The greater Kansas City region is just months away from the launch of a $5 million pre-seed fund that will target entrepreneurs who need $50,000 to $350,000 in investment.
The fund, which doesn’t have a name yet, will make investments worth up to $150,000, but only if other investors put up an equal amount. Participating entrepreneurs must also agree to get training and mentoring at the Enterprise Center in Johnson County, one of the leaders of the project.
Organizers say the fund will help fill one of the biggest needs for up-and-coming businesses in Kansas City.
“The seed capital crunch is one of the pervasive resource gaps limiting Kansas City’s entrepreneurial growth,” said Melissa Roberts, vice president of communications and outreach at the Enterprise Center. “In launching this pre-seed fund and closing that gap, we are taking an important step towards our civic goal of becoming the most entrepreneurial city in America.”
(The latest “We Create Capital” report from KCSourceLink includes more details about the demand for pre-seed investment in Kansas City.)
Several local business and civic groups worked on the new fund, including the Enterprise Center, the Economic Development Corporation of Kansas City, KCSourceLink, the OneKC for Women Alliance, the Kauffman Foundation, the Greater KC Chamber and local investors.
As part of the effort, ECJC has secured a $150,000 Seed Fund Support grant from the U.S. Commerce Department’s Economic Development Administration. That money won’t go directly into the fund. Rather, it’ll pay for staffing and administrative expenses to support the fund.
ECJC will seek to raise $5 million for the fund over the next few months, then start making investments in the first half of next year. (Interested in contributing? You could qualify for a charitable tax deduction or, if you’re the founding donor, naming rights and a seat on the fund’s board. )
If and when one of the fund’s portfolio companies is sold, no money will be paid out to donors. Instead, the proceeds will go back into the fund itself, ensuring more resources for pre-seed investment.
About 217 organizations applied for one of the Seed Fund Support grants. ECJC was one of 41 selected.
“The fact that this project has been undertaken by groups from both sides of the state line goes to show that our regional goals of spurring economic development, driving job creation and improving business dynamism are better served by building bridges than by border wars,” Roberts said.
