KCRise Fund closes $34M Fund III with ‘hyper-local’ focus; Here are its first four investments

A third venture capital fund — expected to invest $34 million in 20 more tech startups across the Kansas City region — builds on KCRise Fund’s thesis that high-growth local companies are the key to investor success, said Ed Frindt.

It’s a competitive advantage that swells with each wave of funding, he added, announcing the close of the Kansas City-based firm’s Fund III.

“The number of high-quality technology companies in Kansas City has grown exponentially in recent years thanks, in large part, to a local capital market willing to give them a chance,” said Frindt, managing director for KCRise Fund. “Our prior investors are returning, and we are able to recruit new capital, because local entrepreneurs are delivering financial returns — which creates an important two-sided relationship we tirelessly strive to facilitate.”

Backers for Fund III range from local corporate stalwarts like JE Dunn to financial institutions like Bank of America and such quasi-government entities as the GROWKS Multi-Fund Program.

The fund is already investing. Four startups — Celerity Enterprises, Saile, PLOT, and Outbound AI — announced in the past six months.

“It is imperative for the entrepreneurial ecosystem and the high-growth startups in Kansas to have access to capital to build their companies,” said Trish Brasted, president of Entrepreneurial Growth Ventures, which manages, via the GROWKS Multi-Fund Program, the State of Kansas’s investments in funds and companies related to the federal State Small Business Credit Initiative.  

“And it is equally as important that we partner and invest alongside those that have demonstrated success and support for the entrepreneurs and founders in our region, which made the team at KCRise Fund an obvious first choice for our newly created GROWKS Multi-Fund Program,” she continued.

The closing of Fund III builds on the KCRise Fund’s growth since its founding in 2016, scaling to more than $90 million in assets under management. The firm has invested in 48 portfolio companies, with 10 exits to date — including four acquisitions by public companies.

Click here to explore KCRise Fund’s portfolio.

BacklotCars co-founders: Josh Parsons, Fabricio Solanes, Justin Davis, and Ryan Davis

KCRise Fund I, which includes such notable exits as BacklotCars and PayIt, has already returned nearly 100 percent of capital back to its investors, with half of its portfolio companies still unrealized, said Frindt.

Fund III offers the opportunity to continue that track record of returns, he added.

“We are excited to have fresh capital at the stage where we’ve identified a need locally and had success, and to continue offering something unique in the venture capital world — giving neighbors the ability to collaborate and win together,” said Frindt. “We are proud to be Kansas City capital for Kansas City startups.”

With funding rounds from four KCRise Fund III portfolio companies already announced, the initial investments from the fund represent innovative opportunities to advance industries in which the Kansas City region has evidenced institutional expertise and pools of talent, said Frindt.

“Our investment dollars naturally follow where the local talent is gravitating, because we are so close to the market,” Frindt continued. “It’s becoming more mainstream in our region to work in technology, where you have fast growing companies in attractive sectors that are solving meaningful problems and offering high-paying roles and employee ownership.”

Darcy Howe and Ed Frindt, KCRise Fund III

KCRise Fund raised Fund III in half the time of the capital raise for its second fund, added Darcy Howe, founding managing director for KCRise Fund, noting investor support and conviction despite the current market conditions further validate KCRise Fund’s approach and performance history, as well as the growth of local investor interest in the asset class.

“Reaching the milestone of our third fund would not have been possible without so many individuals and institutions believing in our vision for the region,” she added. “Our investors continue to have conviction that by empowering founders with capital and support, globally relevant technologies can be built in our city.” 

KCRise Fund III investors include a diverse cross-section of successful entrepreneurs, prominent family offices, and prestigious institutions, Howe said, including:

• Health Forward Foundation and Research Foundation;
• Kansas City University, University of Central Missouri, and University of Kansas Medical Center;
• Academy Bank, Bank of America, and Country Club Bank; 
• Burns & McDonnell, Evergy Ventures, Foley Equipment, GBA, JE Dunn, Lockton, and MarkOne Electric; and
• the State of Kansas (via GROWKS Multi-Fund Program).

“Bank of America’s investment in KCRise Fund is part of our ongoing commitment to advance economic equality as well as elevate and support to minority- and women-owned funds,” said Matt Linski, president of Bank of America Kansas City. “We want to facilitate more opportunities for entrepreneurs and address the challenges they face, especially when it comes to securing funds to start or grow their business.”

The new fund allows KCRise Fund to continue bridging the gap between promising technology entrepreneurs and strategic high-growth capital, said Howe. Additionally, by doubling down on prior investment strategies and themes, it underscores KCRise Fund’s thesis that the untapped potential of Kansas City — as an underserved startup ecosystem — is ripe for investment, she reiterated.

“In 2016 when we began to test the thesis that hyper-local focus on high potential technology startups could bring competitive financial returns, we weren’t sure if deal flow, talent, and investors could get to scale to make it successful,” Howe said. “However, in seven years, we are proud of the catalytic results, as evidenced by talent coming from around the country, competitive financial returns, and deeply engaged investors.  My partners Ed Frindt and Liam Reilly deserve the lion’s share of credit for the present and future success of KCRise Fund.”