Kansas City: Why You Should Start A Business Here Before It Becomes “Cool”

Husch Blackwell LLP

[ co-author: Kenyon Briggs]

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:

(1) The 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% 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% from $12.28 million from the year before. Local venture capital is also growing; thirty-one of those companies raised 50% or more of their capital from KC-area investors. It is no wonder that fundraising events like Fund Conference KC are choosing to visit Kansas City in October 2019 for a two-day event where entrepreneurs and investors can network and grow together. 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.

(2) The 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. According to CBRE, Kansas City is one of the fastest growing hubs for tech talent in North America:

  • Kansas City witnessed the 6th largest growth rate for North American tech talent over the last five years;
  • Kansas City’s technology software and services jobs grew by 76% between 2012-2017;
  • Kansas City ranked 7th nationally for the number of added tech talent jobs vs. the number of tech degrees issued; and
  • Kansas City experienced more tech job growth than Los Angeles, Boston, New York, Dallas, Philadelphia, and Washington D.C. between 2012-2017.

Kansas City’s workforce will only continue to grow. Kansas City was named the #2 top city for college graduates by Ziprecruiter in 2017, and Kansas City will continue to receive quality graduates. Twenty universities surrounding Kansas City, including The University of Missouri – Kansas City, Rockhurst University, The University of Missouri – Columbia, The University of Kansas, and Kansas State, offer competitive undergraduate, graduate, and post-doctorate degrees.

(3) The Thriving Startup Ecosystem

Kansas City’s startups benefit from multiple layers of support ranging from startup-focused news outlets, organizations, accelerators, social events, and partnerships. Companies like Startland News and KC Source Link provide information that helps keep founders and investors up to date on what is going on in their startup community. Organizations like the Ewing Kauffman Foundation empower entrepreneurs by giving them tools and resources, conduct and publish startup-focused market research, and work with policymakers to reduce barriers of entry for new entrepreneurs. Groups like Launch KC and the Sprint Accelerator coordinate some of Kansas City’s 25+ 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 and KC TechWeek. Needless to say, if you start a business in Kansas City, you will not walk alone.

(4) The Secret Ingredient

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?

Kansas City takes the crown because of its secret ingredient: the city itself. Not only does Kansas City offer all the resources that will attract successful businesses, it also possesses all the amenities and luxuries that will 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. The median home value was approximately $195,000, and the median rent was approximately $1,250. More specifically, Kansas City’s average rental unit is 899 sq. ft. and costs $1,003 per month. According to Rent Café, 46% of apartments in Kansas City rent between $701-$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; Kansas City’s new $1.5 billion single terminal airport broke ground this year and is expected to be completed in 2023; 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; 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”: the city provides free public WiFi to fifty-four square blocks of downtown KC, interactive kiosks are placed at streetcar stops and throughout downtown, smart streetlights and traffic signals gather data to help run the city more efficiently, and the smart city innovations will continue in the future.

City Growth: Kansas City has spent more than $2 billion for new developments in its downtown area since 2016. Additionally, Kansas City’s downtown population is expected to increase by 33% by 2025. This large population growth is partially due to national corporations headquartered in Kansas City doubling down on their local investments. For example, Cerner recently began construction on the second phase of its new 4.7 million sq. ft., $4.45 billion campus. Burns & McDonnell completed a 311,000 sq. ft. headquarters expansion in 2016 and another 142,000 sq. ft. 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 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, who won the 2015 World Series, the Kansas City Chiefs, home to the reigning football MVP, Patrick Mahomes, and Sporting Kansas City, winners of the 2013 MLS Cup. Shop at top-tier locations like the Country Club Plaza, Zona Rosa, and Crown Center. Local BBQ joints like Joe’s KC (order the Z-Man with a side of fries), 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 sit out on one of the many roof-top bars and enjoy a happy hour with friends.

When people first think of Kansas City, images of farm land 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.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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