Kansas City and Kansas Have Nearly 200 Tech Startups, But Hurdles Abound

Jan 15, 2020
Originally published on January 16, 2020 8:00 am

Kansas City, Missouri — Time was, a fledgling tech company called CivicPlus had to explain to prospective customers why it was based in Kansas — and not some tech-heavy coastal city.

“We said, ‘Hey, you get Midwest values, but with Silicon Valley quality,’” recalled Ward Morgan, owner of the government software maker based in the college town of Manhattan. “It did throw people off to think that there was a tech company in Kansas.”

Today CivicPlus, founded in the 1990s, serves 3,500 cities and counties on two continents.

Investors see fertile ground in Kansas and Kansas City for more tech startups to take root. Far more have already done so than the public might realize, former Google vice president Brian McClendon says, yet the region falls short of its potential.

“We need a lot more (of) both investment and employment to make this region vibrant,” he said. “Every industry is going to be upended by tech, and if you don’t have those tech companies, the industries you currently have will get replaced.”

McClendon and his wife — fellow Silicon Valley tech veteran and angel investor Beth Ellyn McClendon — unveiled this week their efforts to map out every tech startup in Kansas and Kansas City in hopes of making the sector more visible to prospective investors and tech workers.

The Lawrence residents found nearly 200 tech startups, and hundreds more players with longer histories. Think Cerner and Garmin, two of the region’s biggest tech companies that employ thousands of employees each and were founded in the seventies and eighties.

The bulk of startups — more than three-fourths — sit  in the Kansas City area. Farther west, clusters have sprung up in Wichita and Lawrence. Beyond that, things get pretty sparse.

The McClendons identified nearly 30 tech startups in Lawrence, population 97,000, and none in Topeka, population 125,000. (Local media in the state capital have reported, however, plans for a startup accelerator focused on animal and agricultural science. The area stretching from Kansas State University and Manhattan through Kansas City to the University of Missouri in Columbia is often referred to as the animal health corridor because of the researchers and businesses concentrated there.)

Kansas City venture capital firm Flyover Capital backs tech startups across a large swath of the country outside the handful of East and West Coast states that get the most attention from big-time investors.

“We’re seeing the tech ecosystem start to really ramp up in Kansas City,” Flyover Capital principal Dan Kerr said. “We looked at more deals in 2019 than any other year — so, more people reaching out to us. … Demand for capital in flyover country is very real.”

The center of the country offers cheaper operating costs, investors say, and attractive housing prices and schools. And accelerators and other supports have landed on the scene to help out.

The region suffers, though, from a shortage of computer programmers and other tech-savvy types.

Kansas pumped out fewer than 450 computer science bachelor’s degrees in 2017. Advocates who argue that’s not enough have pushed for more programming courses at the high school level. The Kansas State Board of Education is considering a proposal this month to let coding classes count toward high school graduation — something that most other states already do.

Tech startups in Kansas and Kansas City can struggle, too, to find their way to the right investors interested in their niche, said Darcy Howe, an angel investor who founded the KCRise Fund that focuses on startups in Kansas and west Missouri.

And only the startups with the fastest growth, she said, can hope to attract investment from venture capital firms willing to take risks.

“I’d say we need more capital for the really, really early ones,” she said, “to keep them alive and get them in the right direction.”

Celia Llopis-Jepsen reports on consumer health and education for the Kansas News Service. You can follow her on Twitter @celialj_LJ or email her at celia (at) kcur (dot) org. The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.

Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to ksnewsservice.org.

Copyright 2020 KCUR 89.3. To see more, visit KCUR 89.3.