Des Moines Register writer Kevin Hardy reported this week that, “Last year, more than half of all the nation’s venture capital funneled to entrepreneurs in California, leaving startups in the other 49 states to fight over the remaining pot of cash.
“Steve Case, who co-founded AOL in 1985, says that must change so cities in middle America like Des Moines can share in the technological revolution.
“‘Some call it the flyover country,’ Case told the Des Moines Register on Wednesday. ‘It’s not really taken as seriously as I think it should be as a center of innovation.'”
Mr. Hardy noted that, “To bolster the heartland, Case says cities and entrepreneurs need to do a better job of telling their startup success stories. But fundraising remains a major hurdle for emerging businesses outside of major tech hubs. Cities who don’t mentor and invest in startups do so at their own peril, he said. He cited research from the Kauffman Foundation that shows startups lead the way in creating jobs, not small businesses or large corporations.
“‘Fortune 500 companies started startups,’ Case said. ‘If you’re using the farm analogy, they’re the seed corn. If you’re not planting that seed corn — some of which will end up dying off, but some of which will grow — you’re not going to have a strong, vibrant community 25 years from now. You just aren’t.'”
The Register article added that, “Case argues that state incentives meant to boost jobs should flow to startups, not necessarily large corporations and small businesses. In Iowa, more than $110 million is spent annually on tax credits and cash payments to existing companies looking to expand here. Less than $3 million is set aside to invest in startups and emerging companies, according to records from the Iowa Economic Development Authority
“Regional tech booms are already reversing so-called ‘brain drain,’ encouraging natives to ‘boomerang’ back home after fleeing their home cities for career opportunities elsewhere, Case said.
“To encourage local tech growth, he said cities must play to their regional expertise. In the case of Des Moines, that means doubling down on ag tech or financial services startups. As technology becomes more pervasive in every part of life, successful tech ventures will need more expertise on specific subjects — not just knowledge of how to code.”
The Register article also pointed out that, “Central Iowa is already playing to its regional strengths, housing both the newly formed Ag Tech Accelerator and the established Global Insurance Accelerator, each funded by businesses in their respective industries.”
