Steve Case Gears Up For Second “Rise of the Rest” Midwestern Tour
AOL co-founder Steve Case likes to point out that a century ago, Detroit was America’s innovation capital, and Silicon Valley was just a bunch of farmland.
Today, Silicon Valley is the bustling tech capital of the world, and the Motor City is trying to reinvent itself after a couple of decades marred by the outsourcing of manufacturing jobs and a brutal recession that hit it harder than most cities.
Case believes entrepreneurship is the answer to revitalization, and that Detroit and other Midwestern cities are putting the pieces together to develop more vibrant economies led by startups in tech and other industries. He wants the coasts to pay attention to what’s happening in America’s heartland—and that’s partly why his Washington, DC, venture capital firm Revolution and a group of startup-focused partners launched the “Rise of the Rest” bus tour earlier this year.
Case’s tour has made stops in Detroit, Pittsburgh, Cincinnati, and Nashville, and featured startup pitch contests that awarded a $100,000 prize from Case to one early-stage company in each city.
Next week, the road trip returns with visits to Madison, WI; Minneapolis; Des Moines, IA; Kansas City; and St. Louis.
“We tried to identify cities that had great histories but also a lot of momentum that suggested a future around innovation and startups,” Case says.
He says Madison shows promise because of a group of interesting startups and a mix of players that have positive impact on the ecosystem, like the University of Wisconsin-Madison, startup accelerator Gener8tor, and big corporations like Epic Systems and American Family Insurance.
“It’s something building, something bubbling,” Case says. “But it still needs more attention and more connections within Madison, but also more connections outside of Madison to other entrepreneurs, to other investors. Hopefully, our bus tour will help do that.”
It’s difficult to gauge the impact of the first bus tour in June, but each of the startup pitch contest winners has made progress, he says. For example, Cincinnati’s Frameri launched its eyewear line into the marketplace and raised $750,000 in seed funding, while Detroit’s SocialProof (formerly called Stik.com) has seen its sales grow, Case says. “They have all felt that it created more momentum in that city, more interest in that city, and certainly in their companies.”
One emerging trend that Case thinks will aid startups in smaller clusters is access to more financing options, such as equity crowdfunding. The SEC has yet to implement the equity crowdfunding rules at the federal level, and that has led some states to pass their own laws. There are still plenty of unanswered questions about how equity crowdfunding transactions will play out and if tech startups will frequently go this route to raise capital. But Case is upbeat.
“Crowdfunding will be particularly valuable to people that don’t have access to the traditional venture investors—including women and minorities who often lack the connections, and also the entrepreneurs in these ‘Rise of the Rest’ cities,” he says.
Case isn’t arguing that Detroit, Madison, and other Midwest cities will completely close the gap with innovation hubs like Silicon Valley and New York. “Silicon Valley will continue to be the pride of America, and the envy of the world.”
He does, however, think it’s important that America doesn’t put “all our eggs in one or two baskets.”
“We need to maintain our lead as the most innovative, entrepreneurial nation. That’s what drives economic growth, what drives job creation, what drives our global competitiveness,” Case says. “Those entrepreneurs are all across the country, and that’s the story we’re trying to tell” with Rise of the Rest.
Check back with Xconomy for the list of companies that will compete in the Madison pitch contest.