As pervious articles have pointed out, San Francisco is not the only city where it is possible to launch a successful startup. A study from the Kauffman Foundation takes that conclusion a step further in its investigation of whether startups can scale up in cities that are not known for their startup culture.
The study looks at Kansas City, Missouri where 144 companies were highlighted for their high growth in the Inc. 500/500 between 2007 and 2013. Through interviews with twenty-two of Kansas City’s high growth firms, the study came to four main lessons:
- Venture Capital is not necessary for growth. While VC is often imagined as a necessity for all startups’ success, just over seven percent of companies in Kansas City were VC-backed. Despite the lack of VC funding, all of the companies interviewed experienced forty percent growth per year. This finding is not unique to Kansas City, around the U.S. the minority of startups are backed by venture capital.
- Capitalize on regional strengths. Firms in Kansas City benefit from a substantial pool of talent and rely on regional connections to drive innovation and growth. Cities looking to grow can benefit from identifying strengths within their community instead of trying to replicate other regions’ successes.
- Big does not always mean national. While many believe that the only way to grow firms is to grow out of the regional market, many of the successful, high growth firms interviewed in the study serve only the Kansas City region.
- Local mentors are important. The majority of the Kansas City entrepreneurs reported that local mentors played a significant role in the success of their businesses. They explained that the mentors helped to connect them with other entrepreneurs and business leaders.
While cities like San Francisco and Austin are great for startups, the research supports the idea that successful companies can grow in many other places.
To read the full Kauffman report, please click here.
Contributed by Emily Luepker.