St. Louis draws entrepreneurs from across the country

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St. Louis draws entrepreneurs from across the country
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Like any good fishing trip, the effort to nurture entrepreneurs in St. Louis generates stories about the ones that got away. Too often, startup companies with promising technologies move to California or elsewhere in search of funding.

In the past couple of years, though, St. Louis has landed some catches of its own. Lured by the area's rich research assets and a growing number of funding sources, entrepreneurs have moved here from places such as Louisville, Nashville and upstate New York.

Harry Arader left his job in Chicago in 2008 to start Midway Animal Health, a veterinary medicine firm. He did the initial work from his beach house in Grand Haven, Mich., and considered half a dozen states for the business's permanent home. In September, he landed at the Biogenerator in the Central West End, and he's an enthusiastic backer of his new hometown.

In the Midwest, Arader says, "I don't think there's any place as attractive as St. Louis is right now."

Arader came because of funding from the Biogenerator, a nonprofit organization where he serves as entrepreneur in residence, advising other early-stage firms. But, he says, "I also had to be convinced that this community was going to be a better place for the business than all those other places."

The more he learned about the scientific talent in St. Louis, and the research being done here, the more he was convinced.

Those same assets — along with local funding — lured Veran Medical Technologies here from Nashville in 2008, Veniti from Latham, N.Y., in 2010 and KyPha from Louisville, Ky., this year. All three are medical device firms: Veran focuses on diagnosing and treating lung disease, Veniti on treating diseases of the veins and KyPha on treating inflammation.

Some of the founders had local ties: Chad Stiening, chief executive of KyPha, grew up in the Metro East area, and Sean Morris, Veniti's chief executive, is married to a St. Louis native. Even so, they say, the move had to make business sense.

"What really sold us was seeing that there were so many groups making an effort, and they have proven to be on the same page and working together," Stiening said. Assistance from the city, Missouri and the Biogenerator helped bring KyPha to St. Louis.

When Veniti raised $15 million in venture capital this year, investors included Prolog Ventures, based in Clayton, and members of the St. Louis Arch Angels. "That was extremely important to me," Morris said. "I wanted to have some dollars from the St. Louis community."

These aren't big firms. KyPha has five full-time employees, Veniti, 10. But they all plan to grow, and if they succeed, their founders are likely to invest in other startups, too. Arader, in fact, is already working on a second animal health company but isn't ready to discuss it yet.

Growth might be easier to achieve in a place such as San Francisco or Boston, with an established biotechnology industry. "In a lot of ways, we're swimming against the stream trying to grow here in St. Louis," Morris says. "There's a very small number of people here who can help you, so you end up recruiting from outside, which adds expense."

These transplanted entrepreneurs know St. Louis isn't perfect — Morris would like an airport with better connections, for one thing — but they've adopted a glass-half-full attitude.

"I came here expecting to be underwhelmed," Arader says. "I've been pleasantly surprised by how strong the deal flow is."

For longtime St. Louisans who are used to seeing ambitious businesspeople leave, not arrive, those are encouraging words.

Copyright 2012 stltoday.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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