Is the Midwest the New Silicon Valley?

The Midwest is turning into a growth sector for tech companies and venture capital firms.

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by Ethan Hausmann

In recent years, the Midwestern region of the United States has attracted high technology firms and the accompanying venture capital money that was previously limited to the east and west coast. This trend is likely to continue for several important reasons.

No place like home...
States like Ohio, Michigan, Wisconsin, Illinois, Indiana, and Kansas are proving to be excellent places to set up shop for technology companies (and other businesses associated with them).

The Midwest makes sense as a hub for the future of technology. It is currently home to 150 Fortune 500 companies, 25% of all U.S. computer science graduates, and about 20% of U.S. patents. It is looking like the resources and the people with the necessary skills have already made the move.

Why so attractive?
For one thing, it is far cheaper to operate in these states than in California or the northeast. The standard of living is just more affordable. This means that paying for things like rent, utilities, office snacks, and other boring necessities is easier. Which in turn makes that business loan go further when you are a start-up. So instead of burning through money in 6 months, maybe it takes 18 or 24 months before you must break-even or go bankrupt.

Another benefit is the lower competition. It is easier to attract VC funding and publicity buzz if you are the only one, or one of several small tech start-ups in a state, compared to one among hundreds in the original Silicon Valley. Standing out among the corn and cows is easy.

Finally, lots of boring, yet very important industries are concentrated in the Midwest. These are areas where technology will be influential in the future. Anything from farming to insurance can benefit from algorithms. Having associated tech start-ups in the same time zone allows them to work more closely with the industry that will directly benefit from the technology.

Has Silicon Valley moved for good?
The short answer is no. There is a reason that things like Google and the iPhone had their start on the coast. Just a certain mix of people and culture and opportunity allowed companies to form which revolutionized the world.

The Midwest is special in its own way. The future of technological advancement might depend on relationships with Midwest companies, but Silicon Valley will always be on the cutting edge of innovation.