The St. Louis Regional Chamber is partnering with local venture capital firms and banks to offer $5 million in seed capital for startups to spur economic development.
Joe Reagan, the chamber’s president and CEO, announced the new Spirit of St. Louis Fund I at the chamber’s annual event Thursday night at Chaifetz Arena.
Reagan said entrepreneurs often faced a gap in resources that the seed capital will seek to fill. There’s money available for accelerators and funding for companies heading to market, but capital is lacking for early-stage businesses, according to the fund’s backers.
“It became clear there is an emerging gap in the startup funding continuum,” Reagan said.
The chamber has committed more than $1 million to venture funds and accelerators since 2013. Past investments have gone to accelerators including SixThirty, Prosper Women Entrepreneursand Stadia Ventures.The chamber’s $500,000 investment in Spirit of St. Louis Fund I is its first foray into seed round financing, said the chamber’s vice president of entrepreneurship and innovation Andrew Smith. “It’s our largest investment into entrepreneurship,” Smith said, adding that funding would go toward businesses in the “post early seed and pre-series A” phase.
The chamber is partnering with Cultivation Capital, Twain Financial Partners and local banks on the Spirit of St. Louis fund. Cultivation Capital, which is based downtown, is the managing partner.
“The hope is to fund 25 to 30 businesses over the next couple of years to allow them to hire employees, get products, and hopefully some of them will go on to” larger funding rounds, said Twain Managing Director Matt Badler. “It’s really to get them to the next phase.”
Cliff Holekamp, general partner and co-founder of Cultivation Capital, said the new fund will begin investing in companies in a few months. Holekamp said he expects to see demand for funding from software developers in the financial and agricultural industries.
“They’re going to be the big companies of the future,” Holekamp said.
Source: New fund creates $5 million in seed capital for startups | Business | stltoday.com
