KCRise fund lands $10M to kickoff startup investing

Kansas City-area startups have a new, local fund to boost their investment rounds.

The KCRise fund announced Thursday the closing of $10 million that will co-invest with institutional venture capital groups in early-stage companies based in the Kansas City area.

Launched in February in conjunction with the KC Rising economic initiative, the fund was created as a solution to the regional challenge of accessing capital. The fund aims to grow to $20 million but can now begin investing. In fact, KCRise is already in discussions on opportunities with area entrepreneurs, including one led by a venture capital investor looking to invest in Kansas City companies.

KCRise fund manager Darcy Howe said that the initial $10 million is a positive step forward for the Kansas City economy.

“Today is a great day in Kansas City,” Howe told Startland News. “It signifies just one more link to a more positive future for our economy and for our city.”

To qualify as a KCRise portfolio company, the firm must “have high growth potential”  and must reside or have substantial operations between Manhattan, Kan. and Columbia, Mo. The firm must also be seeking at least $1 million in a Series A investment round and have an approved venture capital firm investor in the funding round.

Howe said that the fund will help educate new Kansas City investors that are interested in startup ventures.

“This is a modest but important step in helping Kansas City companies to grow,” Howe told Startland News. “The fund will also help the Kansas City corporate and individual investor community learn and have the experience to invest in early stage companies.”

The KCRise Fund is led by Howe, with initial board members of Toby Rush, founder of EyeVerify and Ron LeMay with Open Air Equity Partners.

An investment banker of more than 30 years, Howe previously said that the co-investment model reduces risk and streamlines the necessary due diligence to review an opportunity. Howe added that once the fund reaches its $20 million target, it will likely have a ripple effect in the local economy of more than $120 million in capital in about 10 years.

Led by more than 200 volunteers, the KC Rising effort hopes to improve Kansas City’s economic standing after the region’s slow recovery from the great recession. The 10-year initiative will measure progress in three primary economic categories — gross regional product, number of quality jobs and median household income — against 30 cities of similar population.

KC Rising will target two industry “clusters” — design/construction and life sciences — to help the area grow via trade, ideas and human capital. Though comprised of dozens of partner organizations, KC Rising is primarily led by the Kansas City Area Development Council, Mid-America Regional Council and the Civic Council of Kansas City. The group plans to create a live dashboard to track progress over the years.