Why Tech Startups Are Gravitating to Kansas City

The Kansas City metropolitan region could soon be a hotbed for fin tech start-ups, giving banks and bankers yet another place to search for new products and services that will appeal to their growing mobile audience.

The metro at the confluence of the Missouri and Kansas rivers is primed for technology because of its proximity to mobile technology and software giants.

"If you look at the tech assets that we have here, we have a very mobile town," says Ryan Weber, the president of regional technology council KCNext, a nonprofit advocate for the region's technology sector. "I think the talent is here …We are quietly one of the leading areas in the country."

Straddling two states, the area is a favorite of Google (GOOG).

The region is home to Sprint Nextel (S), the only wireless carrier of Google's digital wallet. The Overland Park, Kan., company is within driving distance of the city, and is reportedly working on a mobile wallet of its own.

Motorola Mobility, which was recently acquired by the search engine giant, keeps an office close to Sprint's headquarters in order to collaborate with Google's ally.

Zave Networks of Kansas City, Kan., was also purchased by Google last fall.

The company created a loyalty rewards platform that is sure to benefit both Google Wallet and Google Offers. A Google spokeswoman said Thursday that she could not talk about how Zave will impact Google's digital wallet strategy.

And Kansas City was chosen last year to be the first to receive Google's high-speed fiber optic network, called Fiber, which Google says is 100 times faster than the U.S. average. That service could launch as soon as this fall, says Weber.

"We are seeing a lot of entrepreneurs have made plans to move to Kansas City as soon as [Fiber] is announced," he says. "We are finding places where they don't have to sign a long-term lease."

New tech business traditionally clusters around infrastructure and talent that can support it.

With Kansas City's mobile commerce bent, as well as its proximity to the Federal Reserve Bank of Kansas City and the Kauffman Foundation, the city could harbor an incubator for alternative payments companies.

Still, Kansas City has some ground to make up.

"The investor community needs to better understand technology, and investing in technology, in particular high-risk financial tech start-ups. That's a new concept for a lot of Kansas City, and even the Midwest in general," says Jessica Bishop, the chief executive of Klink Mobile, which launched last year as a way to move stored value between cell phones using text messages. "But with Dwolla and Klink there are a lot of people getting interested in the payments sector."

Klink is currently working on a system to move cash between users in different countries.

Earlier this year, it launched a method by which its customers are moving mobile minutes in a one-way pipeline to Afghanistan, says Bishop, who previously worked for Leawood, Kan., electronic payments processor Euronet Worldwide.

On Monday, KCNext is hosting a panel that will bring together payments experts from across the Midwest and the country to discuss the future of financial services.

Dwolla's chief executive and co-founder Ben Milne; Federal Reserve Bank of Kansas City Barb Pacheco; And Chirpify founder and chief executive Chris Teso will participate.

"I think that Kansas City has really just started to come into its own," Bishop says. "You look at this city, two or three years ago there was a lot going on, but it wasn't quite as public."

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