What the 'Rise of the Rest' Is Still Missing About the Midwest

The headline of a recent post on Recode says it all: “A whopping 80% of all venture capital investment goes to just three states. That has to change.”

Those three states would be California, New York and Massachusetts.

The entirety of the Midwest — all 12 states of it — gets just 4% of U.S. venture capital.

As Rep. Tim Ryan (D-Ohio) and Rep. Ro. Khanna (D.-Calif.) wrote in the article:

“Our country faces an ever-growing number of challenges in the 21st century, but all too often our political dialogue can’t even begin to scratch the surface. While Washington remains mired in its usual partisan fights, entire communities across the country — especially in the Midwest — have been locked out of an economy that has moved away from the manufacturing base that helped build the strongest middle class the world has ever seen.

“Though it may not always feel like it, we have the perfect opportunity right now to help rebuild and rejuvenate struggling communities by connecting them with resources traditionally concentrated on the coasts — resources that can help retool their local economies and promote sustained growth and development.”

Read the article

It’s a great idea, introducing big-name investors and political heavyweights to the middle of the country, exposing our entrepreneurs and our opportunities to those in a position to make a difference.

We all know that there is a cultural divide in this country — J.D. Vance wrote the bestselling book, Hillbilly Elegy, about it just two years ago. That is not news.

But the Midwest does need help. We do need capital to help startups and industries here grow. And, as venture capitalists, we need more lead investors as well. It’s time to throw open the doors to the region and welcome the rest of the world to what we have know about the Midwest for a long time: that there is opportunity here.

But it is different here than in the Bay Area. Those coming to town on bus tours or visiting to meet with entrepreneurs, even individual investors, should team up with the locals in order to make the biggest impact. We’ve been here for four years and know our way around the Midwest’s entrepreneurship neighborhood — give us a call.

Consideration

With 2021 well underway and with public markets still strong, we think it is an important time to highlight some of the key private market, venture investment themes that iSelect fund has identified for the year. We believe technologies transforming the Agriculture, Food and Wellness markets will flourish, with a focus on four areas: technologies that enable better food choices to drive better health outcomes, technologies that drive better, more profitable farm operations, technologies that drive the Consumerization of Healthcare, and biome-based treatment technologies. At iSelect, we invest for impact AND performance. We offer qualified investors access to emerging growth companies through our national venture capital strategy. Our unique structure allows our investors to continue to invest in these companies as they develop.

Timing

Why is now the right time for venture? The answer is that now is not explicitly the right time. Venture is something we need in our economy at all times. Now is not better than any other particular time. The question is, why ever stop? When we look at the challenges we’re facing in food and healthcare the reality is there is someone, somewhere who has an insight about how to build a product that will solve those problems. And if they put the right resources to it, they will succeed. As long as we need new technology to make life better or make our lives more enjoyable, we need venture capital to help fuel those entrepreneurs.

What is iSelect as a product?

iSelect is a very unique product, but when you break it into its parts it’s fairly easy to understand. On the front end we’re a traditional venture capital fund. We have a diligence process. We have an investment process. We have categories of industries where we have focus and real expertise, and we invest in companies in those areas that meet requirements for the fund. On the back end we’re unique in that we don’t raise a large amount of capital at one time and deploy it over the life of our fund. Each deal that we bring onto the fund, our investors have to prove and determine to invest in that deal. We have to constantly prove our diligence standards. It’s accessible, transparent and easy for investors to come in and see our comprehensive process.

What is the ideal iSelect company?

We are looking for founders that are passionate and we want the problem they’re trying to solve to be big, real, and painful. We want the solution to be revolutionary and we want our capital to be able to help them solve that problem. We want to know that they have customers involved and that the solution they’ve come up with actually meets those customers’ and market needs. And we want the team to be capital efficient with the money they’re spending.

What does the ideal iSelect company look like?

We’re looking for a company that has an opportunity to have a 10x return to our investment or greater in a period of three to seven years. What excites us at iSelect are companies that are solving big problems. We want companies that are going to be the Monsantos of the future. Not just in the size and the scope, but the impact they have on people’s lives. We want to create positive impacts on people’s lives, so we invest in areas like agricultural production and areas like producing healthy foods for our kids. They are problems that impact real people’s lives on a daily basis. That’s what we’re trying to do at iSelect. We’re trying to solve the big problems out there. Find ways to bring capital to the entrepreneurs who are the real heroes out there getting up every morning, beating away at these things that are problems that you and me and everyone else faces in their everyday lives.

What is iSelect?

iSelect is a venture capital firm. What that means is we look at hundreds and hundreds of different companies and we apply tough diligence standards to each of them, looking at whether the team has a good plan for growing the business, whether the team is qualified and credible, and more. We do that to resolve the few who provide the best opportunities for investors. And then iSelect takes that smaller set of investments and goes to investors who are interested in venture capital and provides a way for them to invest in these companies, either individually or all at once. We co-invest alongside other venture capitalists. We source transactions through to an exit where the company would become public or get bought. And we manage that whole investment process on behalf of our investors.

What the ‘Rise of the Rest’ Is Still Missing

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