Start-up capital and venture funding are terms not often heard in cities like Erie, but that’s already changing as a group of very big investors have banded together to target the underserved cities in the midwest and rust belt with seed money to get their start-ups off the ground or to scale them up. Venture capital investors tend to target Silicon Valley or cities on the coasts, but some of the biggest names in tech and investing are looking at the rest of the country for opportunities, not just to make money, but to help cities hit hard by the disappearance of manufacturing and where the comeback happening in other regions hasn’t yet taken hold.
Steve Case, co founder of AOL has teamed up with J.D. Vance, author of Hillbilly Elegy, a book that describes the decline of small towns like the one where he grew up, with the idea of coming up with a solution. The Rise of the Rest fund is the result, aiming to revive entrepreneurship with targeted investments from some pretty big names:
Jeff Bezos, the founder of Amazon and now the world’s richest person; Eric Schmidt, chairman of Google’s parent, Alphabet; Howard Schultz, chairman of Starbucks; Tory Burch, the fashion mogul; Ray Dalio, founder of the hedge fund Bridgewater Associates; Dan Gilbert, the founder of Quicken Loans who has remade Detroit; Henry Kravis, the co-founder of KKR; David Rubenstein, the co-founder of Carlyle Group; Michael Milken, the financier and philanthropist; John Doerr, the venture capitalist; Jim Breyer, one of the first investors in Facebook; as well as members of three wealthy families: the Waltons, the Kochs and the Pritzkers.
There are many more beyond them, but you get the idea. Sometimes, though, connections are as valuable as the money itself:
The fund, said Mr. Vance, was meant to construct an ecosystem like the one in Silicon Valley that will provide support and connections to entrepreneurs in small towns.
… In other words, if they discover a nascent but promising e-commerce company in Allentown, Pa., they will not only invest in it, but they might also help it establish a relationship with one of the fund’s investors — Mr. Bezos, for example — who might invest even more.
Erie and Erie County have seen their share of revitalization plans, but new housing and retail locations don’t create the business activity that a city needs to grow, it needs new businesses along with opportunities for recent graduates to entice them to stay. Investors like these, many of whom started their own companies and became highly successful, often recognize the signs of future potential in start-ups others might miss. While a great idea and enthusiasm are sometimes all you need, other times there’s no substitute for capital and this group, through the fund they formed, wants to bring opportunities to areas like ours that have missed out on angel investing.
This is a development we need to watch closely. Start-ups here have as much chance as those in any other city of attracting their attention and it’s one more reason Erie County needs to refocus on starting new businesses rather than worrying about the one that got away. Erie can be a start-up city, too, and there’s no better time than now to become one.