A newly closed, oversubscribed $41 million KCRise Fund II is poised to accelerate regional growth with an influx of talent and investment dollars for 20 high-growth technology companies benefitting Greater Kansas City, said Darcy Howe.
And the work has already begun, the fund’s founder and managing director added.
Before today’s closing announcement, Fund II had invested in 8 of the 20 companies targeted, all of which are located directly in the region or strategically accretive to the region, Howe said. Half of KCRise Fund II companies to date are led by female or diverse founders.
Click here to read more about Daupler and TripleBlind, two of Startland News’ 10 Kansas City Startups to Watch in 2021.
“2020 brought talented former Kansas Citians back to the region, away from their higher-cost, coastal environments,” Howe said, referencing pandemic-era workplace shifts that brought unexpected benefits. “KC-based technology companies also learned that a distributed workforce can be highly productive. These two factors have increased the quality of talent joining our portfolio companies and accelerated traction.”
Investors include 17 corporations and universities headquartered in the Kansas City region, along with numerous families and family offices, many with next generation family members leading engagement and learning the discipline it takes to be a venture investor, according to Howe.
Click here to read why Blue KC joined the group of investors backing KCRise Fund II.
Today’s announcement follows the launch of the $19 million KCRise Fund I three years ago, Howe said, which helped bridge the high-growth technology funding gap in the KC region.
“Our goals for Fund II remain the same as in Fund I: educate and grow the number of venture investors who will invest in this region, connect large businesses seeking innovation with the innovative companies being built in their own backyards, and deliver financial results which will encourage doing it all over again,” Howe said.
“Additionally, Fund II has attracted investors outside of the region who believe our strategic regional thesis is a competitive advantage in building a venture pipeline and working toe-to-toe with founders and their teams.”
The results of Fund I have exceeded expectations since fundraising first kicked off in September 2016 and closed a year later, said Ed Frindt, partner at KCRise Fund.
“The growth of our firm is a testament to the collaborative culture of Kansas City,” he said. “Our investors recognized the multiplier effect of how organized risk capital, hands-on mentoring, and opening of their personal networks could catalyze growth for KC’s entrepreneurs. Our hyper-local model brings a competitive advantage not only to our founders but to our financial returns.”
Out of KCRise Fund I’s 20 portfolio companies, five have exited, including BacklotCars, PayIt and Zego. Those five exits returned nearly 100 percent of investor capital called, with 15 investments still remaining, according to the fund.
To date, Fund I companies — since KCRise Fund’s investment — have attracted $358 million in investor capital, 78 percent of which was from outside the region, Frindt said.
Click here to read more about BacklotCars’ $425 million exit to KAR Global in 2020.
KCRise Fund builds syndicates with institutional investors around the globe who are attracted to the capital efficient, revenue-focused innovators identified and supported by the fund.
“Our partnership with KCRise Fund II fits perfectly with our transformation agenda, recognizing how critical it is to connect with and be inspired by the world outside of H&R Block,” said Jeff Jones, CEO and president of H&R Block, a KCRise Fund corporate investor. “Early-stage companies need market validation, counsel and customers, and we’re a good testing ground for one another. There is no question to me that investing in our own backyard improves our community and our economy.”
Click here to read more about H&R Block’s decision to invest $2 million in KCRise Fund II.
KCRise Fund now has the largest assets under management — $60 million — by a Midwest venture firm founded solely by a woman. CBInsights lists KCRise Fund as the most active venture capital fund in the state of Kansas.