Middle America feels left behind. Can the tech community help?

Middle America feels left behind. Can the tech community help?

May 18, 2017

By Caroline Fairchild, Senior Editor, Technology and Startups at LinkedIn

Like so many things in business, the numbers speak for themselves. In 2016, venture capitalists invested nearly $70 billion across 8,000 U.S. startups. But close to 80% of that capital went to founders in just three states: California, New York and Massachusetts.

This is a reality that, until recently, the tech community mostly accepted. A vast majority of the biggest venture capital firms in the country are in these coastal states, so it makes sense that investors are backing companies started in their own backyards. But then, something happened that made investors, founders and tech execs alike feel like they had to get out of their own bubbles: Donald Trump was elected president. In that moment, shellshocked leaders across tech started to think about how they could get back in touch with regions outside of the major metropolitan areas on the coasts.

Only 50% of those born in 1980 or later will make more than their parents, new research shows. Trump’s election tapped into the angst about jobs disappearing and what people across the country consider to be unfair competition driven by technology. Leaders in the industry now want to see — and solve — this problem firsthand.

Facebook CEO Mark Zuckerberg announced a tour across America to meet with families and workers in places like Fort Bragg, North Carolina and Blanchardville, Wisconsin. Y Combinator Founder Sam Altman went on a listening tour to speak with Trump’s supporters around the country. And now, investors have started to speak publicly about how they can diversify their portfolio to include founders solving problems for users outside of major city centers. Despite all this activity, the numbers have barely moved: In the first quarter of 2017, more than two-thirds of the $13.9 billion in venture capital deployed to startups went to founders in California, New York and Massachusetts, according to data from PwC and CBInsights.

In this episode of Work In Progress, Chip Cutter and I explore what this concentration of capital means for business owners who aren’t based on the coasts. Steve Case, the CEO and chairman of Revolution, a venture capital firm based in Washington D.C. and most famously, the guy who brought America online as co-founder of AOL, joins to discuss what Silicon Valley can do to solve this problem. Case is also the man behind “Rise of the Rest,” a nationwide effort to work closely with entrepreneurs in emerging startup ecosystems. To date, Revolution has traveled some 6,000 miles to invest in startups in cities like Omaha, Detroit and Minneapolis. Is it realistic to think that other investors will follow his example? Listen to our conversation to find out.

https://soundcloud.com/linkedineditors/how-silicon-valley-can-really-get-out-of-its-own-bubble 

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