photo by: AdobeStock

About once a decade, I seem to write about an idea to create a locally based venture capital fund.

Usually, some promising young company has just left the community to grow somewhere else. The question turns to: Why wouldn’t they stay in Lawrence? The answer often is money. They need money to expand, and there are no venture capital funds in Lawrence. But there are a lot on the coasts, and thus those businesses move to be closer to investors.

To the uninitiated, a venture capital fund is an entity — often backed by high-net-worth individuals — that makes investments in promising startup companies in exchange for an ownership position in the companies.

Despite the idea coming up many times, the community still doesn’t have such a fund. But it does have another idea for one. Unlike past instances, though, this one isn’t being driven by the sting of a company that has left town.

Instead, it is sprouting out of a longer-term movement. Douglas County CORE is a group that we first reported on in 2021. It is a group of entrepreneurs and other community stakeholders who want promising startup businesses to become a much larger part of the Douglas County economy.

That group has confirmed it is in talks with a private partner that would contribute $1 million to a locally based venture capital fund. The goal would be to attract other investors to grow the fund to $3 million to $5 million in size.

“But we are in the very early stages of communication,” Kyle Johnson, a founder and leader of Douglas County CORE, told me.

But the conversations are a positive sign, he said, because they are an indication the community is getting closer to building an ecosystem for startup companies. Johnson said there’s probably a fundamental reason why past efforts to create a venture capital fund here haven’t panned out.

Lawrence and Douglas County have never produced enough startup companies.

“If there are only one or two per year that pop up, investors don’t need to get together to review those,” said Johnson, founder of Lawrence technology company Bixy, which has gone through the venture capital process.

Johnson said the community really needs about 10 “interesting” ideas a year to be in a position for a fund to be feasible in the county.

To clarify, Douglas County certainly has more than 10 startup businesses in a year. However, most aren’t what venture capital funds are looking for. Most often, venture capitalists are looking for technology companies or medical companies that are likely to have an idea that will change an entire industry. Thus, a new retail shop on Mass. Street is not likely to ever get a look from a venture capitalist, but a software company that can make online shopping 50% more efficient might.

Such a company also is the type that many economic development professionals in town dream about. A company that has a breakthrough product may very well end up producing a lot of jobs that pay very well. If you can stop that company from moving to Silicon Valley, Boston or even Kansas City, you can keep those jobs in Lawrence and benefit from the spending and tax revenues that they produce.

Johnson said the community is not yet to that 10 interesting-ideas-a-year mark. But he said there’s reason to believe that it will create such a “pipeline” of prospects in the next two to three years. He said that seemed to be the opinion of the individual who is in discussions about creating a fund. Johnson did not name that individual, but said they are “an active venture capitalist with multiple funds under management.”

“I think what this individual liked about our approach is that we aren’t just thinking that we should start a fund and everything would be great,” Johnson said. “What they really liked is our intense focus on pipeline development.”

That pipeline development work that CORE is undertaking is sometimes seen and sometimes not. Back in 2023 I wrote about the organization’s first pitch competition, which is a Shark Tank-like event where entrepreneurs pitch their ideas to a panel of judges. As we reported, CORE hosted the second annual version of that event in April. The event resulted in 18 entrepreneurs being awarded a total of $25,000 in micro-grants for their business ideas.

photo by: Chad Lawhorn/Journal-World

Christopher Niles Enneking participates in the 1st Annual Pitch Competition hosted by the entrepreneur group Douglas County CORE on Friday, April 21, 2023.

Come October, CORE will be hosting another event that may be even more unique than a pitch competition. It is being billed as a Launchpad event. From Oct. 4-6, CORE plans to team up with a group of software engineers and computer programmers who will donate their time to help entrepreneurs create basic software prototypes for their business ideas. So, think of an entrepreneur who has an idea for a new app, but doesn’t have the programming skills to actually create it. The idea is this event will allow some of that work to be done so that the entrepreneur now has something that he can show potential investors or others.

“At the end of the 48 hours there is going to be a pitch competition and demo day,” Johnson said. “You are going to show us what you built and get judged.”

During that 48-hour period, there also will be classes and workshops for the entrepreneurs to take while the programmers are busy writing code. Such training is a foundational idea for CORE. Last month, CORE launched its first 10-week session of FastTrac training, which is a business development program designed by the Kauffman Foundation, the Kansas City-based organization that is considered one of the national leaders in entrepreneurship.

Johnson said CORE plans to launch a follow-up initiative that is a one-on-one fellowship program. Select graduates from the FastTrac program would have access to an expert that they would work with one-on-one. Those experts could be in the world of computer software, accounting, marketing, business research or any number of other topics. Johnson said the goal is to have 10 to 20 experts available by the end of 2025.

October’s Launchpad event is set to be hosted at KU Innovation Park on KU’s west campus. People interested in signing up for the event can do so at kuinnovationpark.com/event/douglas-county-core-launchpad/