With focus on VC money, story on prairie startups misses bigger picture

The Dec. 20 issue of The New Republic magazine includes an article — published online as “Silicon Valley’s Profit-Killing Provincialism” and in print as “No Angels” — by Lydia DePillis on the trials of raising capital outside Silicon Valley. The story includes insights from John Schnipkoweit, founder of Cedar Rapids-based RecBob, and John Jackovin, founder…

About the author: Geoff Wood is the COO and main connection point in Iowa for Silicon Prairie News. For more on Wood, see the note that follows this post.


The Dec. 20 issue of The New Republic magazine includes an article — published online as “Silicon Valley’s Profit-Killing Provincialism” and in print as “No Angels” — by Lydia DePillis on the trials of raising capital outside Silicon Valley. The story includes insights from John Schnipkoweit, founder of Cedar Rapids-based RecBob, and John Jackovin, founder of Des Moines-based Bawte, on their experiences attempting to raise investment dollars for their startups, and it features thoughts from Silicon Valley venture capitalists on why they tend to steer clear of investing outside of traditional technology hubs.

DePillis visited Iowa in October and was shown around the community by Christian Renaud of StartupCity Des Moines, according to a post written on Renaud’s blog. I had the chance to chat with DePillis by phone shortly after her visit.

Over the last year, excitement around the startup community in the Silicon Prairie has been the subject of many articles, most notably John Eligon’s Thanksgiving Day story on the front page of the New York Times, “Tech Start-Ups Find a Home on the Prairie.” 

By comparison to that sort of press, The New Republic’s story feels almost as if it was written for the purpose of presenting a contrarian perspective on the region and its startups. My first reaction to the story was to nitpick and disagree.

But, for the sake of this post, I shall not pick nits. Rather, I’d like to share a few thoughts on what seems to be missing from the picture painted by The New Republic. While the overall themes are valid — building startups is hard, and Silicon Valley investors tend to invest in established startup hubs — they’re not the whole story. 

The problem of access to capital is real, as made evident in the frustrations expressed by Jackovin and Schnipkoweit, and that shouldn’t be a surprise to anyone. It’s a fact of building here and by itself it doesn’t preclude any startup from becoming successful. It’s certainly not stopping either Jackovin or Schnipkoweit, who have both have built companies in Iowa prior to their current startups, from moving their ideas forward. 

The article puts too much emphasis on a certain level of capital as the defining mark of a “tech hub.” While the importance of funding is obvious, there are plenty of other factors that are just as important. A culture where people are willing to take risks, the infrastructure to support a startup ecosystem and universities and established companies that support new ideas are just a few of the things that also contribute to making a place like Silicon Valley, well, Silicon Valley. Throughout the Silicon Prairie, we are seeing encouraging progress in many of those areas.

Would we be further along if the big funds from around the country started dumping capital into the Prairie? Most likely. However, we are seeing movement there. The New Republic Story mentions Union Square Ventures (New York) leading Des Moines-based Dwolla‘s latest round and Andreessen Horowitz (Silicon Valley) investing in Kansas City-based AgLocal as “exceptions.” But Lightbank (Chicago) recently invested in Omaha’s SkyVu Entertainment, and Union Square also funded Kansas City’s Pollenware. What may look like exceptions from the desk of a VC on Sand Hill Road look an awful lot like the start of something from my vantage point on Silicon Sixth Avenue here in Des Moines. Each of the VC deals I mentioned came about in the last 18 months, and I’m looking forward to what the next 18 months bring.

In focusing on access to capital, the article doesn’t consider the positives of building a company somewhere other than Silicon Valley. Of course, you have all the typical workforce and cost-of-living related statistics that can be provided by any local economic development official in the Midwest. However, there are less obvious and likely more important benefits, like being able to stand out more easily in a less crowded technology community, having less pressure to work toward an early exit and avoiding the expensive perk and poach wars required to attract and retain talent out west.

Again, the themes of The New Republic piece are correct: It isn’t easy to build startups, and Silicon Valley venture capitalists don’t often invest in the middle of the country. But leaving it at that falls short of telling the whole story.


Credits: Screenshot from tnr.com.


About the author: Geoff Wood is the COO and main connection point in Iowa for Silicon Prairie News, an organization working to increase the notability of the Silicon Prairie region – Des Moines, Omaha, Kansas City and surrounding area – as an innovation center and startup hub. In addition to a daily news blog, the Silicon Prairie News team also produces events like Big Des Moines (formerly Thinc Iowa), Big Omaha and Big Kansas CityWood helps organize Barcamp Des Moines and DSM Startup Drinks.

You can contact Geoff at geoff@siliconprairienews.com or find him on Twitter, @geoffwood.

This story is part of the AIM Archive

This story is part of the AIM Institute Archive on Silicon Prairie News. AIM gifted SPN to the Nebraska Journalism Trust in January 2023. Learn more about SPN’s origin »

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