Shift Magazine - April 2020 - 10

coastal

cash flow
Industrial Midwest falls short
in venture capital funding
BY DALE BUSS

We
can bring
things forward
with our network
that people in
Silicon Valley
can't.

s coastal tech giants and traditional
based in the "big three" states of the venture capautomakers joust for ultimate control
ital world are also the biggest beneficiaries of
of the future of the U.S. auto industry,
funding by far, said Reilly Brennan, a Detroit-area
the industrial heartland is at a signifinative who runs San Francisco-based Trucks
cant disadvantage in a key area: It's a relatively
Venture Capital, which focuses on mobility.
small source of capital for financing the startThat means when successful startups exit
ups defining much of the future of mobility,
the venture round of funding and repay their
and likewise, its companies are a relatively
investors, most of the profits go to the coasts.
tiny recipient of venture capital funding.
The Great Lakes states see "only a tiny
In last year's fourth quarter, 77 percent of
fraction of venture capital deals, despite proU.S. venture capital funding was raised by
ducing one-quarter to one-third of the nation's
startups in just three states: California, New
research and development, new patents and
York and Massachusetts, according to PwC and
top talent," said John Austin, an Ann Arbor,
Jessica Robinson,
CBD Insights. Funds based in those states also
Mich.-based senior fellow of the Metropolitan
Michigan Mobility
are by far the biggest providers of such capital.
Policy Program of the Brookings Institution. "Great
Institute
With the exception of Illinois, the states of the
Lakes VC funds are currently seen as too small or too
co-founder
industrial Midwest - including automotive-centered
unknown for investors - at a time when VC is funding
Michigan, Ohio and Indiana - failed to make the list of the
fewer firms, with bigger exits."
top 10 recipients. Together, startups in the bottom 40 states
This situation impedes development of an indigenous entrereceived just 10 percent of U.S. venture capital funding.
preneurial ecosystem around mobility that would help flyover
When it comes specifically to mobility startups, companies
country, venture capital executives and others said.

shift * april 2020

Shift Magazine - April 2020

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