For those who have not recently driven down the Ohio Turnpike, images of abandoned steel mills and shuttered factories may come to mind. But the view from the car window today looks far different — one can stop by the Youngstown Business Incubator to see how additive manufacturing startups are utilizing 3D printers, or check out the construction underway at the newly launched Bounce Innovation Hub in Akron.
The Ohio Turnpike is just a small slice of Interstate 80, which connects our nation’s coastal communities from New Jersey to California, cutting straight through Ohio. One of the original routes of the Interstate Highway System, I-80, catalyzed economic growth 60 years ago by bringing together Americans from all corners of the country, creating a center of gravity for a number of industries.
In February, we took to the highway, bound for several stops across the Midwest. Our goal was not to promote investment in the Midwest’s highways, but investment in its burgeoning entrepreneurial ecosystem. We were joined by more than a dozen venture capital investors from Silicon Valley and New York to take part in a “Comeback Cities Tour” through Youngstown and Akron, Ohio; Detroit and Flint, Michigan; and South Bend, Indiana.
Why the Midwest and why us? Rep. Ryan represents Northeast Ohio and led this tour to show VCs that his community, and communities that look like his, are open for business. For experienced VCs like Nitin and Patrick, this trip was an opportunity they could not miss. The Midwest startup ecosystem has been experiencing a bit of a renaissance, attracting increased investment and showing significant results as the area experienced 37 company exits valued at over $5.1 billion in 2017, up from $1.6 billion in 2016. Together, the members on the trip represent the growing percentage of the VC community interested in learning on the ground and bringing resources to areas of the US other than just Silicon Valley and New York. Most importantly, we know that investing is not transactional — it’s a relationship, which requires showing up in person.
Meeting dozens of entrepreneurs on the tour, we recognized similarities among them: passion for building impactful companies and a desire to see their cities once again thrive as business epicenters. The Midwest has long been a source of talent, and it makes sense that people located around research universities and iconic industries will create innovative companies.
Standing in the way of further progress is the lack of a more developed network with reliable sources of early stage capital, connections to broader networks, and companies spanning different stages of development. Though some local startup capital is available, the risk appetite and access to venture resources and growth capital are limited. Through Nitin’s work with Unshackled Ventures, Patrick’s experience building companies, and Rep. Ryan’s political leadership in the Midwest, we know firsthand how important each component is for success.
Silicon Valley already has a robust network of investors at each stage of a company’s growth. Our goal is to build access points from Silicon Valley inward to states including Ohio, Michigan, and Indiana. This starts with building relationships and trust between investors, business leaders, corporations, incubators, and accelerators. Next, we need help from the local business ecosystem to understand and tout local strengths that set this region apart.
Business communities in Rep. Ryan’s district, like Akron and Youngstown, offer investors and employers an attractive business environment that includes a low cost of living, proximity to outstanding universities, solid infrastructure, and clusters of local enterprise customers. Packaged together, it’s an enticing offer for the outside investor community. Similarly, large family foundations and funds can be access points, fostering the flow of investments and knowledge in both directions. Partnering with local investors and business leaders will be very helpful to identify, evaluate, and leverage these strengths — and that’s what we started to do in February.
The Comeback Cities Tour is already paying dividends for entrepreneurs in the Midwest. Those on the tour immediately recognized critical masses of customers in these cities, and conversations have already started between Silicon Valley startups, VC funds, and the regional customer base. This progress is on top of $75,000 pledged by Patrick in partnerships spanning Ohio. Over the coming months, we will deepen the relationships developed during the tour, to drive opportunities and flow of capital in both directions. And we will hold ourselves accountable on follow-up action.
Our Comeback Cities Tour started the dialog, but more needs to be done to grow partnerships of trust. So where do we go from here? There is no better model than Interstate 80. The interstate of the future will connect talent, ideas, and capital as much as the road system of the past connected physical commerce. With the right coordination and relationships, Midwest innovation combined with coastal capital and business experience will drive economic growth from the center of our country outward.
Because entrepreneurship is not a zero-sum game, we all stand to win by working together.
Rep. Tim Ryan (D-OH) represents Ohio’s 13th District, which includes Akron and Youngstown. Nitin Pachisia is a founding partner of Unshackled Ventures. Patrick McKenna is the founder and managing partner of High Ridge Venture Partners.