Sometimes, in risk capital, it pays to specialize. The latest indicator is a Kansas City, Mo.-based crusade house that’s focused on seed-stage startups that are based anywhere from” Park City to Kansas City .” According to an SEC filing, it exactly closed on $16.4 million in asset commitments. It’s the third fund for the organization, Royal Street Ventures, which was founded several years ago by two Kansas City countrymen — Laura Brady and Jeffrey Stowell.
It’s an interesting fragment of geography to be so focused on, partly because, well, it leaves out a lot of opportunities elsewhere.
At the same time, the house is hardly the first to seed a pennant in an underserved expanse, then get to work. It’s hard to remember now, but when Foundry Group opened its entrances in 2007 in Boulder, Colorado, it didn’t have many, if any, opponents knocking the tires of local startups — or entreat up valuations. Similarly, onetime Sequoia Capital investors Mark Kvamme and Chris Olsen hightailed it to Columbus, Ohio, in 2013 based on a hunch that there were plenty of savvy founders in the Midwest who investors on both coasts were missing.
Certainly, Brady and Stowell, who previously worked for a bank and the innovation center out of which Royal Street sprang, aren’t having trouble putting money to work. They’ve written checks to at least 40 Midwestern and Western U.S. startups since the firm’s launch in 2016, including an organic snack firm in Park City announced Allgood Provisions; a Kansas City firm announced BacklotCars that’s building marketplace for the wholesale automotive industry; and a weather data company in Overland Park, Ks ., called Main Street Data.
They’re too reaching the occasional investment in a startup off the beaten path. Blueboard, for example, an employee recognition and motivations platform, is based in San Francisco.
Either way, the team’s brand-new fund highlights a growing predisposition on the part of restriction collaborators to acquire speculations on parts of the U.S. that are on the rise, thanks partly to surging expenses in places like the Bay Area and New York, as well as competition for expertise in such tech hubs — a constant tug-of-war can hobble a startup before it gains meaningful momentum.
Among the highest-profile advocates for the trend, of course, is AOL founder Steve Case, who has been banging the rhythm about startups in underserved fields all over the U.S. in recent years. Case has also been helping to raise investing capital for them through grain stores dubbed Rise of the Rest, the second of which was announced back in October.
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