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Missouri is leaving millions of dollars on the table, funding that could fuel the early-stage startups which by the way, create nearly 80% of net new jobs in Missouri.
MOSourceLink's Show Me Capital: Financing Early-Stage Companies in Missouri maps the state’s capital landscape. The report reveals key gaps in both the debt and equity finance systems, draws on funding and financing activity across the state and analyzes data from more than 30 loan programs, 600 grant and equity investments and 50 venture capital firms. The report reflects the state of capital as of December 2019.
The good news: it’s clear what needs to be done to fill the gaps in the early-stage finance continuum.
“Capital is critical to get innovations off the ground and get customers in the door. Nearly 60% of new business owners bootstrap their business with personal savings, which leaves out those aspiring entrepreneurs who don't have personal wealth to lean into,” said Jim Boyle, co-founder of Justine PETERSEN, the largest player in microlending in Missouri. “Increasing the accessibility of microloans removes a barrier to the hope and economic mobility of entrepreneurship.”
There are some key takeaways about the gap in
Missouri capital that we found:
- Missouri needs more alternative loans, especially in rural areas: While a number of organizations have alternative loan funds, many of those resources are underutilized and/or underfunded.
- The pipeline of growth companies needs support at the early stages. Grants play a critical role by fueling companies too new for investors who often expect immediate returns. Data from programs like Digital Sandbox KC prove that investing in companies’ earliest stages helps them survive the “valley of death” and leads to follow-on funding. Federal grants are one avenue for early-stage funding, but Missouri lags compared to leading states in taking advantage of federal research grants (SBIR/STTR).
- Missouri companies need better access to equity-stage investment. While Missouri compares favorably to some neighboring states in venture capital raised, it lags behind others. Also, Missouri-based VC funds invest in early-stage companies, but not necessarily those based in Missouri.
“The message is clear: we need to connect and activate capital of all types at all stages to support our Missouri businesses, especially those in the very early-stages,” said Ben Johnson, vice president, programs at BioSTL, a collaborative group of St. Louis civic, academic and business leaders who support medical and plant science innovation. “Access to the right capital at the right time is often the critical difference between those who survive the ‘valley of death' to generate revenues—and those businesses that fold.”
Ready to Make a Difference?
Get into the data. With Show Me Capital, we now have the information we need to get and keep capital in the state of Missouri. Download it now so we can help entrepreneurs today.