Economy & Innovation
1:06 pm
Tue May 20, 2014

Arch Grants: Attracting and Keeping Entrepreneurs In St. Louis

(This story aired Tuesday on NPR’s Morning Edition.)

FoodEssentials has the typical startup vibe.

The company gathers and organizes food label data for retailers and brands, like which products are gluten free or are heart healthy.

Dheeraj Patri, one of three co-founders of FoodEssentials. In the startup's downtown St. Louis office, employees get to ring a gong when a project is completed.
Credit Maria Altman (St. Louis Public Radio)

But co-founder Dheeraj Patri says they still need to figure out just where to put a foosball table and bar.

"So we’re still moving in, but I guess as a start-up we’re always moving in," he said, as he gave a brief tour of the company’s new space in downtown St. Louis.

With 17 full-time employees and 30 part-time data collectors Patri says they’re a long way from the Chicago basement where they started.

He beams as he points to a table covered with awards they’ve received since moving to St. Louis.

"It’s really symbolic of what St. Louis has given us," he said. "I love Chicago; it’s a great town, but we didn’t get that support from Chicago, and we got that from St. Louis."

Building on St. Louis' entrepreneurial history

FoodEssentials came here after winning an Arch Grant.

It was part of the first class of the global competition in 2012 and got $50,000 and a year of free support services.

Since then competition has given away nearly $2 million to 35 companies on the condition that they agree to stay in St. Louis for at least a year.

Executive Director Ginger Imster says unlike most business competitions, they don’t want equity in the companies. The goal is only to build on St. Louis’ long business history.

"Entrepreneurism in St. Louis has been here since beer and furs," Imster said. "This is the next phase."

The competition is now in its third year and the startups range from consumer products, like a tattoo that lasts just six months, to a biomedical device that helps treat epilepsy.

What St. Louis offers, beyond the cash, is a growing network of startup incubators, co-working spaces and angel investors.

And Imster says another selling point is that the city is not only friendly to entrepreneurs but affordable.

"They can find not only residential property that they can afford, but commercial real estate they can afford," she said, "so it makes growing a business here, not easy, but possible. That’s the difference between St. Louis and a lot of other markets."

Attracting interest from elsewhere

With a logo that pictures the Gateway Arch as a giant magnet, the competition does appear to be attracting more interest.

Half of this year’s 46 finalists are from out of state; four are from other countries.

Dane Stangler  is vice president of research and policy at the Kauffman Foundation, a private group promoting entrepreneurship.

He says other cities are paying close attention to what’s happening in St. Louis.

"This idea of a competition to relocate as a tool for economic development is quite new especially in the U.S. context," Stangler said. "A couple of other countries have experimented with it at the country level, but it’s on the leading edge."

Still, Arch Grants officials know they have to sell some out-of-town entrepreneurs on putting down stakes in St. Louis.

On a recent sunny day finalists took a whirlwind tour of downtown, from visiting startups in buildings with exposed brick walls to apartments offering great views.

Just out of college, Shanshank Sanjay and Jonathan Hubbard, are eager to grow their social analytics marketing firm.

Jonathan Hubbard and Shanshank Sanjay's startup DCAF, a social analytics marketing firm, are finalists in this year's Arch Grants competition.
Credit Maria Altman (St. Louis Public Radio)

Now based in New York City, they’re downright giddy about St. Louis rental costs.

"So awesome, so much better. Currently in New York I’m paying $900 and that’s me and a guy splitting the floor of a house,” Hubbard said, “so I mean the pricing for two people here is astronomically better.”

Arch Grants will announce the 20 winners of this year’s competition Wednesday morning.

That’s when Sanjay, Hubbard and nearly 50 other entrepreneurs will find out whether they’ve won the competition.

With that will come $50,000 and a quick call to a moving company to begin relocating their business here.

Follow Maria on Twitter: @radioaltman