In the heartland of America, a different kind of growth silently takes root and flourishes, away from the coastal hubs that often monopolize the narrative around innovation and entrepreneurship. Nebraska, often painted with the brush of agricultural and cult classic football fanfare, is emerging as a hub of entrepreneurship and innovation, punching above its weight in the world of venture capital investment. According to a recent Flippa report, Nebraska has secured the 8th position nationwide for the growth of venture capital investment relative to its GDP (Gross Domestic Product) from 2012 to 2022.
Since 2012, the state has seen a remarkable uptick in venture capital investments into its tech-based economy, inspiring a landscape dotted with startups and a burgeoning innovation ecosystem. This has not been an overnight phenomenon; rather, it is the result of strategic initiatives, a spirit of innovation, and public-private partnerships.
Sowing Seeds for Growth
Total VC (Venture Capital) investment in Nebraska exploded from $32.98 million in 2012 to $501.7 million in 2022, and on a per-GDP basis, the level of VC investment in the state increased by 9.5 times over that span. The number of deals during this time reflects the planting of many seeds for future growth. In 2012, Nebraska experienced 22 venture capital deals but by 2022, the number expanded to 81 deals. This growth is not just a testament to individual company successes, but a reflection of a broader cultural shift occurring within the state. Neighboring Kansas ranked 16th (5.5X increase) while Iowa ranked 29th (3.3X increase) and Colorado ranked 28th (3.2X). While each of these states have a larger population and larger GDP, Nebraska’s significant growth can be attributed to the state embracing a tech-based economic development strategy that did not exist prior to 2012.
With agricultural, healthcare, and sports technology leading the charge, Nebraska's startup ecosystem is as varied as its landscape. Despite its early struggles in attracting and retaining top talent, the state has managed to foster a welcoming environment for innovators and entrepreneurs, proving that innovation knows no geographical boundaries.
Cultivating Nebraska's Entrepreneurial Spirit
This infusion of venture capital isn't just about dollar signs. It's about the stories that are unfolding and the doors that are opening for the next generation of Nebraska's business leaders. Local universities and private-sector entities are now working in tandem, providing the fertile ground necessary for these startups to take root and grow. Entrepreneurs in Nebraska now have access to mentorship, networking, and resources that were once a privilege reserved for those in the more established tech ecosystems. This democratization of opportunity not only benefits the statewide economy but also serves as a beacon to out-of-state talent looking for a vibrant and supportive community in which to launch their ideas.
The Nebraska Business Innovation Act's Impressive Trajectory
A pivotal player in growing Nebraska's technology-based economic development strategy is the Nebraska Business Innovation Act (BIA), administered by the Nebraska Department of Economic Development. Since the BIA was passed in 2011, hundreds of Nebraska’s entrepreneurs and innovators have received critical non-dilutive grants and seed capital. Invest Nebraska, a statewide venture development organization, operates the Nebraska Innovation Seed Fund program under the BIA. Since its first investment in 2012, Invest Nebraska has carved out a formidable reputation for itself by actively participating in over one hundred high-growth investments in the state. The impact of these investments is quantifiable and significant, with $35M in capital deployed directly by Invest Nebraska, catalyzing the raising of $152M in matching private capital from private investors, demonstrating the confidence and potential seen in these ventures.
The ripple effect of Invest Nebraska's initial investments is further evidenced by the remarkable $460.3M in follow-on capital that these companies were able to raise over the past ten years, highlighting the sustained growth and viability of these startups. Invest Nebraska's strategic focus on high-growth investments has undeniably played a vital role in the transformation of Nebraska's economic and entrepreneurial landscape, setting a precedent for future growth and innovation.
A Victory for the Midwest Grit Mentality
Nebraska's triumph in the venture capital arena is a testament to the "Midwest Mentality" that advocates hard work, grit, and community. In an environment where the scale-up is celebrated as much as the startup, founders can build companies that are not just financially viable, but that make a meaningful impact on the world beyond their state lines.
The Midwest is cultivating a breed of entrepreneurs who understand that venture capital isn't just about immediate growth; it's about building sustainable businesses in the long term. For investors, it's a realization that there are untapped opportunities in the heartland, where the cost of doing business is often lower, and the potential for return on investment is significant.
Comparing Kernel to Kernel
To fully appreciate the significance of Nebraska's growth, it is important to juxtapose the dollar amount of venture capital investment with the state's GDP. This metric provides a more nuanced understanding of Nebraska's burgeoning potency in the world of startups, as it factors in the state's economic size.
With a 950% increase in funding per $1M GDP, no other Midwest state performed as strongly as Nebraska. GDP tells us whether the economy is expanding by producing more goods and services or contracting due to less output.
When compared to neighboring states, the statistics become even more compelling, painting a picture of Nebraska as an emerging region in the VC world. Its growth may not rival the behemoths of California or New York, but it certainly proves that in the Midwest, the "entrepreneurial soil" is rich and ready for a harvest.
The Cornhusker State's Venture to the Future
Venture capital is more than just an economic indicator; it is a sign of confidence in a region's future. Nebraska's growth in this area highlights a state that is reinventing itself, building on its history of hard work, determination and grit while also looking forward.
For startup founders eyeing the horizon, for investors seeking the next big opportunity, and for policymakers intending to foster economic vibrancy, Nebraska's venture capital ascent is an assurance that the heartland is not to be overlooked. We are a silent powerhouse, gathering momentum, with an economy ready to bloom, and a startup sector ripe for investment.