St. Louis’ Startup Scene is Really Taking Off

    By Amanda Honigfort, Special Projects and Programs Producer

    What do you think when asked what and who St. Louis is? Do you by any chance think tech and startup hub? If so, let’s solidify that idea. If not, keep reading and see if I can change your mind.

    Where to begin?

    Well, there was that great piece last year where FiveThirtyEight called us the “new startup frontier” and that same year Business Insider reported that we are the fastest growing startup city (that’s right folks – not L.A., not San Francisco, us). Plus Popular Mechanics beat them to it in 2015, when it ranked us the top startup city in the country. There’s also a string of recent articles from TechCrunch, Forbes and more with some pretty great things to say.

    Then there’s legacy. Although you could make the case that history is not as important as our present and future, it does inform how we got to now, and our city’s legacy is the base we’re building on. Plus, it’s a pretty impressive legacy.

    Founded by innovators and entrepreneurs, the traders and trappers of our earliest days built a strong fort into a notable town, which in turn grew rapidly and claimed many of the country’s “firsts” west of the Mississippi River.

    Anheuser-Busch grew from St. Louis soil to lead the global beer industry, and Purina the same in pet care. Though you might scoff that they’re both foreign-owned now, they still kept St. Louis as their North American headquarters, employ thousands of St. Louisans and contribute significantly to our local economy.

    Enterprise, Express Scripts, Centene, Energizer, Panera (St. Louis Bread Company) and Monsanto dominate their markets from their home bases here, and those are just the locally founded companies that grew to massive corporations. One of the largest privately owned companies in the country, World Wide Technology, also stemmed from our entrepreneurship ecosystem.

    Next, let’s move forward in time to some of our more recent entrepreneurial successes – I’m sure you’ve used Square recently (founded right here by St. Louis natives Jim McKelvey and Jack Dorsey – thank you for Twitter as well Mr. Dorsey). Oh, and Wash U’s taking names with some little venture called the Human Genome Project – they’ve mapped the human genome, while Mercy has built the nation’s largest electronic intensive care unit.

    St. Louis became the Cambridge Innovation Center (CIC)’s first expansion site out of Boston, with two locations in the heart of the Cortex District – a move that gives us further startup cred and has led to numerous “serendipitous collisions” with a third CIC iteration to come in 2018.

    The Cortext District is another pillar of St. Louis’ innovation community. The 200-acre space within the Central West End and Forest Park Southeast neighborhoods was formed in 2002 by Washington University, BJC Healthcare, the University of Missouri – St. Louis, Saint Louis University and the Missouri Botanical Garden (MoBot) to “capture the commercial benefits of university and regional corporate research for St. Louis”.

    They boast that the over 250 companies working within Cortex have created over 4,000 jobs, and when construction finishes on the final phase in a few years, that number will be up to 15,000 permanent jobs and many more companies. As evidence of this success, Microsoft announced they will open a regional headquarters within the district.

    The Cortex District is part of the reason, along with organizations such as The Danforth Plant Science Center, MoBot, Monsanto, Bunge North America, Novus International, our universities and others, that we boast one of the largest STEM workforces in the country and the highest concentration of plant science PhDs in the world.

    Another part of that is BioSTL – a broad-based collaborative group of St. Louis civic, academic and business leaders who have been working since 2011 to promote jobs and companies within the biosciences and drive economic growth.

    With this, we’ve seen St. Louis’ star in the ag-tech industry continue to rise. In addition to the big players, we have an increasing number of small and midsize businesses comprising a regional network of over 450 research and development AgTech companies employing over 15,000 people. Many of them are based out of the Helix Center or The Bio Research & Development Growth (BRDG) Park at the Danforth Plant Science Center  – places where smaller companies can get access to world-class labs, greenhouses, other materials/workspaces, training and convenient office space.

    There’s a reason the AgInnovation Showcase was held in St. Louis this year, and the InfoAg conference will be held here next year. There’s also a reason for the Yield Lab AgTech accelerator to operate from St. Louis, and why we’ve seen more companies, accelerators, and venture capital funds forming a presence here. There’s also a reason the St. Louis County and the Economic Development Partnership created the 39 North district.

    Last of the major players, but certainly not least is T-REX. The six-year-old startup incubator and co-working space is home to about 200 companies, countless events, and houses several of the region’s entrepreneur support organizations including iTEN, Cultivation Capital, Missouri Small Business Technology Development Center, Veteran’s Business Resource Center, Stadia Ventures, SixThirty, SixThirty Cyber, Prosper Women Entrepreneurs and the Midwest Cyber Center.

    It’s also home to Arch Grants.

    Arch Grants is a nonprofit startup incubator that provides $50,000 equity-free grants and pro-bono support services to the 15 – 20 entrepreneurs who win their yearly Global Startup Competition. The only catch? All companies must relocate or stay in St. Louis for at least a year after receiving their funds or return the grant.

    Their alumni include over 100 companies – many of which are making names for themselves both locally and in wider markets. Arch Grants has also seen a high retention rate and a large economic impact.

