Venture Capital

GUIDE: LOANS, GRANTS AND EQUITY FUNDING > PART NINE

Venture Capital

Venture capitalists (VCs) invest money in newer businesses. These capital investments come later in the business cycle after the company has already had investors. Many entrepreneurs think “big money” when they consider venture capital. But it can be a complicated relationship – and it’s not for everyone. Here’s how it works.

Venture capital basics

WHO ARE VENTURE CAPITALISTS?

VCs are private-equity investors. VC firms invest funds provided by limited partner investors. These limited partners can be pension funds, insurance companies, foundations and even individuals with ultra-high net worth.

These firms provide funding to companies that show potential for significant growth. In exchange, VCs get an equity stake in the business. VCs see investing in new or expanding companies as a high-risk, high-return activity. They’re looking to make more than they could investing in the stock market.

WHAT’S AN EQUITY STAKE IN A BUSINESS?

An equity stake means owning a percentage of the business. When a VC invests in a business, they do it in exchange for a percentage of the business. This means they gain significant control over company decisions.

HOW MUCH DO VCS INVEST?

Venture capitalists usually make good-sized investments, and those numbers are going up. In 2020, more than 10,800 U.S. companies received venture funding. And 3,680 venture funds had $548 billion in assets under management, according to the National Venture Capital Association. The amount of money that VCs invest in individual startups obviously varies. However, they invest after the initial investing rounds, after a business has had time to get their act together and really show potential.

DO VCS INVEST IN THE MIDWEST?

You bet. California and New York have the highest rate of VC investments in the country. In 2020, Missouri ranked 24th and Kansas ranked 38th among states for capital invested by VCs. That money matters. Missouri companies raised more than $475 million in venture capital through a total of 79 deals. And Kansas companies raised almost $100 million through 21 deals.

IS FINDING VENTURE CAPITAL A GOOD IDEA FOR MY BUSINESS?

Possibly. Read on – or call KCSourceLink at 816-235-6500. Our Network Navigators provide free help. They can point you to the resources that are right for you and your business, no matter what funding stage you are in.

WHO SHOULD WORK WITH A VC?

Venture capital funding can be a good fit for businesses that are about to see significant growth. But the owners need to be in the right mindset.

Before you meet with a VC, you and your business partners need to answer some tough questions:

  • Am I willing to give up some ownership and control of the company?
  • Can I show that the company will likely show significant revenue and earnings in the next three to five years?
  • Can I demonstrate that my company will produce a solid return for investors?
  • Am I able to take guidance from investors and accept decisions from the board of directors even if I don’t always agree?
  • Do I have an exit plan that might mean I’m not involved in the business in three to seven years?

If your answers indicate major company growth and flexible business partners, finding a VC might be a smart next step. And if you’re not there yet but headed in that direction, KCSourceLink can help you take those final steps. Reach out to our Network Navigators.

HOW DO I PREPARE TO MEET WITH A VC?

Once you’ve taken an honest look at your company, you need a solid business plan and executive summary. It should include:

  • Financial overview for at least the next three years
  • Sales and marketing plans
  • Goals for the next three to five years and the actions you’ll take to reach them
  • Exit strategy

This list might appear short, but those four bullet points represent a lot of heavy lifting. You need a detailed road map for your business and a pitch that perfectly represents it.

We highly recommend working with an expert to find the best investment group and prepare your pitch. Many resources are listed here. Not sure where to start? No worries. Call KCSourceLink at 816-235-6500. We can connect you for free with the experts who can help you reach your goals.

Who Can Help?

Accelefund

Accelefund helps aspiring entrepreneurs invest in their companies using retirement savings without paying taxes, early withdrawal penalties or taking out a loan.

Specializes in: Obtaining Equity Funding

Capital Access Center

The Capital Access Center (CAC), part of the Kansas Small Business Development Center (SBDC), is a consulting service to small business owners needing Capital (loans, lines of credit, etc). Due to state-specific funding for the Capital Access Center, we are only able to work with Kansas businesses.

Specializes in: Obtaining Equity Funding

Community Capital Fund

Since 2012, the Community Capital Fund has deployed more than $1,500,000 to neighborhoods and grassroots organizations, as well as entrepreneurs and small businesses, organized nine Community Development Workshops that have collectively drawn more than 2,100 community leaders and fiscally sponsored 10 social ventures that have raised more than $1,500,000 collectively.

