Venture Capital in the Center Corridor of the United States; Synergies between the Midwest and Texas

In the run up to SXSW 2023, we’re revisiting the most impactful conversation we had during SXSW 2022. Without fail, this meeting of the minds in Austin continues to create meaningful relationships, partnerships, and collaborations every year. Make sure to join us in 2023 for Funded House and be a part of where we go from here.

In this first-of-its-kind discussion, we explore how and why the center corridor of the United States is emerging as the country’s epicenter of innovation. Particularly as the ecosystems of New York, Silicon Valley, and Los Angeles see people migrating to new opportunities and the culture and economies of the middle of the U.S., venture capital and the work of VCs and other investors throughout cities such as Houston, Austin, St. Louis, Oklahoma City, Chicago, Detroit, Cleveland, and Columbus are witnessing innovation flourish in sectors already dominant herein more than on the coasts, among them: logistics, defense and cybersecurity, media, transportation, agriculture, energy, CPG, retail and commerce, music, healthcare, government, and education.

Samantha Lewis, Principal at Mercury Fund, Elisa Sepulveda, EIR with MATH Venture Partners, Christy Cardenas, Managing Partner of Grit Ventures, the cofounder of LOUD Capital, Navin Goyal, M.D., and Kelli N. Jones, a General Partner at Sixty8 Capital, join me at SXSW 2022 to discuss Venture Capital in the Center Corridor of the United States and, more importantly, how our development of community drives innovation.

Produced in collaboration with Midwest House, through Funded House, and by Streamlined Media, I’m particularly honored to share this as I brought my daughter Bridget to SXSW to work, and she stepped it up brilliantly to capture a lot of this show.

Click here to open and read the transcript

Paul O’Brien – CEO, MediaTech Ventures

From Austin, Texas at South by Southwest 2022, my name is Paul O’Brien with MediaTech Ventures! I’m really excited to start this conversation with this esteemed group of folks at the table here. We’re at Midwest house in Austin, Texas on purpose. Part of the purpose is that I actually grew up and started to see a bunch of my friends back from Michigan and Chicago and Detroit. I’m Austin-based now, though, and when I moved here about 12 years ago from California I got really fixated on the idea that there was a lot more going on in the center corridor of the country, all the way up from Michigan, Wisconsin, and Minnesota, all the way down here to Texas. And I think we’re really starting to see that and realize that truly. So with me, I’ve got Kelli, I’ve got Navin, I’ve got Christie, I’ve got Elisa, and I’ve got Samantha, a group of VCs from Texas, and a group of VCs from the Midwest. And we’re going to start to explore that idea. As we get to know better what’s going on in this part of the world and why everybody’s so excited about it. How are y’all doing?

Samantha Lewis – Principal, Mercury Fund

Very excited to be back at South by Southwest, right? 

Paul O’Brien – CEO, MediaTech Ventures

Yeah, I am. I am in my element more than you could possibly imagine. It has been depressing being stuck at home for two years. So it’s wonderful to see you all. I want to start with that side of the table if we can. Texas, right? Everybody’s here. Why is everybody here besides South by Southwest? What’s drawing all this attention to what’s going on in this part of the world? And then to open it up to the rest of the table? What do we think about the Midwest? What has our attention up north of here?

Samantha Lewis – Principal, Mercury Fund

Well, everything’s bigger in Texas, including now, you know, round sizes, exits. Not quite, but we’ll get there. So yeah, I think Texas, Texas is a great place to build a business. I moved here after high school. So I’ve been here since undergrad, but not born and raised in Texas. And I think the piece – like one of the key things I think about building business or building a venture fund in Texas, is that you get to be part of building the community. And so because the community is still in its growth phase, you get to jump in and really make an impact on the community, like immediately. And so really creating your own communities out of it. And understanding, like, where you want to go with that, where you want to go with your communities, where you want to go with your company is easy to do here because people are really open and receptive to new business ideas. And so it’s a pretty open economy in that way. And I think that that’s really conducive to VC and innovation. Oh, by the way, I’m Samantha from mercury.

Elisa Sepulveda – EIR, MATH Venture Partners 

I’m Elisa, I’m from Math Ventures. We are actually based out of Chicago, but I live here in Austin, Texas with one of our partners. I moved here from New York. I’m a northeasterner, also Cuban, Puerto Rican, first generation American 11 years ago. And one of the things that I love about Texas is exactly what you were saying, Samantha. It is so open, it’s so easy to meet people. Something about that Southern welcoming nature makes it really easy to be successful here. I also think we have incredible universities, we have thriving arts, there’s music, there’s all kinds of exciting things happening here in Texas, in the arts community that contribute to the creativity that we have as working with entrepreneurs.

