The Money is in the Middle: Why Now is The Time to Invest Away From The Coast

Learn why AngelHack is committed to growing our ecosystem in emerging cities, and why now’s the time for others to get onboard or get left behind.

North America has long been viewed as a mecca for technology, startups and growth. It’s home to some of the largest tech hubs in the world, including Silicon Valley, New York, Boston, Los Angeles, Seattle, Vancouver and Toronto. It’s true that these cities are titans of tech, but there’s more to the story. The combined population of these cities is only a fraction of the total North American population, and increasingly we’re seeing emerging cities outside of the coastal regions fighting for a seat at the table.

Their advantage and opportunity are unique.

Coastal region cities are heavily saturated with startups. Real estate prices are skyrocketing, making it tough to attract and retain talent or even find office space. But take a two hour flight east of NYC and the landscape starts to change. You can find a small office for 10 employees in Bloomington, Indiana, for the price of a broom closet in Palo Alto, California. This is where startups in emerging cities have an opportunity to make it big.

Burn rates are much lower, the market isn’t oversaturated, and locking down local traction and growth is easier with less competition.

So, if you’re a corporation or an investor looking to reach new ecosystems, how do you find them? This is where AngelHack can help. We have a proven record of breaking into new ecosystems from India to Africa and beyond, and we believe the U.S. Midwest is the next big market.

There are accelerator programs in small cities around the US making some impressive strides with their portfolio values. Check out Brandery for starters. They’re located in Cincinnati, Ohio and have a fund of over $100m. With 73 investments, 43 companies, and four exits under their belt, we can expect them to be a larger contender in the accelerator arena pretty soon. Some of their companies include Wyzzer, a survey tool used by some big fortune 500 companies which has raised $2.1m in four rounds. Or ChoreMonster, a Cincy based company that has raised $2.7m in four rounds.

Brandery isn’t alone with accelerating in non-tech mecca cities. There’s Dreamit ventures, which has an office in Philadelphia, PA; or even TechWildcatters, a newer Dallas-based program that has some promising companies in its portfolio like ImageVision, a video recognition software company that’s raised $7.5m in four rounds.

The list is seemingly endless, but the point is clear.

As the North American Regional Manager for AngelHack’s Global Hackathon Series, my main driving force is to grow and diversify our community of 125,000+ hackers;specially in emerging tech markets where hackathons are less common and un-tapped talent is waiting to be discovered.

That’s why this year we’ll be heading to Detroit and Atlanta to help grow the local startup community

We’ll also be accelerating the winning teams from each city through our HACKcelerator program, a 12-week pre-accelerator where, with substantial mentorship and support, we help foster winning hackathon ideas and turn them into early-stage startups.

The mission is to spark and support the growth of the tech ecosystems in these cities by fostering the startups born at our hackathons. In turn, this generates more revenue for the city, creates more jobs, and let’s be honest…every city needs more of us tech nerds.

Still not convinced? Let’s explore.

For our first year in Detroit, we’re super pumped to be partnering with HackWSU. The hackathon is run through Wayne State University with an overall mission to build up the tech ecosystem and encourage people that come from all walks of life to be involved in technology. That’s why they opened the hackathon to everyone this year, rather than just students. For those of you taking notes, yes… The glass slipper couldn’t have fit better for us. We’ll be powering this event and we expect to see 400+ developers, designers, and entrepreneurs from the greater Detroit area come together and create great potential startups.

The city as a whole has drastically pivoted from being a factory city, and their tech industry seems to be on the rise.

There are roughly 100 tech startups operating within Detroit, many of which are making some serious noise. Like CrowdRise, the world’s #1 fundraising site for charitable causes. These guys and gals raised $23m through numerous rounds from big venture groups like Union Square Ventures and Spark Capital.

Another money maker is Sakti, a solid state battery development company. They raked in $30m from nearly a dozen funds including GM ventures…They are staying true to the OG Detroit by working with a car manufacturing venture fund.

Detroit also has some passionate entrepreneurs like Dan Gilbert who is making it his life’s mission to change the narrative around the beautiful city, and build it up into a new tech empire. Providing work spaces and capital to house startups should not only be a priority, but also a necessity. Startups are bootstrapped and people like Dan are helping to address that pain point.

To put it simply…Detroit is reemerging with a whole new innovative spirit.

To be honest, all I really knew about Atlanta was the Housewives, the airport, great food, and that they’re the Hollywood of the South.

However, I’ve learned that Atlanta has quite a lot more to offer, especially in tech.

This year, AngelHack will be going to the Big Peach due to its unique community. Through my research, I discovered that there is a hunger for more tech, and most of the coworking spaces and tech companies are incredibly receptive to organizations trying to help build the community. For example, The Iron Yard is providing a home for our hackathon with open arms.

The startup scene is all very localized and they have a lot more opportunity than most small cities when it comes to business and growth because of the easy access to larger enterprises and a tech hungry community.

Atlanta is home to a lot of Fortune 500 companies; some tech, some not. Included in this long list is CocaCola, Delta Airlines, and First Data, all of which have multiple tech initiatives that they want to source local startups to work on. So if you have a B2B business model, you might want to pack your bags and head to Atlanta.

The city is also working with ten large companies to create a new VC fund/accelerator called Engage which will have its first cohort in Spring 2017. The new fund will be managed by Tech Square Ventures Managing Partner, Blake Patton, who is beyond qualified to captain this ship.

Additionally, The Obama administration also expanded it’s “Smart Cities” initiative and will invest over $160m in federal research that aims to innovate additionally technology to help the local Atlanta community tackle traffic, crime, and economic growth . Federal agencies are spearheading the program but there’s also a laundry list of private companies lending a hand such as IBM, AT&T, CH2M, Intel, Qualcomm Intelligent Solutions, Verizon, US Ignite, and Urban-X.

These are just a few examples of the strides the city is making to encourage startups to flock to their emerald gates. Time will tell how massive of an impact these initiatives will have on the city and we can’t wait to see the results.

Initiatives Impact loading

There you have it, world. If you ever wondered why it’s important to expand tech into emerging market’s hopefully this shed some light on the subject. North America isn’t the only place on earth this will work. There are emerging markets all over the world that can offer the same, if not more, incentives.

You can take advantage of these incentives by partnering with organizations like AngelHack! To find out more information click on this shameless plug.

Do you know any other examples of emerging startups outside the usual cities? Great accelerators and funds focused on those areas? Post in the comments!

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