Last week, David Wheeling, Tracy Fuller and Mike Mars rented out Bob Monkey’s Noodle Zoo’s East Village restaurant for a party celebrating the formation of their new event-planning company, Protocol Group Inc.

In choosing Des Moines, they picked what some would consider an unusual place to locate a business that plans corporate, political and sporting events. Indeed, the base for those companies lies solidly in New York, Los Angeles and Chicago, where Wheeler, a native of Norwalk, has lived for 15 years.

They considered the Windy City, but determined that Central Iowa and other Midwestern cities are ready for more elaborate and professionally coordinated events. They also had received personal appeals from Iowa Department of Economic Development Director Michael Blouin. In the end, it was that lobbying that won them over, Wheeling said.

“We want to be in a community of a state with leaders who think that way,” Wheeler said. “Mike Blouin has bent over backwards for us in a way that Illinois or Minnesota hasn’t done. Minnesota hasn’t given us the time of day.”

In starting their company here, the Protocol Group’s founders are bucking a trend. In 2001, Iowa ranked 49th in the country in terms of business formation. In past years, the state has consistently fared poorly on surveys of business and entrepreneurial climates. In 1994, Money magazine said Des Moines was the 215th best place to live, behind Cleveland, Fort Wayne and Oakland.

In the past year, however, a coalition of political and business leaders has have spearheaded new programs, including the Grow Iowa Values Fund, the Iowa Fund of Funds and an insurer-sponsored venture capital fund, designed to boost economic growth, attract vibrant companies and add workers.

In short, the leaders want more Iowans to take chances and outsiders to take more risks on Iowans. And there are signs their strategy is working. Last month, Fast Company magazine called Des Moines the “hippest” city in the nation.

“Iowa, in my opinion, has turned the corner from negative to positive,” said John Pappajohn, a venture capitalist whose Pappajohn Entrepreneurial Centers at Iowa’s three state universities, Drake University and North Iowa Community College are credited with starting 1,467 companies and creating 4,442 jobs. “It’s changing. Iowa has made fabulous progress.”

To persuade Iowans to accept more risk represents, in some ways, a massive change. Iowa was laid low by the farming crisis of the early 1980s, which caused some sectors of the economy to become more cautious and others, including manufacturing related to the agricultural industry, to wilt.

One of the pillars of Central Iowa’s economy is the insurance industry, whose chief goal is finding ways to avoid or mitigate risk.

“I think that in tough times people pull in their horns and tighten their belt – they play it more conservative,” said Sen. Chuck Grassley. “We’re growing a little more confident now. It’s part of the tradition of Iowa – to be very forward-thinking.

The Iowa Department of Economic Development, newly energized by Blouin, says twice as many companies are courting the state from a year ago. The state’s Vision Iowa Fund is reinvigorating city centers across the state by helping to finance cultural attractions.

Gov. Tom Vilsack, whose economic focus on advanced manufacturing, biotechnology, value-added agriculture and information services, is gaining traction. Three companies – Wells Fargo & Co., Trans Ova Genetics and Gcommerce Inc. have announced they are coming to the state or will add jobs here because of the Grow Iowa Values Fund. Those companies have promised to create about 2,500 new jobs.

“Iowans are becoming much more appreciative of the need to advance and do things we haven’t done before,” said former Gov. Robert Ray.

According to recent figures from the U.S. Bureau of the Census, Iowa gained more population from California during the 1990s than it lost to that state. The movement was part of a larger trend that saw people leaving large coastal cities for the Midwest and other areas that have lower living costs.

That lure, along with the Values Fund, is part of what attracted GCommerce, according to Steven Smith, the software developer’s president and chief executive.

“The Values Fund is really showing that the state of Iowa is investing in the future, and that it’s being very aggressive about bringing technology jobs to Iowa,” he said.

Hoping to direct more cash toward start-up companies, Vilsack last year approved a tax break for insurers in return for an agreement that they would invest $60 million in venture capital over the next five years.

Eight Iowa insurance companies have so far invested more than $20 million. The largest investor in the program is Wellmark Blue Cross and Blue Shield, which has so far invested $15 million out of a $25 million commitment. Among other large commitments are $10 million from Principal Financial Group Inc. and $8 million each from the Iowa Farm Bureau and AEGON USA.

“What we’ve done in the state is we’ve basically created four cornerstones for creating that new Iowa: sufficient power, sufficient capital, supporting quality of life with recreational and cultural activities, and now the Values Fund,” Vilsack said.

Though Iowa has come some distance to make itself friendlier to new companies and those that may consider relocating here, there is plenty of work left to do, business and political leaders admit.

When it comes to indexes that rank states in terms of taxation and the size of government, Iowa still ranks near the bottom, though it is improving. In 2002, the state ranked 44th on the Small Business Survival Index, a list compiled by the Washington, D.C.-based Small Business Survival Committee. This year, Iowa had risen slightly to 41st.

The Grow Iowa Values Fund’s board has felt itself squeezed by competing pressures: a desire to formulate strong and long-lasting policies and procedures while at the same time giving rapid approval to new projects. Indeed, the grants to Wells Fargo, GCommerce and Trans Ova were made before economic development officials have had a chance to put in place a tool to formally evaluate returns on investment.

On Thursday, the fund’s board was dealt a blow when Holmes Foster, a former state superintendent of banking who was serving as its chairman, resigned.

“Holmes has done and continues to do so much for the state of Iowa,” Vilsack said in a statement released Thursday afternoon.

The Values Fund itself could be suffering problems. Political leaders have hailed it as a $500 million engine for economic growth. That figure, however, is tied to a funding formula that is dependent on Iowa’s sales tax revenues. If sales tax growth doesn’t top 2 percent annually, the fund won’t receive more than the $100 million it’s slated to get from the federal government.

Regardless of the size of the Values Fund, some officials said any money devoted to venture capital and other business start-ups will help.

“Just having the availability of those funds is going to lead to a big change across the state,” said Robert Forsythe, the senior associate dean at the University of Iowa’s Tippie College of Business. “People respond to incentives.”

Pappajohn is confident that success will breed further success.

“What we need is a couple of hits in Iowa, and then we’ll see change,” he said.

Joe Gardyasz contributed to this article