The Midwest Offers Investment Opportunities and Value, Says a Panel of VCs

Shannon Beeman
June 20, 2014

Venture-capital investment in the Midwest is picking up momentum, said four seasoned VCs during a panel discussion on Tuesday afternoon. “Investors on the coasts are thinking more about the Midwest, because they sense there is value here and they are interested in opportunities,” observed Kevin Willer, co-founder and partner at Chicago Ventures.

Several trends are driving the pick-up in venture-investment activity in the Midwest:

  • The valuations of Midwestern companies are still modest compared those on the West Coast
  • Companies are built more efficiently in the Midwest
  • The Series A funding crunch on the West Coast is not evident in the Midwest
  • Good Midwestern companies are getting funded
  • Local and regional VC funds are drawing in capital from the coasts
  • Increasing numbers of non-Midwestern VC funds are trying to get a foothold and enter the Midwest market

The Midwest’s appeal to investors also stems from the research flowing from its universities and medical centers. “We see so much interesting research here in Michigan that we’re putting an investment professional in the state and opening a Midwest office,” said Blair Garrou, the managing director of Mercury Fund, a Houston-based seed-stage venture-capital firm.

The panelists offered suggestions to entrepreneurs seeking venture-capital funding for start-ups and growth-stage companies:

  • Target a VC firm that aligns with your company’s primary business focus
  • Ask an angel group, limited partner or service provider to introduce you or provide a referral to the venture-investment firm
  • Look for a common connection, such as Ann Arbor SPARK or MiQuest, between your company and the VC firm
  • Meet with venture capitalists at the firm and build a relationship before you ask them for money