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story.lead_photo.caption This Jan. 16, 2017 aerial photo shows progress on the renovations at the Arch grounds continuing in St. Louis. After long decline, St. Louis is trying to rebuild its image with business start-ups and investing in major downtown projects. The city's image took a hit in recent years due to factors such as racial protests, the loss of the NFL's Rams and the departure of several Fortune 500 companies. Photo by Associated Press / Fulton Sun.

State leaders want to make Missouri the best Midwestern state for startup activity, but to do so, the state has work to do, according to a new task force created by Gov. Eric Greitens.

The task force wants to create a better environment for Missouri startups by giving new businesses better access to seed funding and by making it easier for them to find employees. The task force held the third of five meetings Wednesday to hear concerns from business leaders and entrepreneurs around the state.

Greitens created the Governor's Innovation Task Force in late June to assess the state of innovation in Missouri. Business leaders from the nonprofit, private and government sectors make up the board and work with the non-partisan Hawthorn Foundation on the project.

Drew Erdmann, Missouri's chief operating officer, serves as the task force's sponsor. On a conference call with reporters Wednesday, Erdmann said the task force wants Missouri to become the best state for startup activity between the East and West coasts in the next five to 10 years.

"There's a lot of positive momentum in the last 10 years around the state," Erdmann said.

He added there's great enthusiasm statewide in the ag science, animal health, manufacturing, aerospace, defense and healthcare fields.

"These are all areas where we've been very distinctive," Erdmann said. "When you look at the resources both at the academic level, private sector level, the intellectual capital balance, we really do think there's some distinctiveness here."

Task force leaders still have work to do. Financial services firm Pricewaterhouse- Coopers said Missouri had the fourth most venture capital invested among Midwestern states during the second quarter with $14 million invested in Missouri startups. That's down from $16 million during the second quarter of 2016 and $43 million in 2015, according to the firm.

During the second quarter, Illinois led Midwestern states with $814 million in venture capital invested in its firms. Michigan and Ohio trailed with $40 million, according to PwC.

A 2017 report by the Kaufman Foundation said Missouri ranked No. 10 among 25 large states for startup activity. The amount of startups per 1,000 firms grew from 76.8 startups per 1,000 firms in 2012 to 95.5 in 2014, the last year for which data was available.

This year, Kansas City and St. Louis improved their rankings on the Kaufman Foundation's Startup Activity Index rankings with Kansas City moving up from No. 19 in 2016 to No. 10 this year. St. Louis also moved from No. 36 to No. 26.

The task force found through a survey with 1,700 participants that 70 percent of participants said Missouri's climate for startups is improving. Only 24 percent though thought startups statewide have enough access to capital.

Erdmann and Tim Noonan, a former Boeing executive who volunteers on the task force, said the state sits in a good position. While the state's government tries its best to create a thriving environment for startups, Erdmann said the state lacks a large ecosystem of investors and entrepreneurs who feed off of each other like that in densely populated places like Silicon Valley.

Erdmann also said while it's important to attract venture capital from outside the state, the task force wants to figure out how to spur investments by venture capitalists and investors who currently live in Missouri.

"There is a lot of wealth in private hands in the state of Missouri," Erdmann said. "The question is how to get that channeled into the startup phase of investing."

Erdmann said the state lacks angel investors and sources for angel funding, which startups typically use to get off the ground in their earliest stages.

"There's been quite a lot of development of certain venture funds, but there are still shortages," Erdmann said. "When people need the $50,000, $100,000, $200,000 angel investments, that's still a little bit tougher."

Erdmann also said only 47 percent of participants said Missouri firms had enough access to high skilled employees, which they said is holding back growth. Noonan added the state has many smart people coming from state colleges and other private firms capable of filling those positions, but the state needs to churn out more coders, engineers and scientists at its universities.

"There's many, many wells of deep strength we have," Noonan said.

The task force held meetings in St. Louis and Kansas City in late June, seeking input from business leaders and entrepreneurs. It held its latest meeting Wednesday in Columbia, seeking input from Mid-Missouri business leaders. Final public meetings will be held today and July 31 in Springfield and Cape Girardeau, respectively.

The task force hopes to prepare a report by the end of August with its recommendations.

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