THE NEW STARTUP GEOGRAPHY

HIGH ALPHA calls itself a venture studio. That’s a combination incubator, early-stage investor, and startup consultancy. But it might better be called a venture catapult. Last year, the Indianapolis company showed its Midwestern can-do-ness in the midst of a raging pandemic by flinging out 10 startups—double the number to its credit in 2019. High Alpha did this in part by converting some challenges created by Covid-19 into businesses. “Where we start is with problems,” says Kristian Andersen, a High Alpha co-founder. “And 2020 presented no shortage of problems.”

Your employees are scattered? High Alpha launched Filo, a service that improves your remote working experience. Can’t hear live music? High Alpha orchestrated Mandolin, which runs livestream concerts and fan portals for music venues and touring bands. And to hire the people needed to run these outfits, the company created Luma, an A.I.-based service that manages the interviewing process.

Something else changed last year in Indy and other parts of the Midwest and South: access to a deeper pool of funding. VCs who once spurned Indy because they couldn’t get there and back from the West Coast in a day are now airlifting cash into the city—not to mention Atlanta, Miami, Denver, and other towns that were never on their shortlist before. “When you have a total and absolute moratorium on physical travel, yet those dollars are being deployed, almost overnight things change,” says Andersen. “We’ve been breaking down this legacy venture capital model.”

That’s exactly what America Online co-founder Steve Case, the CEO and founder of Revolution, has been doing for the past six years. Case started Revolution to fund innovative startups but kept running into the same problem: Too many VCs lived on the coasts, meaning that firms in Boston, New York City, and Silicon Valley were sucking up 75 percent of the VC money. Out of that experience came Rise of the Rest, a campaign that kicked off in 2014 to bring attention to the heartland via a splashy annual bus tour. Three years ago, Case started the Rise of the Rest seed fund to put some capital behind the concept. Now into a second fund, Rise of the Rest has raised $300 million and invested in more than 154 companies in 73 cities. The strategy is to land and expand: Start with $250,000 to $500,000 for a seed round and follow with up to $5 million in Series A or B rounds.

Investment is only part of the plan. Case thinks

Let’s take the new world and bring it to the old world. Steve Case, here in his Washington, D.C., offices, started the Rise of the Rest seed fund to support startups outside of Startup Country. He likes what he’s getting for his money.