    “At this point we’re somewhere in the neighborhood of over 400 jobs retained, over $120,000,000 follow-on capital, and over $60,000,000 revenue generated. … and then of course the indirect impact is more people thinking about St. Louis, more people moving here, setting up satellite offices, setting up their headquarters here,” Ben Burke, Director of Entrepreneurship at Arch Grants shared with us in an interview this September.

    HEC-TV is partnering with Arch Grants to livestream their annual gala which they describe as a “celebration of entrepreneurship in St. Louis” on hectv.org on November 3rd.

    We’ve also been interviewing most of the Arch Grant recipients, who moved here from countries around the world and states across the country, and heard them talk about the long-term future they saw for their companies in St. Louis – how they wanted to be part of and give back to our innovation community, how they saw ways to connect with and build up various industries, and how they wanted to be part of the Arch Grants program more than any other program in the U.S. or other countries. We’ll be releasing these segments on the companies on hectv.org and YouTube throughout November and December – possibly into January.

    “I think there’s things we have to offer here that other places don’t,” said Arch Grants Executive Director Emily Lohse-Busch in an A Conversation With interview releasing on HEC-TV shortly. One of those aspects being the impact of the “Arch Grants seal of approval” – that local business leaders will take the entrepreneur’s meeting.

    Lohse-Busch says she think’s it’s in part Arch Grants’ reputation, but also a sense from local business leaders that “‘I’m a business leader in St. Louis, and I want St. Louis to succeed too, so if you’re doing something actively to make that happen, I’m willing to listen to what you have to say’ – and that’s where those connections happen. … And it’s the best of St. Louis when it comes to the innovation community because it’s people actively building each other up.”

    Many of the companies awarded an Arch Grant this year are joining the ranks of companies that work out of T-Rex, like Arch Grants and other accelerators such as SixThirty CYBER.

    SixThirty CYBER will bring five South Korean startups to St. Louis early this month to work with them on further developing their technologies and introducing them to the local cyber security field. Jay De Long, a SixThirty CYBER general partner, told St. Louis Public Radio that this program is unique because instead of the companies applying directly, the accelerator is working with the government of South Korea.

    SixThirty CYBER is hoping this program extends their reach and helps create further partnerships between Asian companies and St. Louis. The five companies of this program will work out of T-Rex.

    Even with all of the above, we may not be the frontrunner for Amazon’s HQ2, but the RFP submitted last month had to be incredibly strong. KMOX reported recently that the St. Louis riverfront north of the Arch, and corresponding land near East St. Louis on the opposite side of the Mississippi river, was selected for the proposal. They’ll also propose a move-in ready option of 909 Chestnut – the former AT&T building that has sat vacant since the company’s lease expired on September 30th.

    For this first move, Amazon has requested at least a 500,000 square feet of space ready as soon as the city is chosen, along with proposals for where to grow from there. The company expects ultimately to need 8 million square feet of space and 50,000 employees.

    Amazon claims the city chosen would eventually experience significant organizational investments in infrastructure and other areas and 50,000 new jobs – many of which with high wages leading to “residual economic benefits like new home sales, wage taxes, millions upon millions spent with regional retailers, charitable impacts and hundreds of other companies that will establish a presence to feed off of Amazon.” CEO Jeff Bezos has said that the city chosen would receive “…billions of dollars in up-front and ongoing investments” making it a decision with the opportunity to transform the region chosen if all of this comes to fruition.

    One throughline in Amazon’s diverse business portfolio is an emphasis on logistics – a particular strength of St. Louis. With our middle of the country location making us a cross section for international air, rail, interstates and major rivers, we have the 3rd largest inland port, 5 airports, 6 Class I railroads, and 4 interstates. We’re within 500 miles of one-third of the country’s people and within 1,500 miles of nearly anywhere heavily populated in the U.S.

    We’re also apparently pretty vocal about it with more tweets about St. Louis and Amazon than any other region sending in a RFP.

    So what made us an entrepreneur’s city? Hard to say for sure – maybe it’s something in the water – but our relatively low cost of living may have had something to do with it. According to the U.S. Census Bureau’s 2015 American Community Survey data, St. Louis’ median home value of $164,200 is well below the U.S. median home value of $194,500.

    Many of our entrepreneurs are millennials and we’re seen by Business Insider, PennyHorder, the Huffington Post and others as a top city for millennials – a cross-section of affordability with top-notch arts, culture, food and nightlife.

    “Communities that engage Millennials in the creation of spaces to work and live will be rewarded, especially cities,” said Ginger Imster, Vice President of Innovation & Entrepreneurship for St. Louis Economic Development Partnership told the Huffington Post. “Millennials have the potential to breathe new life back into cities, specifically the urban core.”

    Heck, that entrepreneurial spirit extends to making St. Louis a town of great beer with numerous talented craft breweries.

    Whatever the reason, and wherever Amazon picks for HQ2, St. Louis’ tech, agtech, and startup scene seems positioned only to grow.

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