The region has transformed itself as a biomedical and tech center over the past decade. But executives say we’re just getting started.
Here’s something to ponder. In 2015 alone:
• Entrepreneur magazine included Kansas City area in a feature titled “9 Hot Startup Cities That Aren’t San Francisco or New York.”
• The Huffington Post declared this as one of the Top 10 Cities for Creatives.
• Forbes noted the tech tie to baseball in “Royals Benefiting from KC Tech Boom.”
• CBS News ranked Kansas City among its “9 Best U.S. Cities for Jobs.”
• And Inc. magazine dialed into the movement that has earned this region the Silicon Prairie moniker with “Forget Silicon Valley: 7 Better Cities for Startups.”
As it turns out, when it comes to tech and innovation, everything is getting up to date in Kansas City. The question now becomes: How big can we go?
“People now look at the Kansas City area as a pre-Austin,” says Carmen DeHart, dir-ector of outreach programs at the UMKC Innovation Center. “It used to be something people thought about on the east coast, then in Silicon Valley, then in Austin. And now us.”
This region’s unique value proposition, DeHart and other executives in that sphere say, includes a labor pool with a strong work ethic and low cost of living, exploding numbers of tech- and innovation-related resources, a central location that makes getting anywhere in the country a competitive advantage for companies here. And one more thing that can’t be overstated: The difference made by the arrival of Google Fiber and its gigabit Internet delivery in 2012.
Calling that a huge impetus for change, DeHart said that the first rollout led to a burst of new civic and private initiatives. “There was a general awakening of how to support startups, not just about small-business development, which was the emphasis prior to that. There’s a big difference between economic development and startup activity; we need both.”
Now, she and other executives say, the region needs to get its innovation ecosystem to the next level with more investment capital. “We’ve got to shift perception that you can’t get early-stage money in Kansas City,” DeHart said. “Kansas City can support early-stage investments.”
The sheer numbers of venture-capital dollars involved in tech and innovation demonstrate the potential for the Kansas City region. According to a recent study from the Martin Prosperity Institute, venture-capital investment worldwide totaled $42 billion in 2012, with more than 63 percent of it—$26 billion—concentrated in 20 cities around the planet, 12 from the United States.
Kansas City was well off the pace of those investment centers, trailing even smaller venues like Denver, Minneapolis and even Jacksonville, Fla., with just $169 million. So there’s definitely room for growth in this region. But it is well-positioned to start closing that gap, given the considerable progress in expanding that start-up infrastructure over the past decade.
Toby Rush has seen the regional changes through the entrepreneur’s perspective, once as founder of Rush Tracking Systems, which specialized in radio-frequency identification systems for warehousing and distribution; the second time, with EyeVerify, which uses breakthrough technology that allows a smart phone to capture a user’s unique “eyeprint” for secure verifications. In addition to a roughly $1.3 million it won in an international start-up competition in 2013, the company had secured $10 million in financing through last summer.
But more has changed than simple access to capital, Rush says. The regional ecosystem “is substantially different—not just with the money, but with the programs, and various players are more organized and visible to each other,” Rush says. “Before, it was like blind men trying to find their way in the dark: Everyone their hands in front of them, trying to figure out who could help, where and how.”
The change in the 14 years since he became an entrepreneur, Rush says, have created “a greater awareness of what it means to start a company, what resources are available and how to connect—they are far and away more visible today.”
One key tool credited with bringing organizational focus to that sector is KCSourceLink, a free on-line tool that lists nearly 240 companies and non-profit organizations that support various forms of innovation. “We started SouceLink in 2003, and at that point, no one really knew what entrepreneurship was, in a sense,” says Maria Meyers, its executive director. “We had a lot of resources, but they weren’t very well connected.”
On a larger level, though, “everybody was focused on big business as the economic driver,” Meyers said. “We did a lot of educating that entrepreneurship was important.”
Today, she says, there’s a greater awareness not just in Kansas City, but globally, about the role of entrepreneurship in driving economic growth. In part, that’s because the view of it has become more granular. “We used to separate entrepreneurs from the small business owner, but now, lots of different people are saying ‘I’m an entrepreneur,’ whether they’re in technology, running a bakery or operating a retail store,” Meyers said. “People have adopted entrepreneurship as a part of life. That’s been a big change in the market itself.”
Another big change has been the explosive growth in programs and resources that followed the Google Fiber debut—more than 100 between 2012 and 2015, Meyers said. Among them, she listed co-working spaces, business accelerators, KC Startup Village, a focus from City Hall and civic leadership on the value of tech and innovation, and companies relocating or expanding tech operations into this region.
One of those moving in is Pramata, a San Francisco-based company that has developed special software to extract key customer relations data from large tranches of legal documents and contracts. Last month, CEO Praful Saklani and Gov. Jay Nixon announced the Pramata’s entry into this market. Though it will start with 15 employees, it’s another brick in the ecosystem wall.
Sascha Ohler, Pramata’s vice president for business strategy and development, said the company recognized that many cities around the U.S. have the right ingredients for expansion.
“What Kansas City really brings to the table is leadership here, both on a local as well as state level—especially on the Missouri side. It has gone out of its way to create an environtment that is very, very friendly to the start-up community.” Minneapolis, Saklani’s hometown, was in consideration, as was the emerging tech capital of Austin, Ohler said. “But the reception we received here was exceptional.”
Dane Stangler, director of entrepreneurship for the Kauffman Foundation, said there’s still work to be done on building more connections between those who create, those who fund and those who hire.
