastructure, ecosystem, and market gaps that keep startups from demonstrating that value and drawing it in.

The next part of Startup Ecosystems reinforces this, and it seems echoed in Iowa. When ecosystems fail structurally, it shows up as the regional illusion (such as “we’re a tech economy!” when you’re not); Iowa founders relocate at the growth stage not because they want to but because that capital gap remains and it can only be overcome by fixing the ecosystem in the context respective of the problem to address; not, handing out money.

And that brings us to what I’ve lightly touched on throughout the article so far, that Iowa is known to Iowans but not sufficiently to everyone else. Marketing as the missing discipline, is the center of the whole Iowa problem, and Iowa already half-knows it; the Iowa Startup Collective is a region diagnosing its own narrative gap in public. Part Five of Startup Ecosystems unpacks how the lack of marketers, marketing experience, and marketing discipline, cascades failures by masking issues under slogans like a Made for TV Infomercial. Genuine, capable marketing, identifies the problems in the market, discerns how value is created, reaches and influences audiences, and tells the stories meaningful to the outcomes desired.

Iowa invented the computer for crying out loud! I didn’t know that either until I started researching for this article.

Part Six from the book, for Iowa, is about what actually works, conditions before programs, and that is the point of this article: Iowa has unusually strong conditions, and the study group Tej is hosting is something I wanted to celebrate because they are choosing there to work those conditions instead of launching one more program.

That’s the book in a nutshell, grab a copy here:

Ten Dimensions of Capacity, and an Honest Iowa Scorecard

The book’s second framework, the Ten Dimensions of Entrepreneurial Capacity, is the operational audit, and covered in Why Startup Ecosystems Fail at Scale. Run Iowa through it and the pattern holds while we uncover strengths and opportunities.

Iowa scores well where it counts most, on collaboration culture and local competitiveness. The collaboration is genuine; “Iowa nice” turns out to be a real networking asset, the MIT REAP cohort aligned a dozen stakeholders around a shared strategy, and Plains Angels co-invests with regional groups instead of hoarding deal flow. Local competitiveness is Iowa’s single biggest strength, because Iowa actually knows what it is: agtech, insurtech and fintech, bioscience, advanced manufacturing, and now aerospace. That is a defensible cluster map, not a generic “we love tech” banner, and it is the spine of any honest regional narrative. Iowa is also improving fast on measuring outcomes; the Iowa Innovation Dashboard tracks business formation, capital, and research with a rigor most states never build, which lets Iowa manage to outcomes instead of activity, the discipline I argue is the whole game in Startup Cities Need to Measure and Expect Outcomes.

MIT REAP’s Ecosystem Model

The gaps are just as clear. The missing middle is Iowa’s defining structural weakness; the Series A scale-up lane is thin, which is precisely why Next Level’s third fund and Novy’s venture-studio model exist at all. Funding the actors is weak, as it is nearly everywhere; the writers and connectors stitching the ecosystem together are mostly doing it unpaid, and a region that treats its builders as volunteers will eventually lose them. Overcoming silos is a concern because Iowa is geographically spread out, and Des Moines, the Corridor, and Ames do not yet seem to operate as one network. Cross-sector alignment and performance environments sit at minor issues while including talent, in the sense the book means it is about finding the people who do not look like founders yet: the actuary inside a Des Moines insurance tower, the agronomist running field trials, the rural manufacturer who solved a hard problem and never called it a startup, that is Iowa’s underused talent pool. The surge of women now writing checks in Iowa venture is one piece of proof that widening the definition of who builds widens the pipeline. The last dimension, adapting best practices rather than copying them, is the warning label; Iowa should study Boulder and Silicon Valley and import none of their templates intact, because an ecosystem is an organism, not software. Yes, I said none.

Every Iowa Startup Development Organization (I can easily find), and Where the Money Comes From

If you are an economic development professional, this is your map. I use the word programs in the book to cover the whole category of startup development organizations, and Iowa has built a dense one.

