Missouri Innovation Fund Would Be a Game-Changer

by Andrew Smith | Mar 13, 2018
Over the last decade, Missouri state has made tremendous progress as a hub for entrepreneurs. Both Kansas City and St. Louis are among the top mid-sized cities in the nation for startups according to third-party monitoring organizations like the Kauffman Foundation. Startup ecosystems in Missouri’s small towns and rural areas have earned national attention. At a time when Missouri’s brand image and reputation are under assault by large media organizations outside our state, our entrepreneurs are providing a powerful counter-narrative: that Missouri is a place where innovators can make a meaningful difference in their communities by creating jobs and wealth.

Senate Bill 1037 would establish the basic legal framework for the eventual creation of a Missouri Innovation Fund, something that is essential if Missouri is to remain competitive in the national and international innovation economy.

Our momentum is strong, but there is no guarantee that it will continue. Recent scale-backs in the Missouri Technology Corporation have cut funding for startups and the organizations that support them to critical levels. In today’s competitive talent marketplace, it is essential that Missouri continue to signal its commitment to entrepreneurship and innovation, or top talent will leave our state for more favorable environments. Even before the cuts to MTC, other states in the Midwest were already providing significantly more financial support to startups than Missouri.
As a former entrepreneur myself, I am a strong believer in the free markets. However, I also know that for early-stage ventures, the capital markets are highly inefficient. Private risk capital is concentrated in coastal enclaves. This draws entrepreneurial talent to those enclaves, creating a “virtuous cycle” of investment and innovation. In Missouri, we face the opposite situation: the possibility of a vicious cycle where limited access to capital forces our native talent to go elsewhere and make it unattractive for outside talent to relocate here.

Creating a professionally managed, early-stage venture fund would give Missouri entrepreneurs a fighting chance to compete with their coastal counterparts. This bill does not allocate any money to such a fund, it merely establishes a framework for such a fund to be created. Therefore, there is little or no risk, only upside. S.B. 1037 is a modest but important first step towards making Missouri the top innovation hub between the coasts.