Best Practices

KCSourceLink: New Action Plan Reveals Funding Gaps for Early-Stage Companies

Published Jun 18, 2015 by Sarah Mote

Increasing funding in Kansas CityHere's the funding reality: like so many entrepreneurial communities, Kansas City is leaving millions of dollars on the table, funding that could fuel the early-stage startups that create jobs and spur economic growth. A new report from KCSourceLink reveals the region is lacking in microloans, seed capital and locally based venture capital firms. 

It's one thing to say there's a funding problem. KCSourceLink took the discussion two steps further: they tested the assumption against data, and with the help of their Resource Partner network, designed a five-year action plan to increase the availability and accessibility of capital for Kansas City's entrepreneurs and fill the gaps in the finance continuum.

Those gaps and the ​plan to fill them are outlined in We Create Capital, a study developed by KCSourceLink and its network of Resource Partners.

Key gaps in KC's funding landscape

  • The Kansas City Regional Microloan program is successful, with a less than 3% default rate, but funding was only available for fewer than 300 businesses. Leveraging federal microloan funding could make more loans possible.
  • Kansas City-area companies are not using federal grant programs like SBIR and STTR, compared to other parts of Kansas and Missouri.
  • Kansas City has a significant gap in equity funding at the seed stage.
  • Most later-stage investment in area companies comes from outside the region.
  • The Kansas City investment community is not connected, leading to lack of deal flow.
  • The continuum for early-stage companies seeking debt and/or equity needs to be strengthened.

What's it going to to take to fill the gaps?

The study sets out four bold actions that, if embraced by the community (that's you), can drive significant dollars to support startups.
  • Increase the availability of alternative loan funds to $10 million by 2020
  • Increase local, state and federal grant funding to early-stage and R&D focused businesses to $6 million by 2020
  • Increase seed capital investments to $10 million per year by 2020
  • Double the number of venture capital investments of $1 million to $10 million in the Kansas City region by 2020

Data in the report, which looks at key gaps in both the debt and equity finance systems, reflects the funding landscape as of December 2014.

Funding for the report came from the US. Department of Commerce Economic Development Administration. For a complete copy of the report and recommended action steps, go to www.wecreatekc.com.

Want to bring this kind of study to your community? Contact info@ussourcelink.com for details. Just drop "We Create" in the subject line.