The innovation ecosystem in the Midwest is different from the mature venture communities operating on the coasts and, as the region grows in importance, a key question is what the role of the venture capitalist is in growing and nurturing the ecosystem.
A session at +Venture North led by Matchstick Venture’s Ryan Broshar posed that question to a panel of other venture fund leaders.
Broshar set the stage by making it clear that investing in Midwest entrepreneurs is not just a “home team” play. “There are great venture opportunities and great investments in these Midwest regions,” he said as he encouraged attendees not to overlook them.
The group, which included Fallon Donohue from Narya Capital (Cincinnati), Eli Blee-Goldman of Character VC (Milwaukee) and Jonathan Ellis from Sandalaphon Capital (Chicago), discussed the tailwinds supporting growth in the Midwest sector including:
While comparisons to other markets are inevitable, the panel cautioned against the tendencies to try to replicate what a Boston or a San Francisco has developed. “Comparisons to other markets cause us to undervalue what is already here that will help grow our own ecosystem over time,” noted Blee-Goldman. He added that those other systems are highly dynamic and have developed and evolved over years and said that it’s not as easy as just trying to transplant what has worked elsewhere.
Similarly, comparisons to other Midwestern markets do not serve us well. “It’s not a zero-sum game and the better the whole region does, the better each individual market will fare. A high tide raises all boats,” he said.
Donohue added that, in the Midwest, we seem to have an inferiority complex that we need to get over, especially now with so much going for the region.
Ellis built upon that, encouraging the various regions to lean into key industry sector priorities. He noted that, in Chicago, the community has put a focus on healthcare, life sciences, food & food tech, supply chain and quantum computing. He went on to say that the strategy is starting to pay off as they are seeing the benefits of the flywheel effect. “We’ve had about 37 unicorns,” he noted, “And we’re seeing talent at those successful companies either starting something else or starting to write angel checks to other entrepreneurs.”
He is hopeful that these successes may help get some folks who have been waiting on the sidelines to take the entrepreneurial leap.
The group wrapped with a discussion of how corporations can get involved in the local ecosystem – in addition to the obvious role of investing. Highlights included:
The entire panel agreed that one of the most impactful things that a corporation can do for startups is to open up the network and make introductions which puts a nice punctuation point on one of the goals of the conference – to create, foster and leverage networks.