Middle America missed out on HQ2, but scored some startup successes

In the first part of the year, major companies — including Apple and Google — indicated that they were getting too big for Silicon Valley and wanted to add jobs in other parts of the country. This generated considerable excitement in the — could the trend lead to more jobs and businesses in local communities?

But what this year has shown is that most communities shouldn’t rely on a big business opening an office next door to get a better selection of tech jobs. Many of these tech behemoths are still only eyeing a select few cities for expansion. To take a page from Steve Case’s book — the rest won’t rise equally.

First, the good news from this year: Tech companies built in the Heartland are proving they’re well worth the investment. Multiple exits happening here tare making Sand Hill Road investors envious, like Cisco’s purchase of Ann Arbor’s Duo Security for $2.35 billion, SAP’s acquisition of Provo’s Qualtrics for $8 billion, and IPOs from Pluralsight and SendGrid (the latter of which was subsequently acquired by Twilio). These companies now employ hundreds of thousands of people in their respective cities, bringing a diverse mix of tech jobs.

These exits have also made some investors more receptive to investing in Heartland startups that have the potential to power their local economies, and at earlier stages than they would have in years’ past. Just take a look at Ann Arbor Censys, which this month announced a $2.6 seed round, led by GV and Greylock. Even 10 years ago, a company like Censys may have gotten money from Silicon Valley investors — but only after bootstrapping the company for a decade.

Other cities are starting to prove that they have not just one or two high-flying startups, but a solid pipeline of mid-to-early stage startups that have the potential to become tentpole companies for their communities. In Columbus, tech startup Root Insurance hit a $1 billion valuation, while the first financings of startups hit an all-time high.

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Yet no saga proved just how far the Heartland has to go to attract more tech talent than that of Amazon . Sure, maybe it would have been detrimental for Amazon to come into a place like Pittsburgh or Indianapolis and suck up all the available talent, leaving no one left for the startups.

But the fact that the company, after a nationwide search, settled on New York City and D.C. — already centers of financial and government powers in the U.S. — makes me concerned about the ability of the Heartland to meaningfully contend with coastal cities’ grip on tech jobs.

It’s not just Amazon. Time and time again, when I hear about companies touting the fact that they’re “adding more people outside the Valley it’s in places like Seattle, Austin, or Denver, with the occasional Atlanta or Nashville thrown in when they want a presence in the South. These are all great tech hubs in their own right, but they’re not the only ones.

It’s an uphill battle. But I think the big exits that Ann Arbor and the Salt Lake City are seeing — coupled with the heat New York City and Washington, D.C. are taking for forking over billions of dollars in subsidies to Amazon — are a sign that investing in your own tech community is better than trying to import tech titans.

The need to make those investments is only getting more urgent — Silicon Valley is continuing to add jobs at a faster rate than other U.S metro areas. Investing in more Heartland startups isn’t guaranteed to reverse that consolidation of resources and even out economic advantage. But I think it’s one of the only ways for cities to keep their destiny within their own hands and ensure their tech jobs come from a healthy mix of companies.

Middle America missed out on HQ2, but scored some startup successes 1

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