Christy Cardenas – Managing Partner, Grit Ventures

Yeah, I would second all of that. I think to Sam’s point, it’s unpaved territory, right, you know, in terms of tech and innovation, that you can really make your mark on the world from Texas. You know, also it’s cheap, relatively inexpensive.

Samantha Lewis – Principal, Mercury Fund

Come to Houston. It’s way cheaper.

Christy Cardenas – Managing Partner, Grit Ventures

And it’s a nice place to live. You know, I grew up here. I love Texas. So I’m biased but beyond that, people are moving [here].

Paul O’Brien – CEO, MediaTech Ventures

I love the sentiment that it’s a friendly community because outside the Midwest house here at South by Southwest is a big sign that says “Nice as Heck.” Which of course is very Midwest, very Michigan, I love, I love seeing that sign. Navin, Kelli, welcome down. Tell us a little bit about what you’re working on up north and what brings you down, what gets you excited to be here!

Navin Goyal, M.D. – Cofounder, LOUD Capital

Thank you very much. First of all, first time at South by Southwest. Well yes, I’ve been in Texas many many times. I love Texas. I love the people. But to come here with this level of energy, I’ll tell you right now, people were trying to describe it, and people who know me say “Navin, you’re gonna love this.” But now I get it. So backyards, beer, barbecue, business, and beats. All give me energy. And there’s a book in there. It gives me energy, and so I’m really happy to be here and I will continue to come here. But talking about a little background on myself, I am a co-founder and CEO of Loud Capital. We started a fund initially in 2015, and now we do a lot of impact investing, industry agnostic, multiple different funds to help the entrepreneur ecosystem. Basically what you were saying with regards to Texas on community. And essentially, the advantage of not being on the coasts is building an ecosystem of what makes sense. It’s coming into an industry, fresh moldable put a piece of clay, how does this make sense. And so that’s what we do in the Midwest. I would take with the craziness of the pandemic, the last couple of years, it’s now you know, people have looked to us, right from Texas to the Midwest to the South, you no longer have to say, hey, you should come join us. Now. It’s like, hey, when you land here, let me know, if you need some direction, and where to live and where to work, right. So happy to be here. Happy to discuss a lot of things.

Kelli N. Jones – General Partner, Sixty8 Capital

I feel like everyone has said everything already. But I’ll try to add a little extra to it. My name is Kelli Jones, I’m General Partner at Sixty8 Capital. We are a fund that invests directly into black, LatinX, women, and LGBTQ founders, both in the Midwest and in the South, seed stage fund. I’m based in Indianapolis, Indiana, this is my ninth time at South by Southwest, I believe. But this is the first time I’ve been here actually speaking, as opposed to working. I ran an experiential marketing company where a lot of my clients 

Paul O’Brien – CEO, MediaTech Ventures

Both are working!

Kelli N. Jones – General Partner, Sixty8 Capital

Both are working with different, like, this is actually fun working. I get to meet people, talk to people, colleagues, that sort of thing. But what kind of led me into technologies that are really experiential marketing companies to do a lot of activations here at South by Southwest with really big brands now, but at the time, they were really small. So that’s kind of how I got my start. But I can’t – I think I have to echo everything that everyone has said, right? When it’s unmarked territory, it’s really easy to start and grow and build a community. For me, you know, we had a little bit of an ecosystem because we had some significant exits in Indianapolis with Angie’s List and Exact Target and Interactive Intelligence, which were huge. But there wasn’t a lot of focus on the importance of investing in black founders or LatinX founders. And so that was what I got to bring back to Indianapolis, when I moved back in 2017. I spent most of my career on the coast, I was in New York for about eight years, I was in LA, I worked in media, all sorts of stuff. But to be able to come back, take all of that knowledge and be able to focus it on impacting black founders has been sort of my life’s work. And so I’m excited to be in a space to be able to do that. But I think the most important thing about that work is that in comparison to Texas, or Ohio or anywhere else, you get to kind of create what you need for the people that are there. And I think that’s the opportunity we really get to have. And there’s an opportunity for all of us to collaborate and work together and find ways to do it even more.

