Two events this week in St. Louis show how vibrant the startup ecosystem has become there. On Wednesday, a group of 13 companies presented to 50 investors, looking to raise an aggregate of $16 million in capital. The companies were all part of Capital Innovators, an accelerator venture fund that has been operating since last fall. Capital Innovators put on the event, called Demo Day, at the cherished Pageant Theater, which normally is a concert venue. Each presenter had small demo booths where investors could ask questions about the venture and see the software in operation. This was the first such event, and it was more of a coming out party for the ventures that were funded by the firm.
The second event was the annual Invest Midwest conference on Thursday. Here more than 40 companies presented to about 50 investors. Tech ventures, some of whom were presenters at the earlier Demo Day, joined ventures in green energy and the life sciences. This is the 13th year the conference has been in business, which alternates each year between Kansas City and St. Louis. Both events drew small and large investors from all over the country. It was nice to see so many people in town to look at the new offerings.
Capital Innovators announced that it is now accepting applications for its third class of ventures. Those who are accepted will receive an investment of $50,000 in return for some equity in their companies and intensive mentoring at its downtown offices, as we wrote about last year here. Applications are due by June 15th.
At both events, the pitches covered several common themes:
- Hyperlocal business focus. What makes these ventures interesting to me is how focused they are on their particular audiences of either potential users or customers. Lockerdome.com focuses on bringing together sports-addicted fans and amateur players to share their content. Bonfyreapp.com is aimed at college kids to geo-locate what they are doing on or near campus. BusyEvent.com manages what sessions conferences-goers want to attend and records their vendor-booth encounters. DiningCircle.com is aimed at handling real-time Web-enabled restaurant reservations. Aisle411.com takes this to a new level: They have a way to locate a particular product in a store's shelves. To be successful, a venture needs this laser focus.
- It is all about the Web. Most of the firms had some critical component that had something to do with using Web protocols or the cloud. Dining Circle runs in the cloud rather than the dedicated PCs that OpenTable.com provides to their restaurant customers. JBara.com complements and extends traditional CRM software such as Salesforce to improve customer retention and satisfaction. Adjudica.com sells its group-medical-cost monitoring tool as a Web-based service to large health plan operators.
- I have a platform to sell you. Now that everything is in the cloud, many ventures are looking toward building their own Something as a Service to leverage their expertise and get third parties to adopt their frameworks. YoJoe.com is the premier site for people who collect GI Joe action figures and, as a result, is looking to build a platform to support other collectable management websites. Norse-Corp.com developed a fraud-detection system using distributed Internet-monitoring tools, and now is looking to sell this to credit card payment networks for their antifraud programs. Gremln.com built a social media monitoring program that it is extending into compliance management for financial services and health care providers.
- Mobile is where the action is. No surprise there. TangibleHaptics.com is trying to improve the touch screen world by providing actual feedback as you slide your fingers across the screen. EyeVerify.com can biometrically ID who is holding your cell phone from the blood vessel pattern of your eye.
- Despite Groupon, other coupon alternatives are still being proposed. Aisle411 has the ability to deliver coupons to consumers shopping in stores, and BonFyreapp offers coupons based on its audience's movements. These smarter maps tied to particular locations combine the best aspects of geolocation and the immediate needs of the shopper.
My pick for oddest product pitched at Invest Midwest: a high-tech toothbrush from Tifinity Oral Care with bristles made out of titanium that duplicate the flossing process and a built-in microprocessor to tell you when it needs replacing.
Invest Midwest ended with a presentation by Jim McKelvey, cofounder of the mobile-payment company Square and a local St. Louis tech investor. He said that more than a million merchants are using the Square payment process, and now there are numerous competitors in the mobile credit-card payment space. He got the idea for the gizmo when he tried to process a credit-card payment at his other business, a retail glass factory in St. Louis.
When it comes to deciding on a location for a business, McKelvey had some incisive things to say. "Who cares about the taxes that are levied on you when you are rich? It isn't that big of a deal for a small company. It is more important to figure out if you can get the stuff done that you need to get done wherever you are located. We will shop the tax rate when we are moving 10,000 people into an area. For most business owners, that is so far down the list it is irrelevant."
He also noted that "St Louis has made some really good strides towards supporting entrepreneurship, and things are picking up here." He mentioned that the higher quality of life, and the attraction of good schools in many St. Louis areas, was another reason for starting up his engineering team there. However, "Our biggest surprise was that we couldn't scale the Square team here in St. Louis."
But attracting huge amounts of venture capital to the Midwest isn't easy: "The superrich VCs just don't want to get on a plane and don't want to physically travel anywhere." However, for lesser amounts, "money flows pretty fluidly anywhere now."
Do check out some of the companies mentioned if you are interested in their products and services. Many of them are already in business, and have lots of customers and activity.
Photo courtesy of Shutterstock.