A venture firm that invests ‘from Park City to Kansas City’ just closed its third fund

Sometimes, in venture capital, it pays to specialize. The latest indicator is a Kansas City, Mo.-based venture firm that’s focused on seed-stage startups that are based anywhere from “Park City to Kansas City.” According to an SEC filing, it just closed on $16.4 million in capital commitments. It’s the third fund for the outfit, Royal Street Ventures, which was founded several years ago by two Kansas City natives — Laura Brady and Jeffrey Stowell.

It’s an interesting piece of geography to be so focused on, partly because, well, it leaves out a lot of opportunities elsewhere.

At the same time, the firm is hardly the first to plant a flag in an underserved area, then get to work. It’s hard to remember now, but when Foundry Group opened its doors in 2007 in Boulder, Colorado, it didn’t have many, if any, competitors kicking the tires of local startups — or bidding up valuations. Similarly, former Sequoia Capital investors Mark Kvamme and Chris Olsen hightailed it to Columbus, Ohio, in 2013 based on a hunch that there were plenty of savvy founders in the Midwest who investors on both coasts were missing.

Certainly, Brady and Stowell, who previously worked for a bank and the innovation center out of which Royal Street sprang, aren’t having trouble putting money to work. They’ve written checks to at least 40 Midwestern and Western U.S. startups since the firm’s launch in 2013, including an organic snack company in Park City called Allgood Provisions; a Kansas City company called BacklotCars that’s building marketplace for the wholesale automotive industry; and a weather data company in Overland Park, Ks., called Main Street Data.

They’re also making the occasional investment in a startup off the beaten path. Blueboard, for example, an employee recognition and incentives program, is based in San Francisco.

Either way, the team’s new fund underscores a growing tendency on the part of limited partners to make bets on parts of the U.S. that are on the rise, thanks partly to soaring costs in places like the Bay Area and New York, as well as competition for talent in such tech hubs — a constant tug-of-war can hobble a startup before it gains meaningful momentum.

Among the highest-profile advocates for the trend, of course, is AOL founder Steve Case, who has been banging the drum about startups in underserved areas all over the U.S. in recent years. Case has also been helping to raise investing capital for them through seed funds dubbed Rise of the Rest, the second of which was announced back in October.