Editor’s note: The opinions expressed in this commentary are the author’s alone. Ed Wilson and Kenyon Briggs are attorneys at Husch Blackwell in Kansas City. This op-ed is sponsored by Husch Blackwell.
Silicon Valley has been known as America’s premier innovation capital for decades. Between easy access to funding, a strong entrepreneurial network, and a long line of startups-turned-industry-giants, it is no wonder why so many successful entrepreneurs and investors do business in “the Valley.” Why, then, is a mass exodus of the Bay Area in progress? As the exorbitant cost of living continues to skyrocket and Silicon Valley investors put more money into startups located outside of the Valley, many innovators are looking for a more affordable city to plant their entrepreneurial roots.
Kansas City — a lively metropolitan area that straddles the line of Kansas and Missouri — was recently dubbed “The Silicon Prairie” by the Wall Street Journal. Cheesy naming aside, the comparison to Silicon Valley is easily drawn because Kansas City shows signs of becoming one of the country’s top startup destinations in the near future. From a rapidly growing tech force, to an affordable cost of living and a well-connected startup community, here are four reasons why you should look to Kansas City for your next business startup, especially before everyone else does:
Influx of venture capital
A growing number of venture capitalists are putting their dollars into Kansas City businesses. Startland News reported that $908 million of venture funds were invested in sixty-one Kansas City businesses this past year, up 89.7 percent from $478 million the year before. Nineteen of those companies received venture funding for the first time in 2019. The average venture-backed company raised $17.46 million in the past year, up 42.2 percent from $12.28 million from the year before. Local venture capital is also growing; thirty-one of those companies raised 50 percent or more of their capital from KC-area investors. Not surprisingly, investor-focused conference organizations like FUND are targeting Kansas City for growth opportunities. Investors from across North America realize that world class companies are being built in Kansas City right now. Additionally, although areas like San Francisco and New York City still boast an impressive venture capital presence, quality companies no longer need to look to the coasts for money.
Growing tech force
A business is only as successful as its team, and Kansas City is home to some of the fastest growing, highly qualified, young talent in the country. One of the fastest growing hubs for tech talent in North America according to CBRE, Kansas City:
- Witnessed the sixth largest growth rate for North American tech talent over the last five years
- Saw technology software and services jobs grow by 76 percent between 2012-2017
- Ranked seventh nationally for the number of added tech jobs vs. the number of tech degrees issued
- Experienced more tech job growth than Los Angeles, Boston, New York, Dallas, Philadelphia and Washington D.C. from 2012-2017
Kansas City’s workforce will only continue to grow. Ranked second among top cities for college graduates by Ziprecruiter in 2017, Kansas City will continue to receive quality graduates from the some 20 surrounding universities, including state schools like The University of Missouri – Kansas City, The University of Missouri-Columbia, The University of Kansas, and Kansas State University, who offer competitive undergraduate, graduate, and post-doctorate degrees.
Thriving startup ecosystem
Kansas City startups benefit from multiple layers of support ranging from startup-focused news outlets, organizations, accelerators, social events, and partnerships. Companies like Startland News and KCSourceLink provide information that helps keep founders and investors up to date on what is going on in their startup community. Organizations like the Ewing Marion Kauffman Foundation empower entrepreneurs by providing tools and resources, conducting and publishing startup-focused market research, and working with policymakers to reduce barriers to entry for new entrepreneurs. Groups like LaunchKC and the Sprint Accelerator coordinate some of Kansas City’s 25-plus accelerators that span the healthcare, FinTech, and CleanTech industries, among others. Entrepreneurs can network at social events like coordinated happy hours, conversations over coffee, pitch events, and music festivals. Finally, local entrepreneurs can connect with innovators across the world at large events like Fund Conference KC. Needless to say, if you start a business in Kansas City, you will not walk alone.
