The Heartland’s Venture Capital Inflection Has Arrived
There is something exciting unfolding in the Heartland: more specifically, the emergence of a connected technology corridor spanning from Oklahoma City, OK to Bentonville, AR through deliberate capital investment, startup programming and policy, and quality of life attraction.
Capital Comes to the Cowboy Corridor
Last year alone, startups in Arkansas raised over $200M in venture funding, shattering the prior year record by 87%¹ while signaling increasing private demand for venture risk. Most of that capital (94%) found its way to the burgeoning NW Arkansas technology scene, helping companies like AcreTrader ($40M Series B) and Ox ($12M Series A) continue building early-stage growth momentum.
Earlier this year in Tulsa, Atento Capital, the venture arm of the George Kaiser Family Foundation, launched a $20 million pre-seed fund and an $80 million core fund. Other OK funds like Oklahoma City-based i2E and Cortado Ventures — who also invested in Ox’s Series A — have added to the regional venture movement by targeting local startups and founders across several sectors in which the Heartland seeks to lead.
“The innovation ecosystem in the region is bustling with an energy and enthusiasm of which I could only have dreamed of a few years prior. We are beginning to have all the game pieces we need to continue to grow a very robust innovation economy. Founders in the region are starting more companies, and founders from other areas continue to move to the heartland to take advantage. The quality of the deal flow for investors has increased 10-fold, and in a similar manner, venture capitalists from outside the region continue to establish Mid-continent personnel and presence, which ultimately amplifies the natural foundation of academia, founder talent, and risk appetite,” reflects Tracy Poole, our Managing Partner and longtime Tulsa native.
Indeed, Tulsa’s startup ecosystem has seen a marked increase in tech sector employment — nearly 3x the national average since 2015² — though employment overall in Tulsa’s tech sectors remains slightly lower than the national average of ~9%³.
Programs that Push Founders and Funds to Maturity
That previous statistic emphasizes the importance of an ecosystem in practice: walking the walk with invested founders, workforce programs, and environmental policies along a long, patient journey.
Organizations like StartupNWA, Gener8tor and InTulsa drive critical value into their respective geographies, including event-driven networking, accelerator resources, talent demand generation, educational founder content, and avenues for funding between pre-seed and later stages. Centralized startup infrastructure, as evidenced by the growth of 36 Degrees North in Tulsa, helps create the fruitful collisions and coincidences founders and investors need to advance.
Gener8tor, a nationally-recognized accelerator based out of Madison, WI, has invested over $1.5B in approximately 1100 companies since inception. Their regional impact, not directly visible outside the long shadow of coastal city VC, has led to nearly 10K jobs created, and a significant influence in the OKC market. Oklahoma City’s state-level strategic venture focus on biomedical, aerospace, and energy tech has complemented programs like Gener8tor with an acceleration of venture funding: nearly $400M in venture funding has deployed in Oklahoma since Governor Stitt’s call to action several years ago.
Meanwhile in Arkansas, StartupNWA has aggregated resources across Fayetteville, Bentonville, and Little Rock to make the Arkansas startup footprint more visible and accessible to both capital and founding teams, particularly from outside the state. Partnerships with impact venture programming, like ACT House, provide broad accelerator exposure to Tulsa’s early stage, minority founders, including an increased surface area of capital opportunities.
Other established, multi-state venture programs, like Techstars and Lightship, also help to break geographic and demographic status quo ceilings with intensive founder training and shrewd portfolio guidance. And Stitch Crew — a woman-led startup program based out of OKC — challenges the traditional venture model founder funnel by focusing on underserved female and Latino founders.
The Mid-continent also boasts a key component of venture in its academic corridor. Mid-continent universities and academic programs “produce 26 percent of university patents, conduct 31 percent of university research, and graduate 33 percent of the country’s STEM graduates”⁴ according to the Center for Strategic and International Studies.
Indeed, Oklahoma’s three major universities — OSU, OU, and University of Tulsa — as well as the University of Arkansas are top-tier research universities and boast recent venture investment wins. OU’s Boyd Street Ventures and TU’s Hurricane Ventures both represent early-stage catalysts for founders and models born from academic programs and the idea collisions therein.
Creating Quality of Life for Locals and Tech Transplants
Another component of the Heartland’s venture rise has become a clear attractor since the beginning of covid: quality of life. While coastal cities have become increasingly costly — LA, SF, Boston, Atlanta, and NYC are among the most expensive cities globally — the inflationary fallout in Middle America has not been felt as strongly, prompting many US citizens to consider and relocate to these more affordable areas.
Meanwhile, the coastal talent movement continues inland: of the nine fastest growing southern US cities, six are in Texas⁵. California and NY have steadily lost residents to Montana and Iowa. The Cowboy Corridor cities have all seen influxes in both founder talent AND operational talent, particularly in the last five years.
This population trend coincides with a quality of life desire upon which the Heartland is exceptionally poised to capitalize. 2023 median home prices in OKC, Tulsa, and Fayetteville are $315K, $236K, and $250K, respectively. Compare that to the top three US startup cities in 2023, SF, Boston and NY: $973K, $929K, $820K, respectively⁶. The presence of early-stage capital in places with much lower personal burn rates, more living space for the dollar, and more family-oriented culture serve as real attractors to founders and operators.
There is much more to come in the Cowboy Corridor: our journey is itself still early stage. But the foundation for venture growth in the Heartland exists. With patience, capital, smart bets, better programming, and a continued attraction of talent, it’s only a matter of time before a new kind of unicorn bursts onto the US venture scene.
