SparkLabKC searches for a new business model for itself

Business accelerator SparkLabKC is reworking its own business model, skipping this year’s program for startups to concentrate on finding funding for the next three years.

Kevin Fryer, founder and managing director of the program that has helped boost area startups for three years, said it needs $425,000 each year to operate. It has raised more than $1.2 million by seeking individual grants since its launch.

“Long term, the business model doesn’t work,” Fryer said Wednesday. “Your friends get tired of you calling.”

He said SparkLabKC won’t run its program this year but instead will focus on establishing partners among major local institutions and businesses to provide a stable funding source.

The program is among several entrepreneurial supports in the Kansas City area, including the Sprint Accelerator run by Techstars and BetaBlox, that form something of a startup season in spring.

SparkLabKC’s absence this year was reported by Startland, an innovation news website. It said the changes could include new management.

Fryer said SparkLabKC’s new backers would be welcome to become involved or even take over.

“Our goal is to keep it going,” he said.

SparkLabKC works with 17 corporate and university sponsors and 100 mentors, who help the startup companies that apply for and then go through its three-month program aimed at accelerating the startup’s development. Businesses in the program also receive funding, free workspace, professional services and a demonstration day with potential investors.

Businesses from SparkLabKC’s three classes include CouponCloud, which gained an investment from Kansas City-based DST Systems, and PopBookings, which won the $50,000 Peoples Choice award in last year’s LaunchKC grant competition during Techweek.

Fryer said the accelerator still holds a small equity stake in the companies that went through its program. The payoff from such holdings, however, tends to run over a seven- to 10-year cycle, which is too short to support the program immediately.

This story was originally published March 30, 2016 at 2:58 PM with the headline "SparkLabKC searches for a new business model for itself."