A look at how far KC has come … and how far we still need to go.

Years before he co-founded the hugely successful dating app Tinder, before he came up with the idea for “swipe right,” Jonathan Badeen was an Eagle Scout from Leawood.

Last month, Badeen came home for the first-ever Techweek Kansas City, a weeklong festival celebrating technology and entrepreneurship. Hundreds of people gathered in Union Station’s Extreme Screen Theatre to listen to his talk with Alex Knapp, an associate editor at Forbes magazine.

Badeen was enthusiastic about Kansas City’s growing national profile.

“It’s getting awesome here,” Badeen told the audience. “I’m so excited about it.”

It’s a big change from when he was a kid.

“Growing up, I didn’t see tech as an option,” Badeen told the audience. “There wasn’t that person down the street that started up a tech business or was a programmer.”

Things are different today. Even if there’s not a startup founder on every street, the Kansas City region has demonstrated an ongoing commitment to being a place where future generations of innovators like Badeen can thrive.

KCSourceLink recently released its second annual “We Create KC” report, a checkup on Kansas City’s progress made toward becoming the most entrepreneurial city in America. Among the findings:

• More than 40 local companies landed on the most recent Inc. 5000 list of the nation’s fastest-growing businesses—many of them small to midsize organizations in diverse industries.
• The KC Regional Microloan Program, founded in 2012, has provided $3 million in lending to some of Kansas City’s smallest small businesses. Its borrowers have created 800 jobs, while keeping their default rate to less than 3 percent.
• The region is home to more than 60,000 jobs in science, technology, engineering and mathematics, about 7 percent above the national average.

The word’s getting out about Kansas City. Eliot Arnold is president of Crunch Data, a business-analytics startup based in Denver.

The company just opened a Kansas City office. Family’s part of the reason why—Arnold was born and raised here. But the region’s network of resources, programs like the Helzberg Entrepreneurial

Mentoring Program and the Missouri Technology Corporation, make a compelling case, too.

“There isn’t a program like HEMP in Denver,” Arnold said.

A Lot Can Happen in Four Years

The last four years have seen a surge of interest and energy in Kansas City entrepreneurship.

That’s how long it’s been since the Greater Kansas City Chamber of Commerce announced its Big 5 initiative: a plan to tackle five challenging, game-changing community projects. One of them was to make Kansas City the most entrepreneurial city in America.

As part of that, during the spring of 2012, organizers held brainstorming sessions across the city for business owners, startup founders, corporate executives, nonprofit organizations and other stakeholders.

They were asked about Kansas City’s strengths and areas where it could improve. Six main concerns came up during those sessions, said Maria Meyers, the head of KCSourceLink. Kansas City needed to …

• Improve access to capital for young, growing companies.
• Get the metro’s leading corporations more involved in supporting up-and-coming entrepreneurs.
• Build up the city’s pool of technology talent.
• Increase the pace of translational research, so that local universities’ discoveries could be more easily turned into marketable products and services.
• Strengthen the ties between the city’s entrepreneurship resource organizations, so companies can get help more easily.
• Spread the word nationally about why Kansas City is a great place to do business.

And what has changed since then?

Digital Sandbox KC, SparkLabKC, the Sprint Accelerator—all of those programs now offer crucial early funding and professional guidance to the city’s most promising startups.

None of them existed four years ago. The Digital Sandbox companies alone have created more than 180 jobs and drawn more than $17.7 million in follow-on funding.

In addition to the growth of microloans, AltCap—formerly the KCMO CDE—just earned official status as a community development financial institution (CDFI), which should allow it to leverage more federal funds for small-business lending. The Greater KC Chamber has started hosting lunches for investors and potential investors, to introduce them to opportunities here in Kansas City.

On the corporate involvement front, the Sprint Accelerator is just one example of the increased effort that Kansas City’s largest companies have made to support smaller entrepreneurs. Another great one: AMC Theatres is partnering with Startup Village-based companies to use some of the startups’ technology, including that of Lantern and RFP365, in the theater chain’s operations.

When the recent LaunchKC grant competition went looking for corporate sponsors, the response was swift and strong, said Drew Solomon, the vice president of business and job development at the Economic Development Corporation of Kansas City.

The grant contest—which awarded 10 $50,000 grants—also helped convince Techweek organizers to expand to Kansas City, Solomon said. It makes us only the sixth U.S. city to host its own Techweek.

Meanwhile, barely a week passes without a magazine or website either including Kansas City on a “best of” list or flat-out urging young people to move here.

“All this does is to heighten the image of Kansas City as a place to do business,” Solomon said.

We Still need More Talent and More Money

But while there’s been significant progress, there’s still much, much more to do.
KCSourceLink, for example, has found that our region lags when it comes to winning federal SBIR and STTR grants, which can help small businesses pay for research into new innovations.

Lead Bank recently commissioned a report on the state of funding for tech startups here in the nation’s midsection.

The good news is that investments are up—to nearly $4.4 billion last year, about 67 percent higher than 2010. The 15-state region could record $5.3 billion by year’s end.

As you dig into the numbers, though, there are still real challenges ahead for the Kansas City area.

The lion’s share of deals involved companies in Texas, Colorado and Illinois. Since 2010, Texas has recorded $6.8 billion in investment. Illinois has seen $5 billion in investment. Colorado received $3.1 billion.

Missouri, meanwhile, had of total of $1.1 billion. Kansas, $591 million.

Anand Sanwal—the CEO of business intelligence firm CB Insights, which wrote Lead Bank’s study—was on hand to walk Techweek attendees through the numbers. At one point, he asked if there were any startups in the audience. A handful spoke up.

Is it hard to find venture capital in Kansas City? he asked. All the startups present said yes. Some of them indicated they had to go to the coasts to find the necessary funding.

Sanwal followed up: Did the VC firms there pressure them to move? Some said no, but others said yes.

One of the biggest challenges facing Midwestern states, Sanwal said, is the need to hold on to their young, growing companies. When those ventures are ready to really scale up their operations, many feel they need to relocate to Silicon Valley to find the necessary capital—and, just as important, the necessary talent.

Silicon Valley has a large, highly trained workforce across multiple disciplines. That’s an advantage that’s going to be “tough to replicate in other markets,” Sanwal said.

It’s a problem that community leaders know they need to address. KCnext has just introduced Chute (www.chutekc.com), a jobs website built to recruit tech talent from across the country to Kansas City. The site publicizes open positions from Cerner, Garmin, DST and other major employers.

To get the word out nationally, KCnext plans to promote Chute at Techweek New York and other national events.

And early next year, Kansas City is going to become the next city for LaunchCode, a St. Louis-based nonprofit that helps people find programming jobs. Most of its clients are men and women who don’t have four-year computer science degrees, but instead have taught themselves the skills to succeed in that field.

But patience is going to be important.

“If you look at the other communities that are doing well in this area, they’ve been doing it for years, tens of years,” said KCSourceLink’s Meyers.

So it’ll take time—and cooperation, another area where Kansas City is improving. The community’s business-resource organizations are better networked, making it easier for entrepreneurs to locate the help they need.

All of these efforts, from funding to recruiting to education, are making a difference.
“But it’s going to be five and 10 years down the road before we can look back and say we’ve made an incredible leap,” Meyers said.