Kansas City-area investors have committed $10 million to the KCRise Fund designed to funnel local capital into area startup businesses alongside experienced venture capital groups.
The KCRise Fund is called a side-car fund because it follows the lead of venture capital groups in deciding which new businesses to back.
Investing with the venture capital groups is intended to boost the likelihood that KCRise invests well.
Companies seeking money from the fund must reside or have substantial operations somewhere between Manhattan, Kan., and Columbia, and be seeking at least $1 million in financing.
Darcy Howe, managing director of the KCRise Fund, said the fund would initially invest a smaller amount in an early-stage company and invest more as the company “gains traction.” Its total investment in any one company would not exceed $1 million.
“It’ll take several years for us to invest all the money,” Howe said.
Howe said the fund will consider companies that have backing from venture capital groups that the fund approves. It also will present area companies as candidates for investment to venture capital groups and join in their investment decisions.
The $10 million in commitments have come from area companies, institutions, families and individuals. The KCRise Fund plans to grow to $20 million.
The fund is part of KCRising, an effort aimed at boosting economic activity and growth in the Kansas City area.