I was reading an article on local startups in the midwest (Wisconsin in this case) lamenting the “Valley of Death,” one of the most challenging aspects of a startup’s life: going from seed to Series-A, and doing it in a location with little local capital available.
From my own personal experience, few things building Ionic have been as challenging as putting together a proper Series A, so I very much empathize with the struggle founders face.
The part that I’m a bit tired of hearing about, though, is the lack of local money available to startups. Local founders need to get over the fact that, unless you’re in a mature “hub,” there’s just not a lot of local capital available from good investors.
With Ionic, we’ve raised now a little over $12M from investors around the country, and zero of those dollars have come from Wisconsin. It’s not for lack of trying: I’ve pitched local VC’s who complain constantly about not having enough local deals while we had lots of traction and had coastal investors on board, and still failed to raise.
So, I’m tired of hearing about the lack of deals from local investors, too, but that’s a separate point.
The reality is that, as a founder in the Midwest (or any other emerging locale), you’re a pioneer. If you’re anything like me, you’re building your company here because you love the idea that you see something others overlook (like the wonderful talent pool), and you’re motivated by the chance to make a huge impact on your city. Maybe you also just love the idea that building a company outside of, say, the valley, is more contrarian and disruptive than the self-proclaimed contrarians in startup hubs would be comfortable with.
That’s no small order, though. It’s up to us to put in the work to build great companies that can’t help themselves but attract investors from around the country, and we need to bring that money back home. We need to be okay getting on planes and doing the fundraising dance (it sucks for everyone, it’s okay). We need to think big and not reduce the ambition and craziness of our ideas just to cater to the more conservative local investors. We need to have more founders with technical backgrounds that can be self-sufficient and build serious technology without relying on outsourcing one of the most important parts of the business (and needing way less cash in the process). We need more successful founders to help out and be involved with the up and coming ones, and we need to to improve the cohesion of our communities. Above all, we need to build stronger companies with real traction and do it with less.
So, instead of complaining about how there’s no money here, let’s put that energy into building better companies and being honest with ourselves that there’s more to being investable than just having an idea or a small prototype. Let’s stop thinking of our companies as a “Madison,” or “Des Moines,” or “Columbus” startup, and instead think of ourselves as an “Internet” startup that just happens to have an uncommon geographical location.
If our companies are successful, we will become tomorrow’s more sophisticated angel investors and VC partners that can change the things we think need changing. We are the answer to the chicken and egg problem.
To help make this happen, I’d like to extend an offer to help Midwest startups that are thinking about fundraising or struggling to do so, especially those with a technical co-founder. I am thankful to have had help from other founders that had been there before, and I know how important it is to have a guide on what is often an unclear and challenging process. My email is max@ionic.io.
