Study: Lack of funding curbs early-stage biz growth in Kansas City
June 1, 2015 | Bobby Burch
The Kansas City metro area is losing out on millions of dollars in investment funding that could be helping to add jobs and grow businesses in the region, according to a new study.
In recent years, area early-stage businesses’ progress has been stymied thanks to Kansas City’s lacking of microloans, seed capital and locally-based venture capital firms, KCSourceLink’s “We Create Capital” study reported. The study examined gaps in Kansas City’s debt and equity financing systems since December of 2014.
“We need to help our entrepreneurs find the funding they need to grow,” KCSourceLink CEO Maria Meyers said. “We’d like to see people use this data to help move the community forward by increasing the amount of capital that we have here, helping people find the capital we have and by better connecting the community. … (Funding) is really important to build the jobs that we need here for the future.”
Key gaps the study found in Kansas City’s debt and equity financing systems include:
- Poor leveraging of federal microloan funding
- Limited use of federal grant programs like Small Business Innovation Research and Small Business Technology Transfer
- A lack of equity funding for businesses in seed stage
- Poor access to local, late-stage investment dollars, as most funding comes from outside the region
- Inadequate connections between the Kansas City investor community
The Kansas City metro snagged $668.3 million in equity investments from 2009 to 2014, according to the report. That amount of capital places Kansas City only 11th among its 14 peer cities, which include such locales as Denver, Austin, Nashville and Indianapolis.
Terry Dunn, chairman of the Greater Kansas City Chamber of Commerce, said that the study identifies holes in the area funding landscape that must be filled in order for Kansas City to advance.
“It’s clear that we need more experience and more connectivity so that we can take advantage of tens of millions of dollars in federal funding that could be supporting our businesses,” Dunn said in a release.
In addition to identifying gaps, the study set action items that hope to inspire change in the community by 2020. The charges call for an increase in the availability of alternative loan funds, a boost in government grant funds to early-stage and research-focused businesses and a hike in both seed and venture capital investments.
“The thing I’ve observed is that once the Kansas City community defines a clear agenda, we know how to move forward,” said Matt Condon, CEO of Bardavon Health and ARC Physical Therapy and a champion of the Greater Kansas City Chamber of Commerce’s Big 5 entrepreneurship initiative. “It will take all of us — bankers, investors, large corporations, business owners — to make this happen.”
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