If Anheuser-Busch, the brewing company based in St. Louis that’s known for Budweisers and Clydesdales, held a hackathon, attendees would probably dream up the next big app for beer lovers, while overlooking the areas in real need of disruption, like water optimization.
That’s the thinking of Terry Howerton, CEO of the Chicago-based incubator TechNexus. Howerton joined Noah Lewis, managing director of GE Ventures, and Ting Gootee, Chief Investment Officer of Elevate Ventures at last month’s SXSW panel Reinventing America: Betting Big on the Heartland, which was moderated by Paul Noglows, executive producer of the Forbes Reinventing America Project. The conversation between investors making big bets on innovation in the Midwest was part of the Rise of the Rest road trip celebrating entrepreneurship across America.
Here, three important takeaways:
The Midwest is the next Silicon Valley.
The region has a higher density of Fortune 500 companies than anywhere else in the world, accounting for 19 percent of the country’s GDP, yet it receives just 5 percent of venture capital funding — making it a virtually untapped market that’s ripe for innovative thinking. “I really do believe we are going to solve the bigger problems – water, energy, healthcare, transportation. It’s not going to be about the next taxi app or the next Meet Up,” Noglows said.
The middle of the country isn’t lacking in entrepreneurial success stories.
For instance, ExactTarget, an email and mobile marketing technology company, was sold in 2013 to Salesforce for $2.5 billion. The panelists explained how co-founder and CEO Scott Dorsey, started ExactTarget in Indianapolis not only because that’s where he wanted to raise his kids, but also because employee loyalty was stronger there than in Silicon Valley, where the vast majority of his competitors were based.
But, there’s still big challenges preventing the Midwest from becoming an entrepreneurial hub.
The lack of direct flights, and venture capitalists being unwilling to deal with a layover or possible connection delay. To illustrate what a big deal this is, Noglows described how, at The Innovation Summit hosted by Forbes last year, the Indiana secretary of commerce got a standing ovation after announcing a new direct flight from San Francisco to Indianapolis.