Backed by $2 million in funding, the Sandbox provides support for concept development to prove an early-stage tech product or service is viable in the marketplace.

But the center, which is based at Union Station, is designed to go well beyond funding proof of concept. A few thousand dollars can get many tech-based companies off and running. But a small piece of advice can be worth millions. The Sandbox has become a place where technology-based businesses can go to get past a business stumbling block and find direction from some of Kansas City’s most sought-after entrepreneurial minds.

“A lot of people get stuck, so to speak,” said Jeff Shackelford, the Sandbox’s director. “‘Well, I got to here, but how do I get there.’ And we try to help them get over that hump and get to that next step. Because if they get stuck, they never become a company.”

Shackelford, who co-founded Birch Telecom and started Tech Guys Inc., knows a thing or two about starting a successful business. Getting 30 minutes of his time is worth more than the grant money, according to several startups who have sought out his guidance.

After all, he’s been in the shoes of the young entrepreneurs before. He can help them prepare for meetings with investors or teach them how to sell their product to local executives who’ve heard it all before.

“We’re trying to help them figure out how to get to the next level,” Shackelford said.

Helping Everyone Succeed

Being accepted into the Digital Sandbox program gives startups nearly instant credibility that’s hard to come by for newcomers. Shackelford and a long list of mentors invest significant time helping the companies succeed.

So far, the Sandbox is supporting about 15 proof-of-concept projects.

But the program also works with businesses that didn’t receive Digital Sandbox dollars, because they were too far along in their business plan or not quite ready.

Fan Addict is one of those startups that didn’t receive initial funding but benefited from the network of resources.

“The connections that the community-supported organizations like Sandbox offer are priceless,” said Joe Lieberman, who founded Fan Addict, a mobile app that lets casual and avid music fans track concerts and other live events in a given city. It’s set to launch in Kansas City this month.

At the Sandbox, he got advice on his business model and how he could expand Fan Addict to other cities.

“If you go into this for any purpose of getting an invoice paid, you have missed the point entirely,” Lieberman said.

If a startup isn’t quite ready for the Sandbox, Shackelford and his team can help them connect with Kansas City’s other business resources, such as Kauffman FastTrac, Small Business Development Center coaches, KCSourceLink and others.

High Hopes

About half of Digital Sandbox’s funding comes from a$1 million grant provided by the U.S. Department of Commerce’s Economic Development Administration. The Missouri Technology Corporation also is putting up $500,000. The private side includes about $610,000 of in-kind resources from the founding partners, including area businesses. The resources largely come in the form of mentors and key stakeholders who can help young businesses with ideas and strategies to get up and running.

The goal is to create at least 10 new businesses by next fall. The businesses need to show high growth that earn follow-up funding or reach $1 million in revenue by September 2014, Shackelford said. It seems like a lofty goal, but the Sandbox leaders are hardly intimidated.

“I think we can do much better than that,” Shackelford said.

DivvyHQ, an application that helps marketers and content producers manage their editorial calendar, has already met that threshold by receiving follow-up funding, said Maria Meyers, the CEO of KCSourceLink and one of the major drivers behind getting the Sandbox funding.

Launching 10 new high-growth companies is just a means to an end. Ultimately, the Sandbox wants to create more jobs in Kansas City.

“We want them to get into business and start hiring people,” Shackelford said.

The Sandbox is especially interested in companies focused on data center and cloud operations, big data and data analytics, mobile applications and data security. It only accepts companies based within the Kansas City region.

“We’re trying to have companies grow locally so we’re funding locally,” said Meyers, who also heads up the University of Missouri-Kansas City Innovation Center, an umbrella organization for several agencies focused on business development and entrepreneurship.

The Sandbox also is expected to help heighten the city’s reputation as a hub for entrepreneurial minds and ideas. That’s some-thing that’s harder to quantify, but Meyers believes the momentum is already there.

Forging New Connections

Two elements help make the Sandbox unique. First, it links some of Kansas City’s leading companies, such as Sprint, Hallmark, UMB, VML, Cerner and RareWire to up-and-coming entrepreneurs.

“What they’re doing is giving us their people’s time,” Meyers said, noting that it provides the link to people who know the industry and the future of the industry.

But a second feature is that the Sandbox also links those same groups to the university research communities at the University of Missouri-Kansas City and elsewhere.

And it’s doing so without breaking the bank. The maximum funding a Sandbox project would receive is $25,000, Shackelford said.

“It’s very often not huge amounts of money,” said Meyers. “It’s enough money to prove that something will work to get the minimal product out.”

The money goes mostly to product and back-end development and intellectual property research.

“We do not provide any money to the company or the CEO itself,” Shackelford said.

Of course, not everybody needs money.

“Some of the people that applied were well beyond what we could do for them,” Shackelford said. “They really need to go raise dollars.”

Life as a Pitching Coach

When the Sandbox started accepting applications, Shackelford responded to every one of the applicants and offered a place to go for help. He invited several of the entrepreneurs to meet with him.

On a recent morning, Shackelford listened as a team from Aireal Mobile sat across from him and practiced the pitch they might eventually give to customers and potential investors.

Aireal is a mobile design studio that can quickly launch and manage a cost-effective mobile presence. Clients include the Country Club Plaza, Dine Tampa Bay, the National Restaurant Association and more.

Aireal already has clients and has proved the product works, so the company is likely too far along to qualify for the proof-of-concept funding. They’re working on the next step, Shackelford said.

The company’s founders, Tony Caudill and Joe Terry, said the network of experts and business leaders available to them through the Sandbox has been invaluable.

“One perfect example is the Summer in the Sand education seminars, where they bring in local subject matter experts to talk about topics that are relevant to all entrepreneurs, including raising funding, market research, how to write technical specifications and many more,” Caudill said.

As Caudill and Terry practice their pitch, Shackelford leans back in his office chair and pauses momentarily. He offers tweaks and tries to poke holes in the presentation—especially the pricing—just as an actual buyer might do.

“You’ll get about 20 minutes,” Shackelford said. But when one of the biggest deals of your life is on the line, he added, the time will go much faster!

Filling the Gap

After a morning of fast-paced meetings with startups, Shackelford laughs when asked if he had this type of guidance in 1996 when he co-founded Birch Telecom.

“Anybody in the financial world would say: Don’t come see me!”

Though the Sandbox has been open only a few months, Shackelford and Meyers said they’ve learned a lot already. The Sandbox started out by accepting applicants on a deadline-based system, but it’s moved to a process that allows businesses to apply and be accepted at any time. It gives the Sandbox team more time to focus on helping everyone succeed.

“We need to have successes and show that we filled a gap in the entrepreneurial ecosystem here,” Shackelford said.

No idea is too small or too big, said Meyers. The constant flow of innovative ideas from area men and women never stops surprising her. The fun part is thinking about who will be the next Henry Bloch or Ewing Kauffman.

“You never know who is going to be the one.”