Central Ohio has long been America’s test market for fast food and retail, often leading to consumer innovations that spread to every corner of the country when tested, tweaked, and eventually proven. So it’s no surprise that the same penchant for tinkering has spilled into the Columbus Region’s tech sector, making it one of the best places for Midwest startups to launch and prosper.
The recent track record of success has been ignited by the injection of venture capital funding that reached $673 million in 2021, a new record for the Columbus Region. The new mark raised the area’s ranking to fifteenth in the nation, equaling the city’s rank for population size among U.S. cities.
While homegrown startups are a sign of a budding ecosystem, validation comes when companies born elsewhere see the potential and want to jump into it themselves. Upstart isn’t a Midwest startup, per se — it is headquartered in San Mateo, CA — but it did enter the Columbus Region through a small office in 2019. Upstart is a digital-first AI lending platform that partners with banks to expand access to affordable credit for borrowers. Thanks to its AI expertise, the banks with which it works achieve higher credit approvals and lower loss rates. In 2020, Upstart raised $332 million dollars in venture capital funds, raising its value to $1.5 billion dollars. And while the Bay Area gets the credit for yet another unicorn, Upstart has been growing so fast in Columbus that it’s HQ2 is now larger than its HQ1. The company expanded again in late 2021, giving it 250,000 square feet of total office space in Columbus.
Branch and Lower.com are two other names to watch, both with recent funding rounds of $50 million and $100 million, respectively. But tech isn’t the only industry where the rise in Midwest startup momentum is happening. Forge Biologics, a contract development and manufacturing organization in the fast-growing gene therapy space, received $120 million in July 2020 through a Series B funding round. As recently as January 2022, the company received another injection of $80 million in financing from MidCap Financial to accelerate the build-out of its new manufacturing facility.
A common name in many of these high-rising Midwest startups is Drive Capital, a Columbus-based venture capital firm founded by two Silicon Valley transplants. In a recent interview with Chief Executive, Drive Capital Co-Founder and Partner Mark Kvamme stated that he believes “the next technological transformation” will happen in the “consumer packaging, manufacturing, insurance, and healthcare services companies of the Midwest.” In other words, this is only the beginning.
In the same interview, Kvamme continued to champion the burgeoning Midwestern startup scene. “We’ve got one of the largest concentrations of insurance companies in Ohio,” he told Chief Executive in April 2021, “and as venture capitalists and technologists, we’ve taken advantage of that.”
Chris Olsen, Kvamme’s fellow partner at Drive, recently spoke with TechCrunch about his own decision to support the Columbus Region’s thriving startup landscape. “In Silicon Valley, the venture dollars ratio to research dollars is massively too many VC dollars for too little research; the opposite is true here in Ohio. This is more what Silicon Valley looked like in the late 1990s.”
Kvamme shares Olsen’s enthusiasm. “If you put a circle around Columbus, a one-day car drive, you’re talking about 60% of the GDP of America, over 50% or 60% of the population, and [access to] a huge percentage of all the top customers…the Midwest is a spectacular place to build companies.”
There’s no doubt that the Columbus Region is a perfect location for Midwest startups. Innovation, disruption, and growth are all on the upswing and have clearly attracted the attention of prominent venture capitalists and disrupters alike.
For Midwest startups, the Columbus Region is the place to be. Looking to start up or grow your entrepreneurial venture? The One Columbus team has the experience and expertise to help.