Cincinnati's surging startup ecosystem can't seem to help the Queen City surpass its regional peers.
For the fourth year, Cincinnati ranked No. 10 on Chicago venture capital firm M25's power ranking of Midwest startup cities. Meanwhile, Ohio peer, Columbus, moved up one spot on the annual list to No. 5, taking over a spot previously held by St. Louis, Mo.
M25 compiles its rankings based on three factors: startup environment (active startups, startup formation growth, number of exits and large outcomes), access to resources (how much local startups have raised from VCs, the number of local investors, incubators/accelerators, universities, government support and access to quality talent) and business climate (cost of living, labor costs and business-tax friendliness). Overall, there are 25 variables weighed into each city's score.
Cincinnati received an overall score of 26.1. That's 23.2 points off from the list's No. 1 city, Chicago, but only 2.9 points off from Columbus.
In his annual breakdown of Ohio's "3 Cs" (Columbus, Cincinnati and Cleveland), M25 managing partner Victor Gutwein said the comparison is "less fun to analyze every year" given Columbus' emergence as the clear leader. He writes:
I don’t necessarily see this "turning around" anytime soon, as even though some of the causes of Columbus’ rise may not be permanent, the flywheel of talent and capital clearly will be. What we can all hope for is that Cincinnati and Cleveland continue to deeply invest in new startup creation and a variety of funding opportunities (both effectively activating federal/state dollars but also outside private capital like Cintrifuse has done with mobilizing Cincinnati’s corporate resources). These efforts have shown they can pay off and are even more critical in a slower startup economy.
To be sure, while it's been a slower year for Cincinnati startups compared to 2022 when the region celebrated its biggest fundraising successes ever, there have been plenty of wins for the region's startup advocates.
Health care startup HerMD recently closed the largest fundraise of the year thus far, bringing in $18 million. CincyTech closed the first $12.3 million of a $100 million fund. And in September 2022, Standard Bariatrics was acquired by global medtech company Teleflex in a deal worth $300 million, including earnouts.
