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1517 connection helped start Farnsworth Fund

May 21st, 2018

By Doug LeDuc | Greater Fort Wayne Business Weekly

Nick Arnett’s decision to chart a non-traditional educational path after graduating from South Side High School had a lot to do with the Farnsworth Fund’s creation and its modeling after a successful microgrant program of the Peter Thiel-backed 1517 Fund.

The decision launched the Farnsworth Fund’s advisory board chair on a career path that led to his eventual recruitment for his current position as 1517’s community manager.

Born and raised in Fort Wayne, Arnett developed an early interest in public policy and community building. At the age of 12 he started a small nonprofit, the Downtown Improvement Group, to get young people engaged in community visioning efforts around the time that plans were first unfolding for a new downtown baseball stadium.

The city’s mayor at the time, Graham Richard, took him under his wing and plugged him into the Downtown Improvement District, where Fort Wayne Community Schools allowed him to spend half his school days. Throughout his high-school years, he was employed there as its communications coordinator.

After high school, he spent a year working at the Northeast Indiana Regional Partnership, helping the organization roll out NIRP’s Millennial 2020 visioning program.

“Kind of alongside that, instead of going to college, I decided, ‘I’m going to kind of chart my own educational path, here, because with the stuff I’m interested in, there’s really no degree that fits it really well.’ And so I created this project for myself that I called the 12 Cities Project,” Arnett said.

Over the course of a couple of years, he planned to visit a dozen cities close to Fort Wayne’s size, “which had some interesting things going on within their entrepreneurial ecosystems, and try to figure out or uncover what’s going on there,” he said. “What’s causing this uptick in entrepreneurial activity, and also, why are young people becoming so attached to these places? They were moving to these places in flocks.”

The list included cities such as Chattanooga, Charleston, Grand Rapids, Austin, Tucson, and San Jose.

While planning the project, he met Steve Franks, who has worked in various capacities as an entrepreneur coach and eventually would become program manager for the Farnsworth Fund. As the two were chatting over coffee about a fundraising approach for the project, Franks became its first donor with a $75 check.

“That was a really cool thing for me because more than the money it was that stamp of approval or that validation from someone who had a lot of experience doing a lot of interesting things, who was willing to believe in me and even give me some money to pursue my crazy idea,” Arnett said. “Eventually I raised money from private donors and then Parkview (Health) ended up sponsoring a bunch of the trips and Steve even went on some of the trips too. We actually formed it into a nonprofit and had a board and Steve was our first board director.”

While his evaluation of entrepreneurial ecosystems was underway in the cities, Arnett heard about a program called the Thiel Fellowship, which had launched in 2010, the year before he graduated from high school. Its creator, Peter Thiel, is a San Francisco billionaire who was a co-founder of PayPal and the first outside investor in Facebook.

The fellowship program was offering $100,000 grants to 20 young people under the age of 20 each year to forego college or stop-out or drop-out and instead focus their work on their projects, whether they were doing interesting research or creating a startup or just building something unique that could have a big impact on the world.

“I thought, wow, there’s other people out there like me who are kind of taking a non-traditional route, because this is kind of a lonely way to go,” Arnett said. “All my friends are in college and I’m kind of carving out my own path here.”

He applied for the program in the second year, made it through a few rounds, and then got rejected, “which was a good thing, because I would have been a horrible Thiel fellow,” he said.

But he kept in touch with program director, Danielle Strachman.

“I told her, ‘You know, I’m really interested in what you guys are doing and it’s helped me kind of put together some thoughts about how to press forward in my own non-traditional educational path, so let me know if I can ever be helpful,’” Arnett said.

He met her for lunch while he was visiting the San Jose area for the 12 Cities Project, and shared what he was learning about how communities grow and develop and how entrepreneurial ecosystems evolve over time.

They stayed in touch and she thought of Arnett when the fellowship program started looking for ways to scale its benefits to the top tier of its bright, young applicants, who were applying in the thousands from all over the world.

“She said, ‘since you spent so much time examining how communities grow and develop, would you want to come on board at the Thiel Foundation and lead that effort for us?’” Arnett said. “So of course, I said yes.”

He worked for the Thiel Fellowship Team for about 2.5 to 3 years and the network grew to about 2,500 young people from 56 different countries.

Twice per year, they would host a Thiel Foundation Summit where they would bring 400 or 500 of these young people together in person so they could meet each other.

“We had lots of fantastic speakers that would come in and then did other things throughout the year,” he said.

At that point, Arnett was splitting his time between Indiana and San Francisco

“I was still really involved in stuff here in Fort Wayne and didn’t want to leave that entirely,” he said.

During his last six months at the fellowship program, several of Arnett’s friends from Fort Wayne who had moved down to Chattanooga to pursue projects there suggested it was his turn to do likewise, which led him to relocate there to start the WayPaver Foundation.

He founded WayPaver as a space-focused organization with a mission of enabling lunar settlement by supporting scientists, entrepreneurs and researchers who were working on dual-application technologies.

For example, research with an eventual application to human-lunar settlement, such as extraction of lunar resources, also would have a worthwhile business application or help improve the quality of life on earth.

“At the end of the day, you’re talking about food, you’re talking about water, you’re talking about clean air access if you’re going to live on earth or anywhere in the stars,” Arnett said. “And we had a group of donors down in the Southeast who had committed a pretty significant amount of capital over three years to give us some runway and get us started, and had a blast with that,” he said.

“And while I had a great time getting it started, we really needed someone who had deep experience in the space industry to really carry it forward. So, I handed the torch off to a new CEO who had started several space companies, a great guy to work with, and remained on the board still to this day.”

A few months after Arnett returned from Chattanooga to Fort Wayne, his old boss at Thiel, Strachman, contacted him to say she and its grants vice president, Mike Gibson, had split off to start 1517 as an early-stage venture-capital firm with a thesis like that of the Thiel fellowship program.

It launched with $20 million, which it focused on pre-seed and seed investing, with participation averaging $250,000 on a typical $7 million investment round. They were looking to hire another team member and had heard he might be available.

“So, I went back to working with them and have been there ever since,” Arnett said. “I split my time, half in Fort Wayne, and then the other half I’m usually out in the Bay area or traveling. We do a lot of outreach on college campuses and sponsoring entrepreneurship-related events.”

The venture capital firm had a program where it would give $1,000 grants to young founders who were “a little bit past the idea phase but could use a boost of resources along with mentorship and advisership to be able to build a prototype or something they could actually test with potential customers,” he said.

The microgrant program, which Arnett oversees, established relationships with potential founder teams, which allowed them to help the teams and learn what it was like to work with them, he said.

Out of the 120 grants it has awarded, six have gone to companies it eventually invested in. And when the investments average $250,000, spending less than half that amount to identify half a dozen startups with proven high potential is fantastic, Arnett said.

After running the 1517 microgrant program for a while, he started a conversation to share what he was learning there with Elevate Northeast Indiana board members including its chair, Marilyn Moran-Townsend, and vice chair, Fred Nash.

Arnett wanted to see if there was any way 1517 could work with Elevate, he said.

“I’d like to see us have more of a presence in the Midwest, since we’re based (at 1517) in San Francisco but I’m kind of in two places at once, and we all really latched on to this idea of a microgrant program and that kind of turned into pretty quickly the Farnsworth Fund.”

Nash drew on his experience as president of the Main Street Venture Fund in Fort Wayne to lead Elevate’s development of its new Farnsworth Fund.