Champion of the Mighty Middle: Venture Capital for Middle America

Bottom Line: Founders in the Midwest have bountiful access to engineering talent, customers, and angel networks, all with the advantage of leveraging a lower cost of living. However, these "Mighty Middle" founders often lack a crucial ingredient: venture capital investors with the conviction and experience to lead their first round. Dundee Venture Capital, with the help of the Kauffman Foundation, is on a mission to lead the best seed-stage deals in between the middle coasts in North America and fund this vastly underserved market.

Traditionally, venture capital has been limited to coastal tech hubs such as the Bay Area and the Coastal Northeast. Over the past decade, San Francisco, San Jose, and New York City received about two-thirds of all venture capital investment for the top 20 cities. According to the NVCA-Pitchbook Venture Monitor, 70 percent of venture capital investment concentrates on California, New York, and Massachusetts.

Today, more institutional capital is flowing into the VC asset class, and more capital than ever is being concentrated into fewer, larger, higher-priced deals, creating more competition for investors to get in at the seed-stage. In 2006, the median pre-money seed-stage valuation was $3.75 million. Last year, it was $7 million, according to Pitchbook. Yet valuations for Midwestern companies tend to be half of those seen on the coasts.  

These trends create ample opportunity for seed-stage investors focusing on the Mighty Middle, an often-forgotten segment of promising entrepreneurs. Over the next decades, Dundee Capital Management plans to make a big impact on the entrepreneurship ecosystem in Middle America by focusing on funding opportunities there. It will continue to build its capacity to serve entrepreneurs in the middle of the country and continue to add talented people. It will continue to do what it does best, stay focused, and not bow to the whims of what the market is or isn’t saying. By focusing on funding for middle America, tt has a clear formula for success. 

Read the full report HERE.