For most of the 200 Kauffman Fellows attending the Reunion VC Summit, it is their first time visiting Kansas City.
To help them get a taste of the metro’s entrepreneurial ecosystem, Keith Harrington, Kauffman fellow and partner at Kansas City-based Fulcrum Global Capital, presented some cultural highlights at the summit Tuesday.
Like many Midwestern cities, Kansas City has the reputation for being “nice.” Harrington said this mentality lends itself to phenomenal work ethic and grit among entrepreneurs. He added that the Kansas City ecosystem relies on trust — you can count on the community to be there.
Although being nice is often considered as a good thing, it also yields challenges. Harrington said that Kansas City entrepreneurs tend to be risk averse and fear failure.
“(In Kansas City,) fear is not always viewed as just another step on the way to success, the way that it might be viewed on the coast,” Harrington said. “Failure sometimes leads to shunning, and that is a problem in this ecosystem.”
Harrington said he believes this behavior is changing, and that the benefit of being nice outweighs the potential disadvantages.
“You won’t find a more generous community than Kansas City,” Harrington said. “People are friendly. People are generous and we have a clear culture of giving back. The Kauffman Foundation has had a deep and profound impact in creating that culture.”
Harrington said that the talent in Kansas City is very strong, thanks to its close proximity to several universities — such as the University of Missouri-Kansas City and the University of Kansas — with engineering and entrepreneurship programs. He added that the metro’s relatively low cost of living helps attract millennials to live and work in the area.
Access to capital is a hot topic for every midwestern entrepreneur, Harrington said. In contrast to entrepreneurial ecosystems on the coasts, Midwestern entrepreneurs must get creative in their search of capital that’s often scarce. That situation in Kansas City, however, is improving, Harrington said.
Over the past two years, Kansas City has welcomed several new venture capital and angel funds. Flyover Capital, Royal Street Ventures, Firebrand Ventures, KCRise Fund, The Collective Fund, and Harrington’s own Fulcrum Global Capital are among a few of the new organizations.
Other opportunities that Kansas investors can take advantage of are the state’s angel tax credits, which offers accredited investors a tax credit of up to $50,000 on an investment in a Kansas business, helping to mitigate risk and encourage investments. In Missouri, there are government funded programs that entrepreneurs can tap, including LaunchKC, Digital Sandbox KC and the Missouri Technology Corporation.
“What we hear from a lot of entrepreneurs here is that it is a lot easier to raise money for a nonprofit than a startup — and a lot easier than raising money for a fund,” Harrington said. “But, that belief in other people is starting to make its way to Kansas City.”
Alluding to EyeVerify’s recent exit, Harrington said the financial rewards of startup successes are starting to recycle into the ecosystem. He said that Kansas City’s reputation as an innovation hub is starting to get recognized around the country.
“I believe Kansas City is an (entrepreneurial) ecosystem on the rise,” Harrington said. “All of the trains are running in the right direction.”