Kansas bucked a national trend in 2022: Instead of seeing venture capital and private equity investments wane in area companies, investments climbed 65.6%.
Companies in Kansas landed $356.6 million last year, up from $215.3 million in 2021, according to PitchBook, a firm that tracks venture funding totals throughout the country.
Kansas City-area companies also ranked among last year’s top 10 deals for Kansas every quarter, routinely comprising half or more of the companies listed. Leawood-based C2FO secured Kansas’ top deal of the year, with $140 million. The round allowed employees to gain liquidity and opened the door to exploring new services and growing geographically. Lenexa-based TrueAccord came in second statewide, with $49 million, followed by Prairie Village-based Artio Medical, with $37.5 million.
Missouri-based companies didn’t fare as well. Statewide, investments plummeted from $1.36 billion in 2021 to $491.5 million last year — a roughly 64% drop in funding. Kansas City-based Orange EV secured the state’s third-highest deal in 2022, with $35 million. Missouri's top deal came from Brentwood-based EmpowerMe Wellness, which landed $100 million. Founded in 2017, EmpowerMe is a tech-enabled health care service provider for senior-living facilities. As of December, the company provided services to 100,000-plus seniors at facilities in 36 states, the St. Louis Business Journal reports.
Nationally, venture capital investors pumped $238 billion into U.S. startups in 2022 — a 31% decline from 2021's record haul of $345 billion, according to PitchBook.
On the state level, there were some exceptions to the big dip joining Kansas.
Florida and North Carolina, home to high-growth metros with expanding innovation ecosystems, each saw funding upticks in 2022 — as did Illinois, Michigan and Virginia.
Startups in Florida raised $6.8 billion in 2022 compared with $6.6 billion in 2021. In North Carolina, startups raised $4.3 billion, up from $3.8 billion.
Markets such as Miami, Orlando, Tampa and Raleigh drove those gains.
It's important to note that one or two large deals can tip the scales when looking at state or metro totals.
In Illinois, for example, startups raised a record $10.3 billion, but more than half of that was from Walgreens' $5.2 billion investment in health care startup VillageMD.
Their growth comes as traditional startup hubs often saw funding fall precipitously from 2021.
California, which draws the most venture funding by far, posted a 35% decline — from $162 billion in 2021 to $104 billion in 2022. New York (down 40%) and Massachusetts (down 37%) posted similar declines.
Those three states account for the vast majority of startup funding historically. But whether it's the rise of remote work, the migration of people to states with lower cost of living or the growth of nontraditional startup hubs that allow entrepreneurs the freedom to build venture-backed businesses outside Silicon Valley, the stranglehold California, New York and Massachusetts once had on the innovation economy is starting to give ground to other areas of the U.S.
It's a sentiment shared by Steve Case, the founder of VC firm Revolution and the Rise of the Rest fund, which invests in startups outside traditional tech hubs.
The "era of a few superstar cities dominating the innovation economy is over," he told American Inno Editor Jim Dallke in an interview.
"We have seen more interest in different communities in terms of what’s going on with startups," he said. "We’re seeing more people start companies. We’ve seen more investors, both locally and nationally, backing companies. ... We’re starting to see more significant exits, and people are starting to say, 'Huh, maybe these places really can launch some pretty interesting, pretty valuable companies.'"
