Venture capital investment in the middle of the country tripled in the last decade, according to a new report from Heartland Forward. Investment reached $55 billion by the end of 2021.
We’re used to thinking of startupland as reaching a few dozen miles from San Francisco to San Jose. Maybe add on New York, if you’re in a generous mood.
While those regions still lead the technology industry, the middle of the country is catching up fast.
COVID pushed fundraising onto Zoom, where much of it remains. This has made it easier for founders all over America to get their slice.
Opportunities Where You Might Not Expect
One of the most exciting investments I’ve made recently is in a place you might not expect — Chattanooga, TN.
Krepling, an e-commerce SaaS company, is growing faster than just about anything in San Francisco or New York. And sure enough, investors lined up with their checkbooks out for its recent seed round.
If you have an awesome product with incredible growth, you can raise capital, wherever you may be.
Where the Runway Is Plentiful
Companies like Krepling have a secret advantage over everyone else — their costs are much, much lower.
You can rent a 1 bedroom apartment for less than $1000 a month in Chattanooga. Good luck doing that in New York City or Palo Alto.
Food is cheaper, office space is cheaper, everything is cheaper! All those lower costs mean more runway for your startup.
Raising money right now is hard. The venture market stinks, it’s stunk for almost 2 years, and it’s not showing any signs of getting better.
Locating in a reasonably priced area can put your startup in a strong position. And the middle of the country is filled with low cost, beautiful towns to choose from.
Travel Is Your Friend
One founder I know who lives in the heartland has a very simple fundraising hack: the airplane.
Every 3 months, he visits either New York or SF. He meets as many investors as he can on each trip.
And sure enough, he’s got over $10 million in commitments for his Series A.
Meeting people in person can help. But you don’t have to live on the coasts to do it.
A Place to Focus
“There’s nothing to do here but work! It’s great!”
That’s what an investor in a small southern town told me recently.
Every day, more founders are joining him to work in a place where it’s easy to focus.
For generations, writers have gone alone to a remote cabin to finish a novel. Startup founders moving to small towns to grind aren’t so different.
Wrap-Up
Long neglected by the venture world, America’s heartland is having a moment.
Venture investment is growing faster in the middle of the country than anywhere else. More and more founders are relocating there, eager to extend their runway and minimize distractions.
I’m excited to see a new wave of unicorns coming from the center of our nation. And I hope to back a few of them myself!
Are you investing in middle America? Why or why not?
Leave a comment and let us know!
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Photo: Chattanooga, TN
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