Specializes in: Obtaining Equity Funding

Endeavor Heartland

Established in 2019, and later expanded into Kansas City and Tulsa, Endeavor launched in Bentonville, Arkansas to support entrepreneurs with the potential for economic and social impact in America's Heartland.

Specializes in: Obtaining Equity Funding

equity²

equity² is an impact investment firm committed to deploying capital in inclusive and equitable ways.

Specializes in: Obtaining Equity Funding

TechAccel - Technology Accelerating Partners

TechAccel is a venture development and technology organization that invests across the agriculture, animal health and food science industries. They work with startups, universities and corporate partners to fund and advance new discoveries to market.

Specializes in: Obtaining Equity Funding

Enterprise Center in Johnson County

The Enterprise Center in Johnson County (ECJC) is a venture development organization providing resources and connections to accelerate the success of early-stage companies.

Hispanic Chamber of Commerce of Greater Kansas City

The Hispanic Chamber of Commerce of Greater Kansas City is dedicated to the creation, advancement, promotion and development of economic opportunities within the Hispanic market and business community.

Innovation Stockyard

he Innovation Stockyard operates the Kit Bond Science and Technology Incubator on the campus of Missouri Western State University with a focus on economic and workforce development, and animal health and nutrition.

InvestMidwest Venture Capital Forum

InvestMidwest highlights startups in the Midwest region with the most promise for success.

The conference provides an ideal opportunity for entrepreneurs to raise capital and all attendees to make new connections.

KU Innovation Park

KU Innovation Park, with locations at both the University of Kansas Lawrence Campus and Kansas University Medical Center in Kansas City, Kansas, is the largest incubator system in the state. It is comprised of three separate facilities totaling approximately 90,000 square feet of wet lab, office space and shared work spaces.

Missouri SBDC at Northwest Missouri State University - St. Joseph

The SBTDC offers confidential, one-on-one counseling, coaching and training to existing businesses and emerging business owners.

Missouri SBDC at University of Missouri Kansas City

Missouri SBDC at UMKC is OPEN for business; both virtually and in-person for our trainings and counseling. Contact us at [email protected] to talk how we can help you SOAR with your entrepreneurial journey

Technology Venture Studio

The Technology Venture Studio helps move early-stage innovations from concept to reality—all to create jobs and economic impact, attract more equity funding to our region and establish Kansas City as a tech hub.

The Black MasterMind Group Charitable Foundation

The Black MasterMind Group Charitable Foundation is designed to create strategies to help the Black entrepreneurial community start, stabilize, sustain and scale businesses. It educates, trains, coaches, mentors, develops and provides funding initiatives

The Entrepreneur's Source

I provide no cost education, awareness and discovery services to people who are in career transition and have an interest in exploring entrepreneurship as a potential career path or adding passive streams of income to their existing investment or bus

The Toolbox: Small Business Resource Center

The Toolbox: Small Business Resource Center is the go-to resource for everything small business in Wyandotte County, Kansas. All services are offered at no cost to local residents and businesses. The Toolbox provides support with planning, registering, funding, operating and growing your business through private one-on-one small business coaching.

Whiteboard2Boardroom

Whiteboard2Boardroom connects entrepreneurs and established businesses to technologies available for licensing at institutions of higher education, hospitals and corporations in the bi-state region to stimulate applied research, leverage innovation i

Women's Business Center of Kansas City

The Women’s Business Center provides training, mentoring, networking opportunities and business consulting to help women start and grow their businesses.

Kansas City Area and Regional VC Firms

BioNexus KC

BioNexus KC inspires thinkers from different disciplines to combine their efforts for a common purpose: health care innovation. From bioinformatics to cancer research and beyond, the organization stimulates collaboration and helps bring emerging technologies from concept to reality.

Specializes in: Venture Capital Equity Providers

Dundee Venture Capital

Dundee Venture Capital, based in Omaha, Nebraska, is a seed stage venture fund with more than $5 million invested in the Kansas City region.

Specializes in: Venture Capital Equity Providers

Endeavor Heartland

Established in 2019, and later expanded into Kansas City and Tulsa, Endeavor launched in Bentonville, Arkansas to support entrepreneurs with the potential for economic and social impact in America's Heartland.

Specializes in: Venture Capital Equity Providers

equity²

equity² is an impact investment firm committed to deploying capital in inclusive and equitable ways.

Specializes in: Venture Capital Equity Providers

Firebrand Ventures

Firebrand Ventures is a new kind of Midwest venture fund. We combine a strong brand, vast network and deep experience with startup hustle to invest in exceptional early-stage software startups.

