Steve Lohr reported earlier this week at The New York Times Online that, “They seem an odd couple. J. D. Vance, author of ‘Hillbilly Elegy,’ his best-selling memoir of growing up in the postindustrial Midwest and his journey of escape. And Steve Case, the billionaire co-founder of America Online.
“But Mr. Vance joined Mr. Case’s investment firm this year to scour the Midwest for small yet promising start-ups, particularly for a new seed fund. The firm, Revolution, plans to raise up to $100 million for that fund’s investments, it disclosed in a filing last month with the Securities and Exchange Commission.
“They are by no means the only notable investors seeking opportunity in the region.”
The Times article stated that, “Four years ago, Mark Kvamme, a top venture capitalist in Silicon Valley, left the heart of the tech industry to become a tech investor here in the Midwest heartland.
“After a slow start, his firm has raised $550 million and invested in 26 companies. Its bet is that the middle of America amounts to an undervalued asset, rich in markets, new business ideas and budding entrepreneurs. The Midwest, the thinking goes, is not only untapped, but also an antidote to the scalding-hot tech market on the West Coast.”
Mr. Lohr explained that, “But some investors, led by people like Mr. Kvamme and his firm, Drive Capital, see plenty of potential in the center of the country. Focusing on the Midwest is no longer considered a nutty idea, as it was by skeptical West Coast venture capitalists when Mr. Kvamme and Chris Olsen, another Silicon Valley transplant from Sequoia Capital and co-founder of Drive Capital, made the move in 2013.
“Every major Midwestern city now has clusters of start-up accelerators and incubators, typically housed in renovated red-brick industrial buildings.”
This week’s article also indicated that, “The rationale for investing in the Midwest combines cost and opportunity. A top-flight software engineer who is paid $100,000 a year in the Midwest might well command $200,000 or more in the Bay Area. The Midwest, the optimists say, also has ample tech talent, with excellent engineers coming out of major state and private universities in the region.
“But they also point to technology shifts. As technology transforms nontech industries like health care, agriculture, transportation, finance and manufacturing, the Midwest investors argue that being close to customers will be more important than being close to the wellspring of technology.”
