St. Louis has become a startup mecca, and a good place for recent college graduates to find work, or even follow their dream and create their own venture. There are tons of support resources, a favorable business climate, lots of shared spaces to choose from, and a positive vibe from many quarters. Having been a resident of the city for the last seven years, I have personally seen this evolution and am indeed part of the action myself. So why St. Louis and why now? It has to do with money, middle management, mentoring, brains and bandwidth.
Let's look at the stats. Earlier this year, Dice named St. Louis the fastest growing city when it comes to technology jobs posted on Dice. Job postings grew 25% and the average tech salaries were up 13% to $81,245. And according to Dice, Missouri's tech employment beat out Texas, New York and Washington. St. Louis Community College's annual workforce report is also noteworthy in its praise for IT jobs.
First there is money. Over the past several years, entrepreneurs have seen multiple ways to get grants or investments in their companies. Jay DeLong, the Vice President for New Venture & Capital Formation for the Regional Chamber in St. Louis has this video showing the 10 ways to raise $50k for your startup, including links to venture capitalists and business plan competitions. His video is nicely outdated, and new VC firms are being added to that list. Last month, Jim McKelvey, who was one of the co-founders of mobile payments company Square, put together the new VC firm SixThirty.
Matt Menietti is a Venture Partner with SixThirty (the name refers to the height and width of the iconic Gateway Arch.) and he told me, "We are another organization to the rich ecosystem in St. Louis but we are just focused on financial service tech startups." Their first program starts next month and will provide $100,000 investments, requiring each beneficiary to move to St. Louis for a four month program.
Some of these organizations such as Arch Angels have stepped up their game. When I first came to town, the Angels made one or two yearly equity investments and had a few dozen partners. Now they have merged with another venture capital group that was known as FinServe Tech Angels and award dozens of grants per year. Kyle Welborn, who ran FinServe and is now a partner at Cultivation Capital, another St. Louis-based VC firm, told me "With accelerators, business plan competitions, venture funds and angel groups, local companies are raising enough money to get started and grow."
I mentioned middle management for a reason, but not why you think. Over the past decade, St. Louis has been losing headquarters of Fortune 100 companies to other locations. Our iconic Budweiser is now part of an international beer company as one notable merger or acquisition. These moves involve shedding a lot of middle management, who in turn go into startup mode. Many of them have created new ventures and have been early recipients of Arch Grants and other funding sources.
Some ventures have gotten big enough to require their own middle managers. McKelvey's Square continues to have a small development group in town, and Riot Games development team has more than 30 people in the region.
Mentoring is another big factor. If you are going to start up a company from scratch, it helps to have folks you can call and get guidance from. And in St. Louis, there are now so many IT-related mentoring opportunities it is hard to keep track of all of them. The longest-running IT-specific program is the IT Entrepreneur Network (ITEN), which was founded in 2008 and now has 70 mentors advising more than 200 startup companies. ITEN has various programs including its Mock Angel preparatory session for those ventures that are ready to pitch to VCs and another program to help hone business plans. All of its mentors volunteer their time and take no equity position in the ventures. ITEN has more than a dozen job openings on their website, and you can see some of them below here. (Disclosure: I am a mentor at ITEN.)
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October 12th, 2012 at 12:52 am