There's a lot for businesses to like about St. Louis. Regional dealmakers who spoke at Wednesday's St. Louis Smart Business Dealmakers Conference broke down what's driving activity in region.
Clayton Capital Partners Managing Director and CEO Kevin Short says the M&A momentum in St. Louis continues to grow.
"The numbers of buyers that are calling and reaching out is growing," Short says. "Once they got past the impending doom of the tax changes, folks who had been on the sidelines jumped in. So, it is as hot as I've ever seen it."
Private equity, he says, has discovered St. Louis. Many of the private equity firms in town already do quite well. But the national private equity marketplace has discovered St. Louis. and they are very aggressive trying to get in to acquire companies.
Capacity CEO David Karandish says he's seen tremendous growth in the early-stage funding — seed, Series A, and even Series B funding. There's still, however, room to grow in the B, C and D rounds, however, which would mean companies like EmpowerMe and Capacity don't need to leave St. Louis to get their next round of funding.
"We were very, very fortunate in our recent Series C, about 70 percent of that came right here from St. Louis," Karandish says. "It's almost always the exact opposite from the rest of the tech scene."
To get funding, he says he took an atypical path. He worked with three private equity firms in his last company and wanted to go a different route this time around. So, he leveraged The Young Presidents Organization network, people he's worked with in the past, as well as customers, in the most recent round.
"We were able to push back any desire to have to move or do any unnatural acts, but I don't think everybody gets that," he says.
St. Louis, to EmpowerMe Wellness CEO Josh Stevens, means access to authentic people who'll shoot straight. He says with his first company he worked with institutional capital, private equity, REITs, and got to know the family office network through that experience. With this venture, the choice was made to grow the company through capital from the latter.
"Private equity and institutional capital is inevitable for a lot of high-growth companies," Stevens says. "But what family office capital has allowed us to do is keep it local, keep the relationships local and put the institutional capital further down as far as the fundraising goes. That's, I think, what's been really appealing about St. Louis. You can, as they say, get meetings here that you can't as an entrepreneur and some other major cities."
Judy Sindecuse, CEO of Capital Innovators, says beyond a community of people who go out of their way to help businesses succeed, St. Louis also has a high degree of employee loyalty.
"In other places, especially in the tech world, employees are jumping ship constantly, like every nine to 10 months, trying to find their next bigger paycheck or their next more exciting project," Sindecuse says. "It's very hard, especially for tech companies where most of your IP is in somebody's head, and they're leaving. It's very hard to grow your business under those under those circumstances. But St. Louis really doesn't experience that."
