Economy Takes Toll On Startups

DAVID TWIDDY

KANSAS CITY, Mo. (AP) — The recession is forcing startup companies to battle for a shrinking pool of private financing that they need to get their ideas off the ground.

Representatives of 43 startups, ranging from software developers to pharmaceutical labs to a company that makes eco-friendly masonry blocks from industrial hemp, converged in Kansas City on Wednesday for InvestMidwest, an economic forum that allows fledgling firms in the region to make brief presentations to roomfuls of potential investors.

Organizers of the 10-year-old event said interest among investment firms was as strong as ever, with attendance by more than 70 venture capital firms and 25 angel networks — individuals or groups that typically invest tens of thousands instead of millions of dollars.

But to what degree those investors can support startup companies is unknown. Investors and presenters said the struggling economy has reduced the amount of money available for investment and forced firms to be much more selective.

"Nobody wants to take themselves out of the market," said Amy Francetic with Chicago-based MVC Capital Inc. "They're looking at a lot of things but they're not doing a lot of funding."