You may be asking yourself “so what?” Many cities in North America can point to some combination of growing venture capital opportunities, a strong tech force, and a well-connected entrepreneurial community as reasons why they should be the home of your next business or business investment. Why does Kansas City edge out those other destinations? The secret ingredient is simply the city itself. Not only does Kansas City offer all the resources that attract successful businesses, it also possesses the amenities and luxuries to keep successful businesses here for the long term. Here are just four specific highlights to showcase:
Cost of Living: The Kansas City metro area’s low cost of living is difficult to beat with the median home value at approximately $195,000, and median rent approximately $1,250. More specifically, Kansas City’s average rental unit is 899 square feet and costs $1,003 per month. According to Rent Café, 46 percent of apartments in Kansas City rent for $701 to $1,000 per month.
Transportation, Utilities, and Infrastructure: Kansas City boasts one of the shortest commute times in the nation, averaging 23 minutes. A free downtown streetcar line is available for the public and the city recently approved a new expansion that will connect the Country Club Plaza to the north end of downtown plus, you can easily navigate most parts of Kansas City on your own two feet, including areas like downtown, the Crossroads Arts District, the Power and Light District, the Country Club Plaza, and the West Bottoms. Kansas City’s new $1.5 billion single terminal airport broke ground this year and is expected to be complete in 2023.
Google Fiber provides many parts of Kansas City with internet speeds up to 1,000mbs and Kansas City is one of the world’s leading “smart cities” providing free public WiFi to fifty-four square blocks of downtown, interactive kiosks at streetcar stops and throughout downtown, smart streetlights and traffic signals to gather data to help the city run more efficiently. And more innovations are on the horizon.
City Growth: Kansas City spent over $2 billion on new developments downtown since 2016. Additionally, Kansas City’s downtown population is expected to increase 33% by 2025, fueled in part by the national corporations who call Kansas City home, doubling down on local investments. For example, Cerner recently began construction on the second phase of its new 4.7-million-square-foot, $4.45-billion campus. Burns & McDonnell completed a 311,000-square-foot headquarters expansion in 2016 and another 142,000-square-foot expansion in 2018. Finally, Garmin is in the middle of a $200 million headquarters expansion. With these large corporations needing to hire thousands of new employees to staff the expansions, it is no wonder why Kansas City’s multi-family housing market is one of the hottest in the nation, adding over 14,000 units since 2014, including more than 5,100 units added downtown.
Things to Do: Kansas City is home to world-class culture and entertainment. Between the Sprint Center, KC Live, Midland Theatre, Uptown Theatre, Starlight Theatre and the Kauffman Center for the Performing Arts, there is no shortage of bands, groups, acts and shows coming through. If you enjoy museums, you will love spending time at places like The Nelson-Atkins Museum of Art, the Negro Leagues Baseball Museum, the American Jazz Museum, the National Frontier Trails Museum and the Kemper Museum of Art. If you appreciate local, national, and global history, visit sites like Union Station, President Harry Truman’s Presidential Library and boyhood home, and The National World War I Museum. Kansas City is home to three successful major league sports teams: The Kansas City Royals, 2015 World Series champion;, the Kansas City Chiefs and reigning football MVP, Patrick Mahomes; and Sporting Kansas City, winners of the 2013 MLS Cup. The Country Club Plaza, Zona Rosa, and Crown Center offer top-tier shopping. Local BBQ joints like Joe’s KC, Arthur Bryant’s, Jack Stack, and Gate’s will leave your fingers covered in sauce and your stomach satisfied. Finally, if you enjoy the outdoors, explore 200 miles of trails and 45,000 acres of metro parks, drive to multiple lakes, or enjoy a happy hour with friends at one of the city’s many rooftop bars.
When people first think of Kansas City, images of farmland and cow pastures (aka flyover country) likely come to mind. However, while numerous farms and pastures cover Missouri and Kansas, there is so much more to Kansas City. Kansas City is an affordable place to live with a booming economy, it is home to amazing cultural amenities and high-caliber sports teams, and it has everything necessary to start a world-changing business. Venture capital funds have started to pay attention, and businesses are already taking off. Your business could be next, and you will thank yourself later.
Edward Wilson is a Kansas City-based partner with Husch Blackwell LLP focused on mergers and acquisitions and corporate law and represents both established and emerging businesses.
Kenyon Briggs is an attorney in Husch Blackwell LLP’s Kansas City office.