KCSourceLink’s budget clapback: Startups generated $37.6M in KCMO earnings taxes

Editor’s note: Startland News is a program of STARTLAND, an ecosystem-building organization that is among the participants in an informal coalition of entrepreneur support groups hoping to increase funding for small business support in the 2020-2021 Kansas City, Missouri, budget. This story was produced independently by Startland News’ nonprofit newsroom.

Financial backing for entrepreneur support is an investment with a tangible impact — on the city’s own bottom line, according to data released Friday by KCSourceLink and the UMKC Innovation Center.

Nearly two out of three net new jobs in Kansas City come from startups — defined as new firms with fewer than 20 employees — and in 2018 the small business owners and entrepreneurs running those startups generated $37.6 million in KCMO earnings taxes, said KCSourceLink representatives through a series of documents released late this week to show the city’s return on investment with startup support organizations.

“Entrepreneurs are hungry for just-in-time training that helps them start or grow a business,” KCSourceLink said Friday.

KCSourceLink — a hotline- and email-based clearinghouse built to assist aspiring and existing business owners via a collaborative, 240-member regional resource network — is among the support organizations that would see a significant reduction in funding if a budget proposed by Mayor Quinton Lucas is passed March 26 by the City Council.

Click here to learn more about KCSourceLink.

The submitted $1.7 billion budget reduces small business support allocations from $400,000 to $250,000, said Sarah Mote, marketing director for UMKC Innovation Center and KCSourceLink. (The proposed budget also removes $50,000 for LaunchKC and $300,000 for the planned Keystone innovation district project.)

Click here to read more about the potential impact of the proposed budget and how entrepreneur groups are rallying to reinstate funding.

“The most important message here is that entrepreneurship is vital to the Kansas City economy and should be supported at all levels. Entrepreneurs create 58 percent of net new jobs and contribute millions in earnings taxes,” Mote said. “We’re grateful for the support the city has shown its entrepreneurs in the past, support that has allowed several entrepreneurship programs, including KCSourceLink, to leverage the FY20 $400,000 investment into $2,000,000-plus in matching funds for entrepreneurship support programs and direct grants to entrepreneurs.”  

Highlighting the impact of matching funds and programs, KCSourceLink noted a 2019 KCMO investment of $25,000 from which the support organization leveraged $300,000 from other sources.

That initial KCMO investment was part of a five-year pledge ($25,000 per year) made in 2018 to match a federal grant from the U.S. Department of Commerce in partnership with local corporate and philanthropic partners. Local support of $812,500 matches an additional $812,500 federal grant that provides core funding for KCSourceLink over five years.

Two more KCMO Resident Speakeasy Sessions are planned in the coming days — Saturday, Feb. 29 and Tuesday, March 3 — to serve as public budget hearings ahead of the proposed budget’s expected adoption by the Kansas City City Council on March 26.

Click here to learn more about a planned Budget Feedback Takeover.

Top requests for training and resources from KCSourceLink include assistance with marketing/sales, startups, business plans, financing and mentoring.

Many of those requests represent an opportunity for wealth generation and building in some of Kansas City’s most underserved communities, the support group said.

In 2019, KCSourceLink had 54,831 website users (54 percent from KCMO) and 9,489 hotline interactions (33 percent from KCMO), according to the organization’s data. Requests for assistance from KCMO’s lowest income/highest minority zip codes accounted for 68 percent of those local interactions.

The final two budget-related Speakeasy Sessions are set for:

• 9 a.m. — Saturday, Feb. 29 — Southeast Community Center, 4201 E. 63rd St., Kansas City, MO 64130
• 11:30 a.m. — Tuesday, March 3 — KC Health Department, 2400 Troost Ave., Kansas City, MO 64108