Arch Grants’ startups stay successful—and most stay in St. Louis
Sparo Labs is a good poster child for where entrepreneurial spirit can take you in St. Louis. Co-founders Andrew Brimer and Abby Cohen went to Washington University together—Brimer is a St. Louis native, and Cohen moved from Michigan—and generated the idea for their product, the Wing, in their last year of college.
They applied to Arch Grants for a $50,000 grant and a year of pro bono support, mentoring, and networking services—and won it. They set up shop in the tech startup incubator T-REX, following the grant competition’s dictum that their business would call St. Louis home for at least a year, the duration of their funding.
And then they stayed.
Sparo Labs’ story is not necessarily unique. Many other recipients of Arch Grants funding have used the money and free advice to flesh out their product or service ideas and find (perhaps to their surprise) that St. Louis is actually the best place to locate, grow, and market their business.
As Cohen says, St. Louis has the right “ingredients:” a strong, supportive community, a focus on attraction and retention of strong, scalable companies, and organizations such as Arch Grants to facilitate growth.
The entrepreneurial culture and community in St. Louis has been a topic of proud conversation so frequently in the past few years that it may be hard to identify the city’s next steps. But like startups themselves, said Arch Grants executive director Ginger Imster, St. Louis could always do better.
Arch Grants was founded in 2012 in an effort to combat job loss in St. Louis, and what Imster calls the “negative narrative” of the city, by looking inward to St. Louis’ high-tier universities and outward to other states. In its first application year, Arch Grants awarded $750,000 in grants to 15 companies, several of which have survived and thrived in the St. Louis startup ecosystem that grew with them.
Sparo Labs used Arch Grants’ model of mentoring and networking to earn and win more funding even after their grant-year had ended, and eventually engineered Wing, a pocket-sized sensor for smartphones that provides asthma patients information on their lung function. FDA approval pending, the med-tech startup will enter another phase of their business—the product-actually-exists-phase—quite soon.
Arch Grants has also grown. Now, competitions come in year-round cycles, allowing its 200 community judges to decide on 40% more finalist companies than in 2014. The nonprofit’s success is closely tied to its points of differentiation from similar startup-funding organizations: a 12-month commitment to grant winners, an “industry-agnostic” program of mentorship and competition, and of course the mutual obligation between the organization and its grant recipients when they locate in St. Louis. And those points of differentiation seem to matter: out of 60 Arch Grants companies that are still in business over four years of grants, 53 remain in St. Louis.
“Six years ago, there wasn’t nearly as much excitement,” Brimer said. There were few startups, and generally, entrepreneurship wasn’t seen as a feasible path out of college. But by the time he and Cohen graduated, entrepreneurship was flourishing thanks to an astonishing transformation of corporate priorities, community support, and funding and mentoring organizations. With industry clusters in medical tech, financial tech, and biological and plant sciences, St. Louis catapulted into business news as one of the top startup cities in the nation.
Calling St. Louis as startup-friendly as cities like New York or San Francisco may require a leap of faith, but there are definite benefits to a small-town funding environment, Brimer said. “In other communities that are a little more mature, you have a little bit of an oversaturation, where everyone is vying for the same funding. Or if something good happens to you, that means something good didn’t happen for someone else.” The St. Louis market still has room to grow, and that means that many companies can get their start here—creating jobs, innovating new products, and filling homes and offices—easier than they might elsewhere.
While it looks on paper like an unqualified success, Imster insists that there is more to be done for the St. Louis startup community.
For one thing, though the startup community is more amiable than elsewhere, the investment community tends to be smaller. Though many big St. Louis corporations are making a point to invest in the startup economy, investment by individuals is more limited than it should be, Imster said.
“We have a high number of high-net worth individuals,” she noted; but “It does not mean that a high percent of those high net worth individuals are actively involved in the space as investors.”
Imster indicated that the problem lies in the inherent conservatism of the investment market here, where investors have a low tolerance of risk. In order for Arch Grants and its funded companies to succeed, Imster said, they have to encourage St. Louisans to invest locally and optimistically—to introduce to them the strength of the startup community. “How do we help the St. Louisans who are not yet connected with this entrepreneurial community…to connect?”
Strikingly, one avenue of connection may be through the negative tone attributed to St. Louis since the killing of Michael Brown almost a year ago in Ferguson.
The deep local problems unearthed by the Ferguson protests “can’t help but impact” the entrepreneurial community, Imster said, but not necessarily in a negative way.
“I think the issues before us as a region are very attractive to entrepreneurs, who are inherently disruptive, who are problem solvers, and are looking for opportunities to engage in the community.” Facilitating that engagement is a critical aspect of Arch Grants’ mission, she said.
It may be just as critical for St. Louis’ aspiring growth as a city of innovation, community, and business.
Update: Sparo Labs has been invited to participate in the first-ever White House Demo Day on Tuesday, August 4. The event will be hosted by the President himself at the White House. Cohen and Brimer will attend to exhibit their product, Wing. In an email, Brimer told "St. Louis on the Air," "We are very excited about this amazing opportunity and are proud to represent the St. Louis community at the event."
St. Louis on the Air discusses issues and concerns facing the St. Louis area. The show is produced by Mary Edwards and Alex Heuer and hosted by veteran journalist Don Marsh. Follow us on Twitter: @STLonAir.