With the goal of incentivizing within what some might consider a risky investment situation, the state has created the Kansas Angel Investor Tax Credit, which encourages investors to back young companies.
(TNS) — Some might consider
Franano, a former physician, serves as founder and CEO of Artio Medical, a
"We started a new company without a clear idea of what we were going to develop," Franano said of Artio. "But I have lots of ideas, and I have lots of physician and engineer friends who have lots of ideas."
Franano co-founded the startup in 2014, after handing off his previous success story — biotechnology company Proteon Therapeutics, which was founded in 2006 because of a drug he created while doing research at
Though Artio Medical has also found success, Franano recognizes the company wouldn't exist without investment from outsiders who decided to give the business a shot.
"The first investment was from the founders to show that we're committed," he said. "And then we raised money from angel investors and subsequently venture capital firms. That's usually how it goes."
When Franano considers the startup scene in
"There are a few really well-connected entrepreneurs who have an idea and go straight to venture capital or private equity. It happens," he said. "But the vast majority of people start with angel investors. It's a critical part of the funding ecosystem."
Someone who is keenly aware of that funding ecosystem is state Rep.
Entrepreneurship isn't a second-hand issue for the
Owens is also the type of person
Owens pointed to his own backyard as an example of the entrepreneurial chops that Kansans possess, noting there are a range of manufacturing and agricultural companies that started out at kitchen tables in
"These are the success stories," Owens said. "(Kansans) need to believe that dream is still alive and that they can see a path to realizing their own hopes and their own dreams in their own entrepreneurial endeavors.
"But some of these people don't know how to start or where to start."
Guardian angels: Advocates push tax credit boost
One policy item that has been touted by lawmakers and startup founders alike as a way to help entrepreneurs get their business ideas off the ground in
The program encourages so-called angel investors to pump much-needed cash into budding businesses.
These angels don't blow trumpets or don halos but rather are responsible for providing funding to startup companies, often choosing to back a large number of ventures in the hopes that one or two will make it big.
In order to incentivize this somewhat risky investment, the state created the Kansas Angel Investor Tax Credit to encourage these investors to back young companies. To qualify for investment, a company must be based in
This type of credit is especially vital in a place like
"It is something that is cited as a barrier by a higher percentage of entrepreneurs here locally," Roberts said. "I think what it all adds up to is a situation where entrepreneurs are struggling to access resources ... but also that is having an ultimate impact on some of the larger numbers that indicate the economic health in the region."
Though the program has proven useful, it isn't functioning perfectly, according to a report issued last year by the Legislature's auditing department.
The audit indicates businesses receiving a tax credit are slightly less likely to remain operational than their counterparts and also created fewer jobs, on average, than those that didn't participate.
The report also noted the
Owens, who has introduced legislation to reauthorize the tax credit, said more specific data collection is needed to see how the program is working and where it could be strengthened.
But, he added, the simple fact is that not all startups, including those using the tax credit, succeed. If the program didn't exist, the state would be even worse off in its attempts to encourage entrepreneurship, he argued.
"Chances are we wouldn't even have these other businesses if it wasn't for the angel tax credit because we're not the only state in the nation that does this," Owens said.
In a competitive market,
Franano, co-founder of Artio Medical, is familiar with the national startup arena.
Being based in the greater
"And then now that I've done multiple venture-capital backed companies," he said, "I've had a chance to see that (startup) environment in other states like
Franano said that when he first became interested in entrepreneurship in the mid-2000s, "90% of the impactful and important startups" were on the
He pointed to the
But things have changed since, he said, indicating several policies under the administration of Gov.
"We've been through a period now where
Under Brownback, the
"I feel that the Kansas Angel Investor Tax Credit is the best of all of those programs," Franano said. "But that's really the last thing in
"First of all, we've got to get to the end of this (pandemic) quickly," Radley said. "The other piece to that is for startups you probably need a longer runway of capital when you're starting than in the past, until this pandemic is over."
He argued the latest amendments to the angel investor tax credit are one attempt to increase that runway. And he noted new sources of revenue are also coming from the community level, as organizations such as community foundations look to provide support to entrepreneurs in their areas.
According to data from the
He indicated more needs to be done on items ranging from creating more accommodating regulations to investing more heavily in child and health care, so that those who aren't independently wealthy can get in on the startup action.
"There can be a temptation," Wiens said, "to say, 'Hey, we did our thing for entrepreneurs, we started this program, we have this new policy in place and we can move onto another issue.' "
But creating a thriving, and lasting, entrepreneurial ecosystem in the state is going to take more effort.
Another part of that is ensuring Kansans are aware that entrepreneurship is even an option, which Owens believes should start as early as high school. That could mean changing curriculum in career and technical training programs or providing mentorship opportunities for young people interested in building their own enterprise.
"We've got to let kids know that you can be successful and start your own business," Owens said. "That you don't have to fall into the standard 'go to college, get a job, work hard and hopefully you get retirement' kind of mentality.
"You can work hard. You can build your own business. You can create your own products. ... We need to help them understand that it really isn't as complex as what they believe it is or it is portrayed to be."
Franano argued it is important to get to the point where every generation is involved in seeding the next generation of successful entrepreneurs. And he noted
"It's becoming so expensive to run businesses in
Another issue facing policymakers is ensuring rural Kansans can embrace their entrepreneurial spirit, which Roberts says is abundant.
"Innovation can happen anywhere, and great intellectual property can look like something developed in a lab at Wichita State or K-State," she said. "Or it can look like someone who has been working in a feedlot for 20 years and comes up with a new latch for a gate."
Most of the formal infrastructure, however, for getting a startup off the ground is likely to be found in places like
"It is easier to start in the urban areas because of the resources around you," Owens said.
Radley, with NetWork Kansas, said connectivity is key for startups, which is one reason the nonprofit he leads is attempting to grow its network of "E-Communities" throughout the state.
According to the organization's website, an E-Community is a county or municipality that has made a commitment to promoting a local entrepreneurial ecosystem "by identifying and developing resources to help local entrepreneurs start or grow businesses." There are now 66 E-Communities in
"Community development and economic development go hand in hand," Radley said. "If you're an entrepreneur, you want to be able to have all the amenities no matter what community you live in."
The economic fortunes of
But Block22 — the result of a partnership between Pittsburg State, the city and a
Block22 is a mixed-use development that includes everything from a coffee shop to student housing. But most notable from an entrepreneurial angle is the development's business incubator, which provides training and support for startups, as well as co-working space where individuals can meet to collaborate or brainstorm ideas.
Typically, a resident of southeast
"I think we're hopeful that, by kind of going out on a limb and putting this in a place where it usually doesn't happen, in addition to growing southeast
And the hope is those future partnerships will continue to grow, allowing students and community members to build prototypes of potential products and partner with
As it has for entrepreneurs across the country, COVID-19 has presented challenges to rolling out some elements of Block22. Naccarato said the co-working space was supposed to launch in spring of 2020 but was delayed because of the pandemic, and other elements of the development have been used in ways that are different from what was initially intended.
Still, the pandemic has pushed some Americans to open their own businesses out of necessity, experts say. Others have seen new niches crop up in the technology and health care spaces, spurred on by venture capital that is flowing as freely as ever to support those innovative ideas.
And with remote work becoming a new normal, there is chatter that people might be leaving
"There is a deep commitment to reversing the trend of exporting all of our talent," Naccarato said, "basically leaning into the idea that
(c)2021 The Topeka Capital-Journal, Kan. Distributed by Tribune Content Agency, LLC.
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