An Interview with Sarah Spear of Arch Grants
Now in its second year, Arch Grants is ready to award $1 million in grant money to budding startup businesses itching to make their mark in St. Louis and beyond. As the applications continue to roll in, Executive Director Sarah Spear offers some insight into the application and decision-making process, as well as what is next for the organization.
Read the original story, “Reach for the Arch,” in the December issue of ALIVE. Sarah Spear was also featured in “Archetypes” in the November issue.
ALIVE: What is your role as Arch Grants Executive Director?
Sarah Spear: I came on as the first employee and saw through the launch of our round one and now we’re getting ready to go into round two. I provide general oversight to what goes on a day-to-day basis and also interface with our Board of Directors, which is a very active, hands-on board, to ensure that they are up-to-date and involved in whatever ways we can get them involved.
ALIVE: It has been said that the number of St. Louis startups and investors is growing. How might this affect the 2013 finalists?
SS: We anticipate that it will be an even more competitive process. In our first round, less than four percent received grants…but this year it’s probably going to be a smaller percentage. That’s just because there are so many great ideas out there.
ALIVE: With all of the talk about St. Louis becoming a tech hub, does Arch Grants solely focus on technology-based businesses?
SS: We are industry agnostic. Many of the startups that are involved in our first round are tech startups, but we accept applications—we welcome applications—from any industry.
ALIVE: Why are there so many tech startups in the St. Louis area?
SS: St. Louis is a good place for tech startups in terms of the infrastructure that exists, the location, the companies that are already here providing a track record, and also the investment community.
ALIVE: How does Arch Grants decide how many grants are awarded?
SS: We have funding in place for 20 grants for our next round, and if we receive additional funding—additional donors—between now and then, then we will increase the number of grants. In addition to the initial 20 grants we’re awarding, we’re also awarding two follow-on grants of $100,000 each. We will look at our current class of 15 startups and select two of those to receive the additional funding.
ALIVE: How active are the donors in Arch Grants?
SS: We call them sponsors and partners. The sponsors are financial donors. The partners are in-kind donors. The financial donors are largely corporate donors. We are a 501(c)(3) so [sponsors] receive a tax deduction for their donation to Arch Grants, but it’s also the only way to directly support startups or directly invest in startups in St. Louis and receive a tax deduction.
ALIVE: Since the grant money comes from sponsors, do they have a role in picking the 15 finalists and/or a stake in the company?
SS: Because we are a 501(c)(3), the Board members are fiduciaries of all the donations that we receive. [They] make the ultimate decision on who receives the grant funding. The donors receive no stake in the company, otherwise their donation wouldn’t be tax deductable.
ALIVE: Do the businesses ever have to pay back the $50,000?
SS: They don’t have to pay it back. In our next round, we do have a clause in the agreement whereby if they move out of the state then they have to pay back what they received.
ALIVE: Once the finalists are chosen, then what?
SS: We invite all of the finalists to come into town, because we want them to see and feel and taste and smell St. Louis themselves, especially because they would be moving here to receive the grant. We give them a tour. We show them basically the best [of what] the city has to offer. Then they participate in two panels of Q&A with two different panels of judges.
ALIVE: How are the judges picked?
SS: We had a strong group of about 50 judges in our first round that we pulled from the community, so we will be drawing upon that resource space. We look for people who are experienced business people. We look for subject matter expertise whether it’s technology or bioscience or energy. Then we also look for functional areas of expertise like marketing and/or finance to give us feedback on those aspects of the executive summaries that the startups submit.
ALIVE: Does Arch Grants help find locations for businesses and/or living for entrepreneurs the way that T-Rex does?
SS: T-Rex is an easy office location and [it] is what we recommend, because it is very inexpensive. There is plenty of space available…We try to make that transition as smooth and easy as possible.
ALIVE: Are the finalists urged to locate in Downtown St. Louis?
SS: It’s important to focus on creating a critical mass in one geography. So, Arch Grants has focused on Downtown St. Louis, and for that reason we require our entrepreneurs to be Downtown unless their business precludes them from doing business here.
ALIVE: What sets St. Louis apart from other cities for startups to find their feet?
SS: St. Louis has a hunger to excel in the area of startups. Arch Grants, specifically, envisions St. Louis established as an innovation hub. We are focusing all of our efforts on creating that and realizing that vision.
ALIVE: How has Arch Grants measured up to your hopes or expectations so far?
SS: I’m so excited about [Arch Grants] actually launching and having a successful program when we started. We didn’t really know what to expect. We thought it was a good idea. There were skeptics. People had questions. So to see it come to fruition is really rewarding, but moreover to know that St. Louis is benefiting from what we’re doing. When you look at the numbers of jobs created, that’s really exciting, and that’s ultimately what we’re doing this for. It’s why Arch Grants exists. I’m excited to be a part of something bigger.