Editor’s note: Net-zero home-building startup Acre Designs, which found its start in Kansas City, recently entered the world’s best business accelerator program: Y Combinator. After facing a tepid investor market in Kansas City, the company will be staying in the San Francisco area after the program’s conclusion.
Kansas City fosters an enviable work ethic, steady industry and a warm mentorship environment.
But Kansas City’s “show me” mentality is stagnating its startups. Investors are hard to access, risk-averse and take several meetings to make decisions — affectionately dubbed the “slow no.” In Acre’s experience, many aren’t necessarily even interested in startups specifically, and treating startup investment like other investments doesn’t translate.
If you’re not searching for big new ideas, you’ll find a reason to say ‘no’ much easier than finding the potential in an inspiring concept and a coachable team. And the fact that not many people are playing in the pool means the level of sophistication isn’t growing quickly enough.
There’s a perception that investors in Silicon Valley play fast and loose. But it’s really just a comfort level with these kinds of investments and knowing what to look for in a team.
“‘Lack of funding’ means selling a piece of furniture to buy diapers. There’s a serious psychological component to that. When you lack funding, you’re constantly adjusting your goals to what’s immediately possible.” – Jen Dickson
Most Silicon Valley investors are former startup founders themselves so they have a passion for big ideas and intimate knowledge of the challenges startups face. They make quick decisions and bring not just money, but the expertise to a partnership. They see potential where others fear risk, but they’re savvy about evaluating that potential.
Y Combinator’s application process was very thorough, and the interview was friendly but intense. It actually flew almost 500 teams to Mountain View, Calif., from all over the world for 10-minute interviews and then called them that evening with their decision! It seems crazy, but they’ve found a process that works and the results don’t lie.
We talk about this local problem with a very sanitized definition of “lack of funding” — as if it fits tidily into a business ledger. For startup founders, business and life bleed together in every way.
“Lack of funding” means selling a piece of furniture to buy diapers. There’s a serious psychological component to that. When you lack funding, you’re constantly adjusting your goals to what’s immediately possible. It begins to compound the problem as potential investors wonder why you haven’t accomplished more, and you spend more time chasing bills than focusing on your product and customers.
Things are improving in Kansas City, with such announcements as Royal Street Ventures coming into the area to provide much-needed seed funding. But we still have a long way to go to see that the best ideas have the support they need at critical early stages so they can become the success stories that boost Kansas City’s entrepreneurial ecosystem.