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Several startups are growing in KC, but does fair funding match their traction?

Although Kansas City has ample resources for the growing number of budding entrepreneurs, BIPOC startups still struggle to receive sufficient funding.

In 2018, Dr. Shelley Cooper observed that a clinic she worked with was experiencing a high rate of no-shows for appointments. In the same year, her father died in his sleep. She had health problems but was unable to book doctor appointments as quickly as she needed them.

A year later, Cooper channeled his pain and frustration into action. Lui began developing Come On Now, an app designed to reduce the inefficiency and waste of no-shows and canceled appointments in the growing field of telehealth.

“I was thinking about my training in telehealth implementation. What about people who have chronic illnesses that need to see doctors first? Cooper said. “And there are all these empty seats that don’t show up and patients don’t get the care they need. And we need to use telehealth more frequently. I put all three together and came up with the product.”

Come On Now, formerly known as SureShow, is currently in beta testing with approximately 250 users.

Through the app, patients and doctors receive notifications about upcoming appointments. Patients are able to schedule and change appointments based on the doctor’s office scheduling rules, rather than by contacting the office.

“That way, they’re more likely to have that connection to the doctor based on what they need and what the clinic needs,” Cooper said.

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Cooper is one of many entrepreneurs to have launched a business over the past five years in Kansas City, where entrepreneurship is growing rapidly. Between 2017 and 2021, new employers created 86,761 jobs, accounting for 63 percent of all new jobs and about 8 percent of total employment in Kansas City, according to the KCSourceLink We Create report. Jobs.

And as Kansas City startups continue to grow, many founders of color are able to successfully launch their businesses, despite the prevailing biases within investing.

“In Kansas City, a lot should have to do with the strength of resources that support entrepreneurship, business startups, and business advancement,” said Michael Carmona, senior director of KCSourceLink, a part of UMKC Innovation Center that connects entrepreneurs to the Kansas City resources they need to start, grow, or accelerate their business.

Organizations like Kansas City GIFT, Digital Sandbox KC, Scale UP KC, and the Ewing Marion Kauffman Foundation provide entrepreneurs with the resources and funding they need to get their businesses off the ground.

“We have a lot of programming. We’ve seen a lot of grants that have helped grow people and then… you see job creation as those people in their businesses are moving forward,” Carmona said.

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Startups on the rise

One of the biggest factors contributing to the rise of startups is the COVID-19 pandemic. In April 2020, the national unemployment rate reached its peak of 14.7%, the highest rate in history as of data dating back to January 1948, according to the U.S. Bureau of Labor Statistics. In Missouri, unemployment peaked at 12.5 percent during the same period.

“When people lost their jobs, they looked at entrepreneurship as a workforce opportunity for them, and then promoted those businesses to hire others,” Carmona said.

KCSourceLink estimates that there were 8,197 startups in the area in 2021. In that year alone, Kansas City startups created more than 19,000 jobs, up 22% from the previous year.

The tech sector in particular has seen major growth, with a 92% increase in the number of jobs created between 2020 and 2021. KC tech startups have created 8,387 jobs over the past five years.

Health care and social assistance had the second largest job creation in 2021.

With his app sitting at the intersection of health and technology, Cooper believes much of the growth can be attributed to the huge need for improved technologies and infrastructure due to inefficient methods and processes within healthcare.

“There are so many different ways the healthcare industry can be improved,” he said. “And most of these ways are related to technology. Some of them are related to procedures. But for the most part it is related to how healthcare interacts with the patient. How is it implemented on the clinician’s side? And how is information transferred from site to patient?”

Need for different funding

As the number of startups in Kansas City and elsewhere continues to grow, initiatives are seeking to correct demographic inequities in the business space.

While 77 percent of venture capital funds go to companies with white founders, less than 10 percent of venture capital dollars go to female founders, according to Forbes. The amount of venture capital funneled to black founders is less than 1%.

“One of the challenges for founders of color is financing, accessing capital,” said Yinka Faleti, a partner at Ascend Venture Capital, a St. Louis-based micro VC firm.

“It can be the difference between a company moving from the next tier to a company going bankrupt if it can’t access capital. And many times, in the case of founders of color, the company hasn’t even been able to launch to begin with. And so we find that a lot of brilliant ideas, a lot of brilliant founders or brilliant companies, just die on the vine,” she said.

Ascend rejects many of the prevailing principles and practices of venture capital firms, such as investing only in companies recommended by peers and other prominent investors.

“Relying on this as your primary source of supply leads you to invest in the same kind of thing,” said Dan Conner, founder and managing partner of Ascend. “If you invest like everyone else, you somehow conflict with the general concept of venture capital, which is looking for upstream opportunities that are overlooked.”

Investors typically analyze a company’s founder as the first step in their selection process and look for past successes, Conner added.

“And when you think about it, that doesn’t amount to anything really imbued with reality,” she said. “At any one time, any repeating founder was himself a first-time founder. So only picking repeat founders means you’ll self-pick those transformational opportunities in the first place. He also introduces a number of misconceptions that are unknowingly proliferating the venture capital industry.” In 2022, Ascend launched an “opportunity fund” to provide $25 million in venture capital funding to entrepreneurs in diverse communities. Applications are open to business owners in Missouri and across the nation.

“I just have to get on with my business”

Shelley Cooper knows all about challenges. In her journey to receiving funding for Come On Now, she has shared her platform’s mission countless times. Despite the paying clients she has amassed, she has faced many setbacks and rejections which she attributes to the startup world’s implicit bias towards people of color and women.

“So when I go to different lenders, I get the ‘We need to see more traction,’ he said. “And, ‘How many other customers do you have?’ And, “We need to see more market-fit products.” And I understand that’s really important, but I’ve talked to other founders who are not BIPOC, and not women, and they could basically have an idea and they have some funding falling into their lap.

So far, Cooper has funded his venture with capital from a variety of sources, including microgrants, sweepstakes, help from family and friends, and a small business loan. He is waiting to grow his business further before seeking venture capital funding.

According to Crunchbase data, Black entrepreneurs in the United States received nearly $1.8 billion in startup and business funding in the first half of 2021. That equates to just 1.2 percent of the $147 billion invested across all US startups at that time.

Cooper said she was surprised to see some of the funding opportunities easier secured by white entrepreneurs.

“It’s hard to count how many founders talk about the funding they had in the millions of dollars, and they didn’t have half of what we had, what they were doing was not saving lives,” he said.

“And so I find it difficult to understand how that happens. But I can’t focus on that, I just need to get my business going.”

How On Now has shifted its target market from hospitals to federally qualified health centers that serve underserved populations and are funded by the federal government, such as Swope Health.

“That goes hand-in-hand with the company’s mission to serve the underserved and bring health care to people who don’t normally have it,” Cooper said, “and have that continuity of care for frail patients from the medical point of view”.

Mili Mansaray is the housing and employment reporter at The Kansas City Beacon.

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