The Gateway to the West is one of the Midwest's best cities for startups, according to VC firm M25's annual list of the region's top startup cities.
St. Louis hung onto to its No. 5 spot in 2021's ranking, repeating last year's result.
The rest of the top five cities in this year's ranking are unchanged from 2020's rankings: with Chicago, Minneapolis, Pittsburgh and Indianapolis taking the No. 1 through No. 4 spots ahead of St. Louis. It's been the same top five cities since 2018, albeit with Indianapolis overtaking St. Louis in 2019, with no changes in order for three years, M25 said.
Columbus and Detroit were the risers this year. Columbus climbed one spot from last year to No. 6, while the Motor City moved up two spots to earn the No. 7 ranking. Meanwhile, Ann Arbor dropped two spots to No. 8 and Madison fell one spot to No. 9.
Columbus is coming up fast behind St. Louis in the top five. Columbus outranked "boasts the largest VC fund in the entire Midwest region (Drive Capital with over $1.2B AUM), the largest IPO ever in the state (Root Insurance at a $6.7B valuation), Ohio’s newest unicorn (Olive, now valued at $4B) and a handful of other mega-rounds (Lower for $100M, Beam Dental for $80M and Loop Returns for $63M)," according to M25.
St. Louis lost some of its lead on No. 6, Columbus, Ohio, "but stayed in the mix" with a $159 million funding round for "soon-to-be unicorn" Benson Hill. The self-described "food tech company" in May announced it has inked a deal to go public through a merger with Evanston, Illinois-based publicly traded special purpose acquisition company Star Peak Corp II (NYSE: STPC) in a $2 billion deal it says will close sometime in the third quarter.
On this year's list, St. Louis scored high for number of active startups founded, "university ecosystem" (expert ranking and number of patents received), number of VC investors and number of angel groups, among other attributes, according to a breakdown of the rankings.
Here are the top 20 Midwest cities for startups, according to M25.
- Chicago, IL
- Minneapolis, MN
- Pittsburgh, PA
- Indianpolis, IN
- St. Louis, MO
- Columbus, OH
- Detroit, MI
- Ann Arbor, MI
- Madison, WI
- Cincinnati, OH
- Cleveland, OH
- Kansas City, MO
- Milwaukee, WI
- Louisville, KY
- Lafayette, IN
- Bloomington, IN
- Omaha, NE
- Champaign, IL
- Lincoln, NE
- Des Moines, IA
M25 compiled its rankings based on three factors:
- Startup activity (42% weight): active startups, startup formation growth, number of exits, and large outcomes;
- Access to resources (40.5% weight): 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 (17.5% weight): cost of living, labor costs, business tax friendliness.
Venture funding is up across the country, and the Midwest is no exception. The amount of venture capital invested in the region has nearly doubled over the last 12 months compared to the same period last year, climbing from $10.1 billion in ‘19-’20, to $19.8 billion in ‘20-’21, according to M25.
You can see the entire M25 ranking here.
