Ben Harvatine is moving his business to St. Louis because it’s hard to get noticed in Boston. Tyler King is coming because it’s hard to compete for talent in San Francisco.
Both entrepreneurs also are being enticed to St. Louis by $50,000 checks. They’re among the latest beneficiaries of an unusual nonprofit organization that’s trying to reinvigorate the region’s economy by handing cash to early-stage businesses.
The organization, Arch Grants, will award money to 20 new companies today. In its first two years, Arch Grants has funded 35 companies that now employ 192 people here and have attracted $17.7 million from investors.
Along with those tangible measures of success, Arch Grants has created good press and social-media buzz for a region that once was viewed as an entrepreneurial dead zone.
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“It brings really great startups to St. Louis, and they put us on a platform to be nationally and internationally recognized for our startup scene,” says Beth Noonan, a vice president at the St. Louis Economic Development Partnership.
Twelve of this year’s 20 winners are from outside the St. Louis area. Those include Harvatine’s company, Jolt Sensors.
2014 Arch Grants winners
Company | Description | Hometown |
---|---|---|
Artifox | Home and office furniture | St. Louis |
BetaVersity | Creativity labs for schools | St. Louis |
Blue Line Security Solutions | Facial recognition software | St. Louis |
Cast | Mobile app for opinion polls | St. Louis |
CoMo Medical | Aerosol pharmaceuticals | Columbia, Mo. |
Dabble | Marketplace for classes | San Francisco |
Ephecom | 60-second discounted deals | Boston |
FreightGrid | Shipping-industry software | Chesterfield |
Greetabl | Greeting card/gift box | St. Louis |
Hyde Expedition | Inflatable life vest | Elm Grove, Wis. |
Jolt Sensors | Head-impact sensors | Sykesville, Md. |
Less Annoying CRM* | Business software | San Francisco |
Lifepack** | Eco-friendly plates | Cali, Colombia |
Made for Freedom | Fashion apparel | Richmond Heights |
Meter Genius | Electricity saving software | Evanston, Ill. |
Nanopore Diagnostics | Medical test | St. Louis |
Prattle Analytics | Data analysis | Brookline, Mass. |
Tallyfy | Business process software | London |
Tuloko | Cloud software | Minneapolis |
Wondermento | Mobile apps and devices | London |
* Peabody Energy Arch Grants winner | ||
** Monsanto Arch Grants winner |
After graduating from Massachusetts Institute of Technology, Harvatine landed a job in St. Louis as an Anheuser-Busch management trainee. He left about a year ago to work on his startup idea, a sensor to detect head injuries in athletes, and figured he would do it in Boston.
Instead, with the help of Arch Grants, he’s returning to St. Louis.
“In Boston, it’s very hard to get noticed and cut through the noise,” Harvatine said. “Everybody and their cousin has a startup there. I like that St. Louis has a newer and growing startup scene, and I can be involved in deciding what that community looks like.”
King, co-founder of software company Less Annoying CRM, is also a bit surprised to be returning to the Midwest. He and his brother Bracken attended Washington University and then migrated to the coasts — Tyler to San Francisco, Bracken to Boston. They started their company, which develops customer relationship management software for small businesses, in 2009.
The brothers decided last year that they needed, in Tyler King’s words, “to get an office somewhere and start acting like a real company.” When they heard about Arch Grants, they started looking at St. Louis — and decided to come here even before learning that they had won $50,000.
“The biggest thing that attracted us was the talent pool,” King said. “We saw an opportunity to come here and put together a great team. The Arch Grants are a good sign that the community is supportive of startups, and that appealed to us.”
St. Louis didn’t always have such a positive reputation. A decade ago, the Council on Competitiveness studied the region and noted “the lack of a fully supportive entrepreneurial culture.” Local entrepreneurs often had to move elsewhere to find funding.
“We’ve got to do something different,” St. Louis attorney Jerry Schlichter, a co-founder of Arch Grants, remembers thinking. That something ended up being a business competition that hands out cash with only one set of strings attached: The winners must locate in St. Louis.
Arch Grants wrote its first checks shortly after the opening of T-Rex, a business incubator designed for technology companies. The combination of seed capital and low-cost office space proved to be a magnet that has drawn dozens of companies downtown.
Rovertown, which offers mobile coupons aimed at college students, has grown to nine employees since moving here from Carbondale, Ill., as a 2013 winner. The company had planned to move to Chicago, but founder Mike Philip says accepting the prize and choosing St. Louis was “the best decision we ever made.”
The award helped build a lot of business connections quickly, Philip said: “They never heard of Rovertown, but if you say, ‘I’m with Rovertown and we’re an Arch Grants winner,’ I can’t think of a time when that didn’t work.”
As of today, 20 more companies can start using that line. They include Made for Freedom, an apparel brand that Richmond Heights resident Dawn Manske created to help survivors of sex trafficking, and Blue Line Security Systems, a facial-recognition software company started by current and former St. Louis police officers. There are three foreign winners, two from England and one from Colombia.
To Schlichter, the applicants from places such as London and San Francisco are the best confirmation that Arch Grants has changed the conversation about St. Louis. “When’s the last time anybody else attracted companies from out of town in any numbers?” he asks.
The biggest question about Arch Grants concerns its future funding. The grants have been funded mostly through private donations, but backers have asked for $2 million a year in state funding.
The Missouri House and Senate both voted this year to approve the money but adjourned without reconciling differences in their bills.
Schlichter says backers will keep asking for state help, but they have always assumed that they’ll have to keep raising large sums from private donors.
If St. Louis doesn’t want to mess with success, it will figure out how to keep the $50,000 checks flowing.
EDITOR'S NOTE: An earlier version of this story had an incorrect number of employees for Rovertown.