Report shows increase in first hires, ‘available capital’ for KC businesses

A new report shows a big increase in the capital available to early-stage companies in the Kansas City area over the past three years, with “available capital” increasing 290 percent from 2013 to 2016.

The report, titled “We Create KC,” was prepared by KCSourceLink, an organization that works to connect entrepreneurs to a network of resources in the area. This is the fourth year KCSourceLink has prepared the report, which is designed to measure progress toward the Greater Kansas City Chamber of Commerce’s 2011 goal of making Kansas City “America’s most entrepreneurial city.”

“We started our organization with a mission to make Kansas City a great place for entrepreneurship,” said Kate Hodel, who works on special projects at KCSourceLink. “This report shows progress in that direction.”

To come up with the “available capital” figure, KCSourceLink identified funds available through grant programs, angel investing groups and venture capital firms based both in and outside of Kansas City. All organizations identified had expressed interest in investing in Kansas City businesses, according to Hodel.

“Available capital” rose to $752 million in 2016, up from $193 million in 2013.

Hodel attributed the big jump in that number to outside groups interested in investing in Kansas City, either by opening up offices in the city or meeting with businesses to pursue deals.

“We are seeing the emergence of new capital sources from outside Kansas City,” she said.

First hires on the rise

The report also indicated an increase in the number of businesses in the Kansas City area adding their first employee, with 4,679 making that hire in 2015, the most recent year for which that data was available. An average of 4,400 businesses have hired their first employee per year since 2009, according to the report. The number has risen from a low of less than 4,000 in 2009, at the height of the financial crisis.

“Innovation-led” businesses, which include high-growth technology companies in areas like aerospace engineering, computer hardware and software, telecommunications, pharmaceuticals and scientific research, made up about 12.5 percent of all companies making their first hire in 2015.

Entrepreneurial demographics

“We Create KC” also offered a peek into the demographics of the Kansas City entrepreneur community, based on the entrepreneurs who have sought assistance from KCSourceLink. The majority of entrepreneurs — about 53 percent — have a four-year degree or more education. People between the ages of 25 and 44 formed the majority of the entrepreneur pool. Almost 60 percent of the entrepreneurs sell their products locally, with about a fifth selling them regionally and less than 20 percent selling nationally or internationally.

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