“We can do a better job of connecting different pieces, organizations and people,” he said. He cites the example of North Carolina researchers who map what are known as dealmaker networks, collecting data on people making equity investments or taking board seats on companies, and how closely knit together they are.
“When you look at Silicon Valley, Boston, Austin, they have these incredibly dense networks—you can’t even see lines, just one big black spot,” Stangler said. “The Kansas City area had lots of connections, with a few islands. Lots of important pools of activity or investments and deals are going on, but they’re not connected to other pools of deals. That connectivity between those hot spots a really important thing for the region to do.”
Like other executives working in that field, Stangler says a sharper focus on talent is a crucial next step. “Kansas City can do a much better job of making itself more attractive to immigrants, especially immigrant entrepreneurs,” Stangler said. “We have a low foreign-born population compared to other MSAs, and the entrepreneurial propensity is two times as high as it is for the native-born. We have to build the local talent pool for local entrepreneurs to draw on.”
Innovation Central: Support is All Around
The bi-state region, and Kansas City in particular, is now teeming with organizations and resources dedicated to promoting all aspects of early-stage entrepreneurship, from the first idea to proof of concept to early-stage and second-tier financing, business planning, trusted advisers with accounting, consulting and law firms, state-level incentives and more.
Here is just a sampling of the more notable organizations, alliances and programs:
Ewing Marion Kauffman Foundation
The crown jewel of entrepreneurial thought leadership in this region, the foundation offers programs like 1 Million Cups, now a nationwide initiative that allows entrepreneurs in various cities to present their startup concepts to mentors, advisers, and entrepreneurs; FastTrac, with courses to help entrepreneurs develop business skills; and Founders School focusing on business scaling, early-stage financing, board development, leadership and marketing.
University of Missouri-Kansas City
The campus is a hotbed of entrepreneurial instruction as well as support. In addition to its business school and entrepreneurship curriculum, it is home to:
KCSourcelink: A free on-line directory with nearly 240 resources that support business startups and growth in nearly two dozen sectors, from agriculture to warehousing. It serves an 18-county region from Warrensburg to Topeka, St. Joseph and Osawatomie.
Digital Sandbox KC, which provides proof-of-concept resources to support early-stage commercialization efforts.
Whiteboard to Boardroom/CEOBullpen, which connects entrepreneurs and established businesses alike to technologies available for licensing at bi-state universities and companies to accelerate tech commercialization.
UMKC Small Business & Technology Development Center, which serves both emerging and existing business owners with resources, programs on business basics and guidance in evaluating commercialization opportunities.
University of Kansas
Bioscience & Business Technology Center: Based on the campus in Lawrence, it provides wet lab, office space, and business services to emerging bioscience and tech companies.
Bioscience & Technology Business Center: Based at the KU Med Center, it offers wet-lab space for emerging bioscience and tech startups, university startups and collaborations, and companies seeking to locate close to a clinical trials site located at the University of Kansas Hospital.
Hemenway Life Sciences Innovation Center: Another KU Med Center facility, the HLSIC is home to 300 physicians, scientists and students researching liver disease, reproductive sciences, neuroscience, diabetes, and proteomics research.
Kansas State University
Nanotechnology Innovation Center of Kansas State: Known as NICKS, this program in the College of Veterinary Medicine promotes commercialization of faculty research into nanotechnology.
Manhattan-Kansas State Innovation Center:
On the Manhattan campus, this wet lab is owned by the city of Manhattan, and managed by the university’s Institute for Commercialization.
Metropolitan Community College
Business & Technology Campus: Provides academic courses and training programs for students, as well as work-force solutions for businesses.
Johnson County Community College
Offers an associate’s degree in entrepreneurship and various tech-related certification courses, and houses one of the state’s small business development centers to help with business start-up and ongoing management.
University of Central Missouri
Institute for Entrepreneurial Studies and Development: Provides courses and services in business and technology for your small- and mid-size tech-based companies and high-growth enterprises. UCM is also collaborating with the MCC and the Lee’s Summit school district on the Missouri Innovation Campus in Lee’s Summit.
Northwest Missouri State University
Center for Innovation and Entrepreneurship: An incubator for innovative businesses, based at the Maryville campus, that connects early-stage business with academic programming and support The university is also partnering with the city of Gladstone, Maple Woods Community College and the North Kansas City School District in the new Northland Innovation Center.
Enterprise Center of Johnson County
A non-profit funded by the county, the state Department of Commerce, user fees and private sponsors, offering low-cost resources and services to early stage, high-return growth companies in IT, biotech and clean tech, and mobile-application sectors.
Lawrence Regional Technology Center
A nonprofit small business incubator supporting growth of high-tech start-up companies in Lawrence and nearby communities, with an emphasis on life sciences, IT and communications, and advanced materials.
The Missouri Department of Economic Development: Offers dozens of links to resources that promote business growth, as well as state incentives.
Missouri Technology Corporation: Serves early-stage entrepreneurs in promising high-growth, advanced-technology settings.
Missouri Innovation Center: Supports creation of new, high-growth companies, especially those in tech sectors, in collaboration with the University of Missouri-Columbia.
Missouri Enterprise Business Assistance Center: Provides various resources to assist with research and development and marketing for manufacturing firms and others.
Brush Creek Enterprise Center: A business innovation and commercialization center, part of the statewide Missouri Innovation Centers network, designed to stimulate economic development.
The Kansas Department of Commerce: Serves as clearinghouse for public business-growth programs in the state, along with links to state incentives and other financing options.
Kansas Bioscience Park Venture Accelerator: Provides space for bioscience companies and offers lab and office space, shared equipment, and access to business-development expertise from the Kansas Bioscience Authority.