Missouri should increase its investments in entrepreneurs and start-ups while expanding accessibility for business owners and job seekers, a new state report says.
"Catalyzing Innovation: Strategies for Missouri to Drive Innovation and Entrepreneurship" was released by the Missouri Technology Corporation (MTC) this week.
The study, which compiled data from entrepreneurs and start-up firms from 2010-20 and input from 500 stakeholders across the state, included several recommendations from MTC to improve Missouri's entrepreneurial footprint.
MTC proposed matched investments into entrepreneurs from various funding sources across the state, as well as an angel investment tax credit in collaboration with DED. It also recommended undertaking a feasibility study on the creation of Missouri Rural Vitality Funds to provide assistance with loan collateral for rural businesses.
The group also hoped to launch a short-term educational program, work with local partners to provide support to start-ups with high potential for growth, and connect corporate partners and institutions to bolster recruitment and growth.
MTC, a collaboration between the Department of Economic Development (DED) and private businesses to drive innovation and high-tech jobs in Missouri, committed to partially funding many of the recommendations.
"Entrepreneurs play a critical role in the growth and vitality of Missouri's economy," DED acting Director Maggie Kost said. "I appreciate the Missouri Technology Corporation and their efforts to tell that story through this report, and I look forward to working together to better support the entrepreneurial community of our state."
The report recommended at least $100 million in angel and pre-seed funds and $25 million each in risk capital programs and innovation financing options, totaling $150 million in investments at the minimum over the next decade to bolster economic growth. An additional $4 million was suggested for entrepreneurial service needs such as mentorship networks and hubs.
An additional $30 million was recommended to an internship program, while $5 million would go toward sharing entrepreneurial stories to inspire further innovation.
The analysis was undertaken by TEConomy Partners, LLC, an economic research firm. The group was commissioned to identify strategies for economic growth through entrepreneurship and innovation over the next decade.
The report found businesses serving customers and markets beyond their communities make up a large portion of the state's economy, making up 61 percent of new jobs in Missouri from 2010-20. Despite the boost in new positions, the report found employment typically stagnated once they reached a certain point.
The authors attributed halted growth to challenges impeding entrepreneurial growth, including a decline in the number of risk capital offers from investors, accessibility of support services among minority communities and in rural areas, and a lack of research from Missouri universities compared to those in other states.
Other challenges included difficulty in recruiting for IT and subject-matter positions and lacking broadband coverage and service across the state. The report identified broadband as a critical component of its plan, though it left its exact role in infrastructure deployment up to the Legislature as it considers best practices.
Broadband has been a focus of the state government, especially amid the COVID-19 pandemic and the increased reliance on the internet for work. Gov. Mike Parson announced plans for $400 million in American Rescue Plan Act funds to go toward broadband infrastructure, while the House Special Interim Committee on Broadband Development spent months taking testimony from businesses, advocacy groups and internet providers. The committee recommended state fiscal assistance for broadband projects, which MTC said it may take part in.
While an exact amount for broadband infrastructure was not specified in MTC's report, it recommended a $5 million investment to connect Missouri's business ecosystem through software and other means as well.
Another focus would be reinvigorating the Research Alliance of Missouri (RAM), which acts as an advisory group to MTC's board of directors. Around $2.5 million was the cost estimate to increase staffing for RAM over the next decade.
A robust innovation and entrepreneurial environment is an essential tool for economic growth in the state over the next 10 years as technology and new ideas take center stage on the business landscape, an opportunity the governor said he hopes to see Missouri take part in.
"Our state is a hub for high-tech entrepreneurship, with a growing number of leading companies investing right here in Missouri," Parson said. "Supporting innovation is critical for encouraging economic growth statewide. Investments made through Missouri Technology Corporation are doing just that, and we applaud these efforts that ensure our future success."
Jefferson City Regional Economic Partnership, a group created by the Jefferson City Area Chamber of Commerce to handle the area's economic development duties in 2020, was one of the groups participating in the report.
Lincoln University was also noted for its partnership with Missouri S&T in the latter's participation with the Great Lakes Hub, a collection of universities partnering on development programs across the Midwest. MTC said similar partnerships between institutions in Missouri could also bolster economic development across the state.
MTC is a public-private partnership within DED that focuses on entrepreneurship and technological innovation. It has invested more than $75 million since 2014, fostering an economic impact exceeding $6 billion, according to MTC's data.