Why Geographic Diversity in Startups Matters: A Look at the Midwest Startup Ecosystem
There’s a long-standing myth in the startup world: that the best companies can only emerge from traditional tech hubs. Some argue that simply living in these areas immerses would-be founders in an entrepreneurial mindset—whether through casual coffee shop conversations or proximity to other startups. While there’s some truth to this, the reality is that founders in overlooked regions often bring innovative solutions to problems they deeply understand. What they lack isn’t ideas—it’s access to networks, resources, and capital. For example, despite 20% of the U.S. population living in the Midwest, the region receives less than 5% of venture capital funding, illustrating how resources are unevenly distributed across regions.
Midwest Startup Ecosystem Challenges and the Funding Gap
Founders in the Midwest and other underserved startup ecosystems face significant hurdles, with one of the most prominent being the disparity in funding compared to coastal hubs. Despite the Midwest’s contributions to industries like agriculture, manufacturing, and healthcare, venture capital remains concentrated in major coastal regions, leaving local talent and innovation untapped. With fewer venture dollars flowing into their areas, founders often struggle to attract large investments, limiting their ability to scale. This funding gap forces many to seek capital from coastal regions, requiring substantial time and resources to build relationships outside their local networks, which perpetuates the cycle of underinvestment. Bridging this gap requires intentional efforts to direct resources and attention to these overlooked areas.
Why Genius Thrives Outside Traditional Hubs
We believe that genius is everywhere, but opportunity isn’t evenly distributed. Finding geographic diversity in startups takes intentional effort and sufficient time to uncover founders working under the radar—those who might be refining a stealth-mode idea, turning a class project into a company, or scaling a side hustle into something transformative. In regions like the Midwest, this can mean searching for founders working in industries like agriculture or manufacturing, or engaging with universities and local accelerators that are often the first to recognize untapped talent. It can mean sending thousands of reachouts to founders and hosting hundreds of office hours to understand founder needs and offer advice and insights. But this process allows for high-quality founders to emerge through the high quantity of touchpoints.
Uncovering Hidden Talent in the Midwest
Take Diego Achio, founder of Traduality, a gener8tor portfolio company based in Bloomington, Indiana. Traduality uses AI to make regulated institutions super effective at serving and bringing more non-English-speaking customers across branches, contact center, and back-office departments. With support from gener8tor’s accelerator programs, Diego refined his business strategy, scaled operations, and unlocked new customer acquisition opportunities. His story is one of many that showcase the immense potential of startups in overlooked regions.
The Unique Advantages of Building Startups in the Midwest
Closeness to the problem: Founders can develop solutions informed by direct experience. In industries like manufacturing or energy, founders often live and work within the environments where these challenges arise, giving them unique insights into inefficiencies, bottlenecks, and opportunities for innovation.
Less competition: Less crowded markets can offer greater opportunities to stand out. This allows founders to carve out a niche more easily, build customer loyalty, and dominate local or regional markets before scaling nationally or globally.
Lower cost of living and production: Limited resources can stretch further, leading to longer runways, increased hiring potential, and the ability to reinvest more capital into growth and innovation.
Different perspectives: Diverse geographies mean fresh ideas and a chance to solve unique challenges. This diversity in problem-solving not only leads to more innovative solutions but also contributes to building a startup ecosystem that reflects the broad range of needs and opportunities across the country.
Why Geographic Diversity Benefits Investors
Seeking geographic diversity can pay off for investors. Backing startups outside traditional hubs allows investors to tap into underrepresented markets with less competition and greater potential for outsized returns. Founders in these regions often operate more efficiently due to lower costs, stretch their funding further, and face fewer competitors in their industries. Additionally, these startups can address unique challenges and serve niche markets that are overlooked by coastal companies, providing investors with access to innovative solutions and untapped opportunities. By diversifying their portfolios geographically, investors can mitigate risks and align with a growing trend toward inclusivity and broader economic impact.
Building a More Inclusive and Innovative Future
Geographic diversity isn't just a nice-to-have; it's a strategy for discovering untapped potential and fostering inclusivity in the innovation landscape. By supporting founders from diverse regions and backgrounds, we can ensure that new solutions are developed to address unique challenges across the country. At gener8tor, we believe that access to resources and networks should be available to all founders, no matter where they are based. With 92% of our program alumni located outside major tech hubs like the Bay Area or New York, we’re leading the charge in ensuring that startups across the U.S. receive the support they need to thrive.
Ready to Take Your Startup to the Next Level?
Join one of gener8tor’s accelerator programs to unlock the resources, mentorship, and funding you need to grow your business. Whether you're based in the Midwest or another underrepresented region, we're here to support your entrepreneurial journey. Apply today to take the first step toward building a successful startup with gener8tor!
Interested in Partnering with Us?
If you're an organization looking to make an impact, we’d love to explore partnership opportunities. Together, we can create more pathways for startups in underserved regions and provide them with the tools they need to succeed. Get in touch to learn more about how we can collaborate!
