Data on which startups are getting funded in Heartland communities or which venture capital firm just closed a new fund is easily available. But what kind of data is actually useful in determining whether a startup community is seeing progress in producing more fast-growing startups?
Last week, I was sent a 2017 year in review report from the Michigan Venture Capital Association. I like looking at reports from state-led organizations like the MVCA because I find they often capture small startup funding announcements national databases may miss.
The report found that the amount of venture capital money Michigan startups received from Michigan venture capital firms decreased from $222 million in 2016 to $179 million in 2017. Additionally, the number of venture-backed startups in Michigan fell from 141 in 2016 to 134 in 2017. But when I spoke with MVCA executive director Maureen Miller Brosnan, she noted a few reasons to stay positive.
For starters, Miller Brosnan attributes part of the funding decrease to the increasing diversification of Michigan-based startups. Historically, the majority of venture-backed Michigan startups have operated within the health care sector. That’s still the case, but Michigan is also seeing an increase in the number of IT and software startups, which require less capital to operate than, say, a medical device startup.
Also, two years ago the MVCA began tracking for the first time the number of startups in the mobility sector, given the investments both public and private organizations in Michigan have made in mobility and self-driving car startups.
Of course, it’s Miller Brosnan’s job to tout the positives of the Michigan venture community. But I think the variety of startups popping up an area is a worthwhile metric too few startup communities pay attention to. When I spoke with Drive Capital’s Chris Olsen a couple of months ago, he also cited the diversifying array of startups forming in the Midwest as a positive. In particular, he thinks this newer crop of what he called “true tech businesses” can get more attention from coastal investors than startups in the Midwest may historically have gotten.
While it’s too soon to tell if this will prove true, I think startup communities will only benefit from showcasing themselves as suitable for a diverse array of companies.
As always, please send me your thoughts via email. You can also sign up here for VentureBeat’s Heartland Tech newsletter to get this column in your inbox weekly.
Heartland Tech Reporter
Check out this video from CNBC, “LinkedIn CEO on the ‘soft skills gap”
From the Heartland Tech Channel
There’s an oft-cited statistic that 75 percent of all U.S. venture capital goes to just three states: New York, California, and Massachusetts. When three states take up such a large portion of the $84 billion that was invested in venture capital last year, signs of progress taking place in other states or cities — the […]
EXCLUSIVE: As Baltimore’s Ready Robotics was preparing to raise its first round of funding, the company faced a dilemma familiar to many techentrepreneurs outside of Silicon Valley: Potential investors wanted to join the round on the condition that the startup move to Silicon Valley. Ready Robotics ultimately decided to move after raising its round of […]
GUEST: Until recently, most venture capitalists were reluctant to invest in startups outside the Bay Area. I know because half the VCs I pitched when I started my company turned me down because of my location. From a personal perspective, this makes sense. Why would they want to fly halfway across the country and be away […]
GUEST: Between 2014 and 2016, 75 percent of all venture capital funding in the United States went to three major tech hubs: Silicon Valley; New York City; and Cambridge, Massachusetts. Organizations such as Rise of the Rest seek to push funds toward the startups in the middle of the country that might get passed over otherwise. However, the road […]
American cities still have the edge when it comes to high-tech startups and venture capital, but other parts of the world are rapidly catching up. (via CityLab)
Social networking company Reddit announced Monday it’s opening its first Midwest office in Chicago. (via Chicago Inno)
Organizing Midwest talent to use artificial intelligence and machine learning to combat societal challenges like income inequality could be a powerful tool for a new generation of problem solvers, said Brian Curry. (via Startland News)
When Amazon executives recently toured the Dallas-Fort Worth area, one of 20 finalists for a second company headquarters, local officials touted its growing workforce and low taxes as perfectly suited to accommodate 50,000 planned Amazon jobs. (via Washington Post)