Specializes in: Venture Capital Equity Providers

Five Elms Capital

Five Elms Capital is the ideal partner for leading B2B software companies.
The organization invests $5 million to $75 million in companies with $2 million to $20 million in revenue. Five Elms offers minority or majority investments, growth capital or liquidity for founders and early investors.

Specializes in: Venture Capital Equity Providers

Flyover Capital

Flyover Capital provides capital to assist founders in creating the next generation of technology success stories in areas outside the traditional tech hubs.

Specializes in: Venture Capital Equity Providers

TechAccel - Technology Accelerating Partners

TechAccel is a venture development and technology organization that invests across the agriculture, animal health and food science industries. They work with startups, universities and corporate partners to fund and advance new discoveries to market.

Specializes in: Venture Capital Equity Providers

Capital Access Center

The Capital Access Center (CAC), part of the Kansas Small Business Development Center (SBDC), is a consulting service to small business owners needing Capital (loans, lines of credit, etc). Due to state-specific funding for the Capital Access Center, we are only able to work with Kansas businesses.

Enterprise Center in Johnson County

The Enterprise Center in Johnson County (ECJC) is a venture development organization providing resources and connections to accelerate the success of early-stage companies.

iiM (innovation in Motion)

Innovation in Motion (iiM) is an angel capital firm headquartered in Merriam, Kansas. We employ a disciplined approach to identifying, funding and curating startup and early-stage companies in the agriculture, animal health and human health sectors.

InvestMidwest Venture Capital Forum

InvestMidwest highlights startups in the Midwest region with the most promise for success.

The conference provides an ideal opportunity for entrepreneurs to raise capital and all attendees to make new connections.

KCRise Fund

KCRise Fund is a venture capital co-investment fund designed to help bring more financing to early-stage businesses in the area. The fund looks to co-invest with other institutional investors, including venture capital firms and corporate investors, in pre-Seed, Seed and Series A rounds of at least $1 million for early-stage technology companies with a strategic connection to the western half of Missouri or the entire state of Kansas, with a primary focus on business-to-business companies.

Konza Valley Capital

Konza Valley Capital is a licensed small business investment company that provides private equity capital to lower middle-market companies having potential for substantial growth and long-term equity appreciation.

Leawood Venture Capital

Leawood Venture Capital invests in early-stage companies where its team has extensive market and technology expertise and can contribute to the overall success of its investment portfolios. With deep roots on both coasts, the team has strong relationships across the country and accesses the most promising deals from the national centers of technology excellence.

Missouri Technology Corporation

The Missouri Technology Corporation (MTC) is a public-private partnership created by the Missouri General Assembly to promote entrepreneurship and foster the growth of new and emerging high-tech companies. MTC focuses on the life sciences and technology industries, which build on Missouri’s rich history in agriculture.

OpenAir Equity Partners

OPENAIR Equity Partners is a private equity and venture capital firm specializing in early venture, mid venture, late venture and later stage investments.

Royal Street Ventures

Royal Street Ventures is a Utah-based venture capital firm that has expanded into the Kansas City region.

Technology Venture Studio

The Technology Venture Studio helps move early-stage innovations from concept to reality—all to create jobs and economic impact, attract more equity funding to our region and establish Kansas City as a tech hub.

TGP Investments

TGP Investments is a Kansas City based private equity investment fund formed to make middle-market investments in well-managed, profitable and growing companies.

The Toolbox: Small Business Resource Center

The Toolbox: Small Business Resource Center is the go-to resource for everything small business in Wyandotte County, Kansas. All services are offered at no cost to local residents and businesses. The Toolbox provides support with planning, registering, funding, operating and growing your business through private one-on-one small business coaching.

Whiteboard2Boardroom

Whiteboard2Boardroom connects entrepreneurs and established businesses to technologies available for licensing at institutions of higher education, hospitals and corporations in the bi-state region to stimulate applied research, leverage innovation i

Other VC Resources

Check out the KCSourceLink calendar. It’s a complete list of upcoming events. You’ll find opportunities ranging from fine-tuning your idea to pitching it to potential investors.

Get personalized VC help

Finding the right funding at the right time can be a challenge. But you don’t have to go it alone. Check out The Resource Navigator to narrow down your search. Or, give us a call at 816-235-6500. KCSourceLink can create your Personal Action Plan of next-step resources for free.

GUIDE: LOANS, GRANTS AND EQUITY FUNDING

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