Dec 5, 2023 - News

Venture capital moves — slowly — to middle of the country

Growth in venture capital investment, by metro&nbsparea
Data: Heartland Forward; Note: Heartland states are AL, AR, IA, IL, IN, KS, KY, LA, MI, MN, MO, MS, ND, NE, OH, OK, SD, TN, TX and WI; Chart: Erin Davis/Axios Visuals

Venture capital investment in heartland companies more than tripled in a decade, reaching $55 billion by the end of 2021, according to a recent Heartland Forward report.

Why it matters: The jump means more startups in the 20-state region of the nation's midsection. New companies tend to spur clusters, or hubs, of related firms — creating more jobs, attracting talent and generating economic activity.

  • "The growth of these ecosystems is not just important for the region, but critical for America's economic future and essential to its prosperity," authors of the report write.

What they did: Researchers Richard Florida and Karen King mapped venture capital investment in commercially relevant technology across more than 300 U.S. metros.

What they found: Venture capital is still concentrated on the coasts and in established tech hubs — like Silicon Valley or Route 128 in Boston — but the midsection of America is getting a larger share than in years past.

By the numbers: More than 75% of heartland metros received venture capital investments from 2019 to 2021.

  • Northwest Arkansas' venture capital total skyrocketed 900% in the 2009-11 and the 2019-21 timeframes, according to the HF report. Little Rock's was more than 1,000%.
  • Missouri metros Springfield, Columbia and Joplin all fared well, ranking in the top 15 locations in terms of percentage growth.

The bottom line: Study authors offer recommendations to heartland communities looking to boost their economies:

  • Nurture local entrepreneurial ecosystems and note that research universities are key to developing new tech and generating startups.
  • Engage with entrepreneurs who have a vested interest in the region but live elsewhere.
  • Combine the heartland's long-standing manufacturing expertise with its academic resources to create a new model of tech-based economic development.

Of note: The report urges heartland communities to seek federal funding through initiatives like the CHIPS and Science Act and the National Science Foundation's Regional Innovation Engines initiative.

Go deeper: Read the report

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