St. Louis Program Offers Gateway to Small Business Launch

Business leaders and investors in St. Louis have a plan to make the Gateway City a gateway to start-up success in the heartland. To make it happen, they are offering $50,000 to entrepreneurs willing to establish their businesses in the city.

Nick Leiber of Bloomberg Businessweek recently wrote that a non-profit venture backed by major St. Louis corporate citizens such as Monsanto, Peabody Energy and Emerson Electric, along with several individual investors, was organized to bolster the downtown area’s existing, if modest, start-up community. To do so, the non-profit Arch Grants tries to bring start-ups to the city with a unique pitch: the $50,000 comes with no strings attached.

According to Leiber, there actually is one string attached in that entrepreneurs do compete for the cash by pitching their concept to Arch Grants. Executive director and fundraiser Ginger Imster told Leiber that competition has not been a deterrent, as the program has attracted more than 1,100 applicants since it launched in 2012. Nonetheless, Leiber notes that the program is unlike other seeding or incubator programs in that the entrepreneur does not trade equity in the enterprise for the money.

Imster said Arch’s goal is to proactively create job growth in the area by fostering small businesses, rather than “waiting for Fortune 500 companies to move in.” She told Leiber that that Arch Grants has awarded $1.9 million to 35 start-ups since its inception. Winners’ awards also include discounts on rent for work space and housing.

Arch Grants is just one of a growing number of seeding programs being started across the country as urban areas seek ways to stoke job growth, and bolster their local economies. But Arch Grants is also one of the very few that does not require the sell-off of an equity stake in the business. Based on the numbers gathered during its short run to date, the program has also seen a great deal of success.

Imster says that of the 35 grant-winning enterprises to date, only one has not survived. One start-up has been sold, but the rest remain open for business. Collectively, they have generated $3.2 million in revenue, attracted an additional $5.8 million in venture capital, and most importantly, they have created 128 jobs in downtown St.Louis. Jim McKelvey, a St. Louis native who co-founded the mobile payment company Square, and has a prominent role on Arch Grants’ advisory board, sees the program as critical for many of the start-ups it has funded. The $50,000 sum may not seem like much, he told Leiber, but it does go farther in St. Louis than it would in one of the tech hubs on the east or west coasts.

“Companies have a real hard time at the beginning,” said McKelvey, whose company supports other small business initiatives in several cities, including St. Louis. “I’ve seen a lot of companies in Arch Grants that probably wouldn’t exist but for this program.”

Leiber, Nick. “Wanted: More Startups in St. Louis. Reward: $50,000“; Business Week. 12/11/13.