How to Raise Capital in the Midwest: 3 Helpful Tips for Startups

When most people think of a startup raising capital, they envision a small office in Silicon Valley, New York City, and other major coastal cities.

It’s true, these metropolitan hubs are fraught with blossoming startups, investor money, and generally more social media buzz than you’ll find in the typical Midwestern city.

As a result, most people assume it’s easier for founders to raise capital on the coasts than in flyover country.

The truth is that every geography and setting comes with its own challenges. Raising significant cash at fair valuations in the Midwest is certainly plausible, and we have a few tips on how to do it.

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• #1 – Build Relationships with Angels
• #2 – Leverage Entrepreneurial Support Organizations
• #3 – Raise Capital Through an Accelerator

3 Ways to Raise Capital in the Midwest

Despite the common beliefs we discussed above, there are actually some advantages of raising capital in Midwestern cities. We know! Our hometown is Louisville, Kentucky.

There’s an innovative, thriving startup scene in Louisville, and while the number of investors who are active locally is fewer than it would be in Cambridge or San Francisco, it can be easier to attract and engage those investors.

There are some specific strategies that have been effective for us and several of our clients, and we’ll take a look at those now.

#1 – Build Relationships with Angels

If you’ve read our blog post The Art of Friendraising, you already know that networking and building relationships are crucial to a successful fundraise.

This remains true in the Midwest; your network may prove even more indispensable in a less populated city because you simply have fewer options.

However, because the startup scene in Louisville, for example, is much smaller than that of Los Angles or Seattle, that network often proves to be more tightly knit, which in turn makes other local investors more accessible.

Once you build a solid relationship with one or two significant investors, you obtain the golden key to their connections. The tightknit startup communities in these Midwestern cities enable easier access to local angels.

As a first step, Midwestern startup founders should scan the local horizon and identify the key local players. Begin building relationships with other founders and investors who connect through their network.

Many startup communities congregate regularly, and if you simply take the time to fraternize and build trust within the group, many doors will open.

It’s no secret that in the Midwest, everyone seems to know each other. Even more, the startup communities there revolve around networking and mutually beneficial support.

Use that Midwestern mindset to your advantage and begin building your network.

#2 – Leverage Entrepreneurial Support Organizations

Because Midwestern cities do not offer all the advantages of the coastal startup hubs, they often compensate with local entrepreneurial support organizations designed to help founders grow their networks and learn about the space.

A simple Google search for entrepreneurial support organizations in your city, state, or region will likely reveal some local startup communities.

These organizations may unlock pivotal contacts for your startup, along with opportunities for press coverage, which will improve your ability to raise capital within your region.

As a founder, do not shy away from getting involved. Lean into these opportunities to become part of the networks you hope to access.

Oftentimes, the big fish in your local pond will have more of a presence in these organizations than you would find in a huge metropolitan area.

#3 – Raise Capital Through an Accelerator

Accelerators provide portals for Midwestern startups to access coastal investors.

Regardless of region, accelerators provide startups with powerful market validation. Simply gaining acceptance to a higher-tier accelerator is sometimes enough to attract angels when you’re raising capital.

To achieve truly exponential growth, you will eventually need to branch outside even a well-cultivated local community. Particularly for startups in the Midwest, a strong accelerator program may provide the extra validation and support you need to achieve nationwide network expansion.

While accelerators often grant a small sum of cash to their startups, the greatest benefit exists within the networking opportunities and mentorship that accelerators provide.

Check out our blog post on the value of accelerators to learn more about when and why startups should consider joining one.