Startups Are Growing in the Midwest but the Funding Isn’t

As venture capital dollars continue to flow heavily toward coastal tech hubs, a growing number of leaders and investors are drawing attention to what they believe is an overlooked opportunity in the heart of the country. Central U.S. regions, including Illinois, are making a strong case for why they should be seen as the next frontier for innovation funding.

Despite boasting cutting-edge research institutions and a robust pipeline of new technologies, states like Illinois continue to receive a disproportionately small share of early-stage investment. While cities like Chicago are emerging as centers of innovation, the surrounding Midwest remains underfunded compared to its potential.

From the development of quantum computing in Chicago to the stream of commercialization-ready breakthroughs coming from universities across the state, Illinois is home to some of the country’s most promising technology. What it lacks, according to regional advocates, is the venture capital necessary to bring those innovations to market.

“Middle America—especially Illinois—is brimming with untapped innovation. Yet despite the quality of ideas and talent, these ventures often lack access to early, strategic capital,” says Ankit Shrivastava, Founder & Managing Partner of Enventure, a U.S.-India private equity firm. “At Enventure, we see this not as a challenge but as a massive opportunity. We’re investing early in overlooked markets, bringing both capital and hands-on support to scale high-potential businesses that might otherwise be missed by coastal firms. It’s time smart capital moved closer to where real innovation is happening.”

Shrivastava’s remarks point to a widening gap between innovation capacity and funding availability across the Midwest. The region has consistently punched above its weight in terms of research output and entrepreneurial activity, yet it continues to receive only a fraction of national venture funding. According to recent data, the Midwest attracts less than 10% of total U.S. venture capital, despite being home to nearly a quarter of the country’s population.

This disparity raises concerns among economic development experts who argue that geography should not dictate access to capital. They point to the strong technical and scientific output of institutions like the University of Illinois, Northwestern University, and the University of Chicago, which collectively contribute to a deep bench of talent and groundbreaking discoveries. These assets, however, often remain under-leveraged due to limited local investment infrastructure.

In recent years, Chicago has emerged as a leader within the region, attracting a growing number of startups and venture firms. The city’s focus on quantum technology, particularly around the Chicago Quantum Exchange, has attracted national attention. Yet even Chicago’s gains are modest when compared to venture capital magnets like San Francisco, Boston, or New York.

For many entrepreneurs outside major coastal cities, raising capital can be an uphill battle. Startups in smaller or less visible markets frequently find themselves overlooked by large venture firms who concentrate their resources closer to home. This lack of attention can slow the growth of high-potential businesses or force them to relocate in search of funding.

That trend is something some investors are hoping to change. Firms like Enventure are targeting what they see as untapped markets in the center of the country, aiming to deploy capital earlier and more locally. By doing so, they hope not only to generate returns, but also to help build self-sustaining startup ecosystems in regions that have long been undervalued.

The approach reflects a broader conversation happening across the investment world about inclusivity, geographic diversity, and the need to expand access to funding beyond a few major metro areas. As more data points to the success of startups in non-coastal regions, the case for investing in places like Illinois becomes harder to ignore.

Still, challenges remain. Many local ecosystems are continuing to build the infrastructure that coastal hubs often take for granted, such as experienced operators, later-stage capital, and close-knit investor networks. Without these elements, even the most promising startups may struggle to scale.

However, advocates argue that if capital starts flowing more freely to the middle of the country, it could spark a wave of economic growth and technological progress. The innovation already exists; the key now is to connect it with the right kind of investment.

For regions like Illinois, the opportunity lies not in trying to replicate Silicon Valley but in developing their own model, one grounded in deep expertise, underappreciated assets, and a growing appetite for risk-taking. Whether national investors recognize this in time may help shape the next chapter of America’s innovation economy.