Cleveland continues to fall on annual list of Midwest startups

Cleveland slipped one spot on this year's Best of the Midwest: Startup City Rankings list by Chicago venture capital firm M25 Ventures.

Cleveland ranked 12th on the 2022 list, nosed out of its 11th rank in 2021 by Kansas City, Missouri, according to the M25 analysis.

Cleveland's ranking has been steadily declining on the list since ranking fifth in the Midwest in 2017.

Each year, M25 develops a benchmark to help stakeholders understand how Midwest cities and their tech startup ecosystems are performing relative to each other.

The venture capital firm uses 27 variables ranging from number of startups and venture capital firms to labor costs and gross domestic product per capita to develop its benchmarks.

On this year's list, Columbus ranked No. 6 and Cincinnati, No. 10, holding their ground from the 2021 list, according to a blog post by Viktor Gutwein, M25's managing partner.

That's partly because Ohio minted four unicorns in 2022: Branch Insurance in Columbus; and Astronomer, Enable Injections and 80 Acres in Cincinnati, Gutwein wrote.

While Columbus still tops Ohio cities on the list, the difference in its ranking score from Cincinnati is narrowing, according to Gutwein, suggesting that Cincinnati is catching up with Columbus.

Cleveland's gap with Cincinnati's ranking score, on the other hand, is widening, he said.

Though similar to Columbus on several startup activity measures, Cleveland's "startup momentum" (percentage growth in the number of startups from 2017 to 2022) is 7.9 percentage points below that of Columbus.

And Cleveland's "big outcomes" (number and size of exits and venture raises exceeding $50 million) was 5.1 on the 2022 list compared with 21.4 for Columbus.

Some other Ohio cities, including Akron in Northeast Ohio, made big moves on this year's list:

For the sixth straight year, Chicago topped the Midwest startup list, followed by Minneapolis, Indianapolis, Pittsburgh and St. Louis.