On capital, the angel layer starts with Plains Angels, founded in 2012, with roughly a hundred members reviewing close to six hundred applicants a year and the angel-backed agtech investing of Ag Ventures Alliance. Early-stage venture runs through the Ag Startup Engine in Ames, Eric Engelmann, ISA Ventures, and a newer roughly six-million-dollar statewide fund launched by Plains Angels co-founders Tej Dhawan and JD Geneser. Growth-stage venture is anchored by Next Level Ventures, which has deployed more than sixty-five million dollars across roughly thirty Iowa startups and is raising a third Iowa fund targeting forty to fifty million; ManchesterStory, built by Matt Kinley and David Miles, concentrates on insurtech and fintech. Novy, Iowa’s first venture studio, co-founds and capitalizes healthcare-software companies. The public stack adds InnoVenture Iowa and the IEDA Innovation Continuum. The historical foundation under all of it traces to John Pappajohn whose personal commitment to investment in the future seeded much of what now exists.

On programs and institutions, accelerators include the insurtech-focused Global Insurance Accelerator in Des Moines, the Iowa AgriTech Accelerator, and the Iowa Startup Accelerator run by NewBoCo in Cedar Rapids. University commercialization runs through the John Pappajohn Entrepreneurial Centers across multiple campuses, the University of Iowa’s UI Ventures and Jacobson Institute, Iowa State’s Startup Factory and Research Park, and the NIACC Pappajohn Entrepreneurial Center. Connective infrastructure includes 1 Million Cups in Des Moines and Eastern Iowa, Gravitate and Frontier coworking, and the historically pivotal StartupCity Des Moines that Tej Dhawan and Christian Renaud built. Ecosystem and policy organizations include the Greater Des Moines Partnership, the Technology Association of Iowa, America’s Cultivation Corridor, VentureNet Iowa, the Iowa Venture Capital Association, and Diana Wright’s work in Startup Iowa and Iowa Startup Collective storytelling networks. That is not a thin ecosystem. The diagnosis is not scarcity; it is the missing growth-stage lane and the silence about everything that already works.

A New Identity? Reminder: It Cannot Contain the Word Silicon

Iowa should stop, permanently, any temptation to brand itself Silicon Anything. “Silicon Prairie” already exists, it hands the narrative to a California suburb, and it tells a founder nothing about why their specific company belongs in Iowa… other than it’s the prairie… which is largely empty grassland. The case is made in The Best and Potential States for Startups and in Putting a Bow on Your Startup Ecosystem that a region’s narrative has to be specific and defensible, not aspirational cosplay.

Here’s an identity that I think has been sitting in front of Iowa the whole time: Iowa is the Proving Ground. Silicon connotes raw material and novelty. A proving ground connotes the opposite; it is the place where things get tested under load until they actually work, or they do not. That is what Iowa already is. Atanasoff and Berry did not theorize a computer; they built and ran one. Rohwedder did not pitch sliced bread, he engineered it through a fire. Iowa farms on a logic the venture world should envy: you do not get paid for planting, you get paid for yield. Kaylee Williams of InnoVenture Iowa, in Tej Dhawan’s Substack, described healthy ecosystems as needing to “grow like forests, wild and redundant,” and that is the right angle. A proving ground is measured by what survives contact with reality, not by what gets announced at a demo day. For an investor, that is a feature; Iowa founders are capital-efficient because the culture punishes theater. For a policymaker, it is a mandate; build the missing Series A lane so proven companies can scale in-state instead of being harvested by someone else’s ecosystem. The proposed university policy says, “we love the research, prove not just that it works, prove it can matter.” Iowa does not need to be the next anything, it needs to be the place where innovation has to work, and then it needs to say so.

Tej Dhawan has been arguing a version of this for years. When he and JD Geneser launched their statewide fund, he told innovationIOWA that Iowa has to “keep making room for larger and greater investments so that the longer term can be achieved,” framing the whole effort on a twenty-year horizon; an idea he traces to Brad Feld telling an Iowa audience back in 2012, to think in twenty-year cycles. That patience, paired with Iowa’s refusal to mistake motion for consequence, is the asset. I dare say it is also why Iowa picked up my book before most of the cities that should have.

So, the question is not whether Iowa can build a great ecosystem; the conditions say the foundation is already there. The question is whether Iowa will do the one thing that does not come naturally to it, which is to claim the work. If you are building in Des Moines, sitting on capital in the Corridor, or shaping policy in Ames, the single most useful thing you can do this month is stop treating your wins as private information. Find the founder nobody is talking about, name the company nobody knows succeeded, and put the proof where the next generation can see it. The ecosystem that compounds is the one that lets its results be witnessed and its story told in a way that demands retelling.