Before You Fly Over Kansas City, Read This

Editor’s note: Claude Aldridge is co-founder and CEO of Trellie.

Yeah, we got Google Fiber before you did, so get over it…because we can’t have this conversation until you consider the idea that Kansas City might actually be for real. Are we ready for the big time? Nope, not yet, but our MVP is looking really good. Here’s one man’s opinion on a city that is trying to find a seat at the grownup table.

Shared by both Kansas and Missouri, K.C. is a great city. Anyone who has visited will vouch for us. We have some of the most humble, hard-working, talented people that you’ll find who share an appetite for greatness. We host corporations such as Sprint, Hallmark, Garmin, H&R Block, DST and Cerner and consider ourselves privileged to watch some of the best college and professional sports teams in the world (Go Royals!). Our public and private schools are consistently ranked among the best, the cost of living is exceptional and our BBQ takes a backseat to no one. All good things, but the buzz today is all about our emerging tech scene.

Founding companies in the Silicon Prairie while maintaining a presence on the coasts is proving to be a legitimate way of doing business.

 

Yes, in the not-too-distant past, Kansas City was a flyover town for entrepreneurs and investors alike, but not anymore. In a few short years, we became the first city to get Google Fiber, launch Kauffman Foundation’s 1M Cups (70 cities and counting) and get bipartisan support to become “The Most Entrepreneurial City.” Startup Village was founded, TechStars came to town and now smart money from the coasts has started to trickle in.

We count Fred Wilson (Union Square Ventures), Brad Feld (Foundry Group) and Kleiner Perkins as notable investors in Kansas City companies. We may not have the volume yet, but we’ve got the quality. Building a company in the Silicon Prairie is no longer a detriment but rather an advantage. What you can do with Series A money on either coast doesn’t hold a candle to how far we can stretch that money here, and there is plenty of talent to support it.

Founding companies in the Silicon Prairie while maintaining a presence on the coasts is proving to be a legitimate way of doing business and the world is on watch. Does that mean we have it all figured out? Not by a long shot.

Funding in Kansas City is still scarce. There’s money here, but by our very nature Midwesterners are conservative. Investing capital in pre-revenue technology startups, and all the trials and tribulations that go along with that, is a new concept to a lot of people. There is a running joke here about the need to have two pitch decks prepared at all times. One discusses how you are going to take over the world for pitching in San Francisco and New York City and another one describes how soon you are going to start making money (the shortsighted pitch deck).

The local angel investor contingent continues to try to grow into the opportunity in front of them but simply hasn’t kept up with the pace of innovation happening in Kansas City. Unfortunately, the local VC landscape isn’t much better. OpenAir Equity Partners, led by Ron LeMay (chairman of GoGo, former CEO of Sprint PCS and an investor in my company, Trellie), has been a mainstay and a bright spot in the Kansas City investment community for years that continues to support the early-stage tech scene with investment and resources necessary to grow these companies.

Aside from a few other regional funds such as Dundee Venture Capital in Omaha, there’s a lot of talk and little action. Until our local investors realize that seed-stage investments don’t come wrapped in a bow complete with patent-protected, product-market fit, generating $1 million-plus in sales at 50 percent margins with a $2 million post-money valuation, our overall success as a tech hub is limited. It’s only a matter of time before the local investment community either gets educated or gets run over by more seasoned investors from the coasts that recognize this huge opportunity and love our low valuations.

The next logical step in this evolution is up to us — the entrepreneurs — to do a better job of helping these corporations understand how to adopt the fast-moving, rule bending, launch-and-pivot mindset we’re so good at.

 

Kansas City corporate participation in this ecosystem presents a different set of challenges. Thankfully, most of the ones I mentioned previously have publicly committed to supporting the startup scene. The problem is they’re having a really hard time figuring out what that means. Sprint has partnered with TechStars and brought a mobile health accelerator to town. Hallmark and DST have become major sponsors of startup events and even provided access to in-house talent and resources.

Cerner launched its own corporate venture fund. We’re definitely seeing the rest of the large corporations warm up to the idea of working with startups in various capacities. They are trying.

The next logical step in this evolution is up to us — the entrepreneurs — to do a better job of helping these corporations understand how to adopt the fast-moving, rule bending, launch-and-pivot mindset we’re so good at. Accepting the idea that startups and entrepreneurs can be an integral part of reinventing corporate innovation inside AND outside these companies will only help further everyone’s best interests.

The last big hurdle we face in Kansas City is achieving some “big wins” to validate our progress. There have been some notable acquisitions in the past few years such as Zave to Google, VinSolutions to AutoTrader and Freightquote to C.H. Robinson but we need more and we need bigger. This city was largely built by great entrepreneurs such as Ewing Kauffman, J.C. Hall, Henry Bloch and most recently Cliff Illig and Neal Patterson.

The potential has always been here, we just need some big exits to solidify our status in the national conversation. The good news is those are coming. C2FO (working capital marketplace), FarmLink (big data in agriculture), Adknowledge (ad tech), HylaMobile (mobile handset trade-ins) and EyeVerify (biometric authentication) are among the startups in Kansas City with potential billion-dollar exits looming. Once the ball drops, Kansas City will no longer be playing for table stakes.

So the next time you think about whipping out the crafty “we’re not in Kansas anymore” mantra as you fly over our city, maybe you ought to consider stopping over to see what all the fuss is about. Google did.