Last fall, St. Louis-based agtech firm Benson Hill rang the opening bell at the New York Stock Exchange and announced a $2 billion deal that took the company public, making it the latest company with Missouri ties to achieve the rare “unicorn” status reserved for startups that reach valuations of $1 billion or more. But, if not for decisions made by the Missouri General Assembly almost two decades ago, the state might have missed out on several successful investment opportunities, as recent unicorns like Benson Hill and Gainsight received early funding from the state’s Missouri Technology Corporation (MTC).
If we want Missouri to spur entrepreneurship, launch more unicorn startups, and reap the benefits of more high-quality jobs and new economic investment, the state needs to increase its investment in MTC this legislative session.
The MTC was created by the General Assembly to promote entrepreneurship and foster growth of new and emerging high-tech companies. MTC has multiple programs, one being the Innovation, Development and Entrepreneurship Advancement (IDEA) Fund Co-Investment Program that acts as a state-sponsored venture capital program, which creates an infrastructure for accelerating private venture capital into Midwest states like Missouri that lag the coasts in this unique type of capital that is critical to seeding and scaling high-growth companies. MTC was created to solve this unique challenge with a unique solution: it matches state investment with private dollars and on the same terms. This tool has made Missouri more attractive for entrepreneurs and investors and ensures public-backed resources are a catalyst and an accelerator that empowers entrepreneurs to create companies and jobs here, just like Benson Hill.
Since its founding, MTC has delivered on its charge to transform entrepreneurship in Missouri. Over the past decade, MTC has invested over $45 million into nearly 140 early-stage Missouri-based tech companies, which have raised more than $1.1 billion in additional private capital. An independent audit by the U.S. Department of Treasury confirmed that MTC, and by extension, Missouri, was among the most effective states in the country in using public resources to achieve job creation and pro-entrepreneurship policy outcomes.
While a big part of MTC’s mission is investing in early-stage companies, another piece of their portfolio is supporting ecosystem building across the state. MTC has partnered with over 60 non-profit organizations in local communities all corners of the state to invest more than $29 million in entrepreneurial-focused infrastructure projects that have served thousands of small businesses across Missouri. Critical to this work, is letting local communities design entrepreneurial small business support systems that work for them, rather than impose a one-size-fits-all approach from Jefferson City.
Unfortunately, since 2017, when it was appropriated $24 million, MTC has suffered repeated budget cuts. Case in point: even after the appropriation for MTC was tripled last year, it only received $3 million.
The General Assembly has an opportunity to right the ship this year. Greater St. Louis, Inc. and our partners across the state are advocating for an increase in MTC’s budget and for MTC to administer nearly $95 million in federal American Rescue Plan Act State Small Business Credit Initiative (SSBCI) funds, as recommended in Governor Parson’s budget.
This is not the first time SSBCI funds have been used in Missouri. The program was first included in the American Recovery and Reinvestment Act in 2010. MTC successfully administered the $24 million it was allocated and was used as a success story by the U.S. Department of Treasury in their 2016 evaluation report. According to the report: “Through December 31, 2015, Missouri’s total of $21 million in VCP (Venture Capital Program) investments had been matched more than 10-to-1 by $289 million of new capital investment. The program’s success and regional impact led to a substantial increase in the state’s budget for MTC to continue its investment and venture capital development programs.”
MTC used SSBCI dollars to successfully fund JBARA Software (Gainsight, acquired by Vista for $1.1B), Confluence Life Sciences (acquired by Aclaris Therapeutics), Arch Oncology (raised $155M), MediBeacon (raised $83M), Adarza Biosciences (raised $64M), and CoverCress (raised $20M), among others. SSBCI dollars were also used to launch MTC’s IDEA Fund Co-Investment Program, which invested $175,000 in Benson Hill in 2013 — eight years before the company’s billion-dollar valuation.
The state must play the long game this session. If we want more jobs, more investment, and yes, more unicorns, the state should restore investment to the Missouri Technology Corporation this year and allow it to administer SSBCI funds. By sowing these seeds of success today we will reap the rewards of a thriving innovation ecosystem tomorrow.
Jason Hall is CEO of Greater St. Louis, Inc. and a board member of the Missouri Technology Corporation.