May 4, 201710:45 AMOpen Mic
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Midwest magic: Why starting local can be the swift path to global investment
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San Francisco. New York. Amsterdam.
All three are home to EatStreet investors, including Prime Ventures, the Netherlands-based firm that recently committed $10 million and has had tremendous success investing in the online and mobile food ordering industry in Europe.
However, investment hasn’t always come from the coasts — and certainly not from overseas. Early on, in what was our seed round, I spent weeks and weeks — and more weeks — knocking on doors in Silicon Valley seeking investment, when where I needed to be was in our backyard, smack-dab in the Midwest.
Did I learn anything during that time? For starters, rejection builds character. But most importantly, and I can’t stress this enough: Local investors, particularly for new entrepreneurs, are the untapped ticket to long-term success for Midwest-based startups.
I know what you’re thinking: So much of the capital, and the investors who want to spend it on tech startups, comes from the coasts. Facebook, Pinterest, Uber, and other tech giants live, play, and raise capital there. At EatStreet, we walked a different path, funding locally right from the start. And $40 million later, I can say that it has worked out pretty well.
Here’s why I believe in starting local:
It’s more than money
This isn’t some philanthropic or idealistic sentiment. In the early days of growth, especially for young entrepreneurs — I was 20 at the time — investors know they’re going to need to do more than write a check to see a positive return on their investment.
They need to help the company grow, sharing their expertise and counsel on a regular basis. They want a hands-on experience with you and the team they’ve just funded. They want to be close to you because you are their investment.
Your business model and your pitch are an integral part of their investment, and how you’ll turn that into a profit for investors draws them into the fray. Frankly, at that early stage of a business, their collective expertise and contact base is one you should be equally excited about tapping into.
Few investors are going to write a $200,000 check and say, “OK, I’ll see you at the quarterly board meeting.” Their desire to be in close proximity and contact is something I heard repeatedly during my first month and a half pitching in Silicon Valley. It wasn’t easy to accept but the consistency of the message was indisputable, and it stuck with me. Slack, FaceTime, or any amount of carrier pigeons just won’t do the trick at that crucial point in the business.
For my co-founders and I, straying far from our support base wasn’t an option. We wanted proximity to our partners — and the like-minded, Midwestern values that helped our business grow in the first place. Madison was home and we quickly found out there was money to fund our growth outside of Silicon Valley.