Paul O’Brien – CEO, MediaTech Ventures

I love the way the conversation kind of shifted to the fact that not only is it a community, and it’s nice, and it’s friendly, it’s easy to get connected here. But, but, but that there’s meaning that we’re looking for and doing things more impactfully here, some obvious, some obvious industries, I think between between the North and the South and the center here are in transportation, obviously, retail and commerce, e commerce, what what kind of things do you think are missing? What really stitches it together? The quarter is having more meaning, perhaps than California or New York or the SouthEast. Thoughts?

Navin Goyal, M.D. – Cofounder, LOUD Capital

Logistics, logistics? Yeah. All right. So in the world of, the new world of hybrid, where you can  work from anywhere, but if you do have a location, or a, or a physical presentation, somewhere, having it in our regions, let’s say, is a no brainer. And again, we don’t have to sell that anymore. Companies are already doing it. And so they perhaps might have started their headquarters and exec team in this city. But now they’re like, Okay, we’re gonna build a big presence over here, whatever you want to call HQ, whatever. But in the end, you need to be where the population is. You need to be closer to people in general. And that’s it, geography. I mean, it just, it just makes sense. Now, you also have these community impact funds that are being built from people at this table, and many more, that just makes sense to the current investor and current Corporation. And so when you have a young person, I don’t know why this is coming to mind, but like, buys a box of toothpaste, they now care what that company is about. Right? And so my guess and my hope, and the conversations that I’m having is that when people invest money, whether you’re an institution or an individual, you are now starting to question and care where that money goes. And so I have a feeling already. I just met many of you just now that you all have a great story of closing that deal. More than a lot of other folks Whoever raised much more capital that cannot go into the explanation, depth and detail of what that money is in alignment of how your corporation [thinks] and how you think.

Samantha Lewis – Principal, Mercury Fund

Yeah, I think that’s a great transition into something else that we’re thinking about a lot in Texas, which is the energy transition. And I don’t want to steal Christy’s thunder, because she’s the expert here, so I’m gonna pass it over to her. But there are a lot of companies, especially coming from Houston, that are really focused on the energy transition, and it’s making sure where we get our energy is actually clean. And that is the best, most responsible company for our environment, and how we do that, and how we’re transitioning over. And so I think Texas, in general, is a really, really good place to be thinking about that and building a thesis around that as an investor, or as companies, because it is the next wave of energy. So.

Christy Cardenas – Managing Partner, Grit Ventures

Yes, I agree. I’m Christy, everyone, I missed that earlier. You know, everything has to change, about energy, we have to change it completely. And tech clearly needs to start in Texas. Like 40% of the state budget, direct tax receipts from oil and gas, that’s all gonna have to change. And, and I honestly, and you know, a lot of it happens in the Midwest, like big auto, it’s a big giant part of, it’s not a now the machine companies are energy companies and the energy companies are machine companies. And it’s all blurred, because it matters, you know, what your impact is to the environment to your point, and this is I know, something that Sam’s working on quite a bit. And I’m also working on just sustainability more broadly. You know, and it brings us back to this, this point of impact, and really big industry, you know software has been leading the world for the last 40 years. And now when you do transmit those innovations, in data and software into real assets, and how we’re living our lives, and how we run our cars, and you know, how we impact our Earth. And I think that’s really what the heartland has the potential to offer is just, you know, deep innovation and industry, which is kind of everything.

Kelli N. Jones – General Partner, Sixty8 Capital

I was going to take a minute to brag real quick. Why not.

Christy Cardenas – Managing Partner, Grit Ventures

Yes, please. 

Kelli N. Jones – General Partner, Sixty8 Capital

Sorry to move you. Um, so just to lean on that because I think it’s really important to talk about this. I don’t think people – I’m from Indiana, I know that sounds weird. I was like, do you even see black people in Indiana? Yes. Central Indiana is about 30% black, I don’t think people don’t know that. But the thing I love the most about the South and the Midwest is one, universities per capita. There’s universities, like big universities, in a huge short amount of span from where you live. Commerce, just companies, right. In Indianapolis alone, when I sit on my balcony, I can see Eli Lilly, Anthem, Farmers Insurance, the Salesforce tower, and all sorts of things just in the skyline. And I think, you know, the other part obviously, is the fact that you know, you get the opportunity to live for very cheap compared to anywhere else on the coast. So we’re starting to see a lot of impact – we’ve had success in b2b SaaS and b2b marketing. And that’s where most of Indiana’s success in technology has come from. But what’s been – kind of gonna be kind of the next wave of boom is one, we have the 5g Center in Indianapolis, where everything 5g is coming out of it, we have the battery Innovation Center with their testing everything from autonomous and all sorts of stuff, that’s 45 minutes south of IU University. You know, we have ag tech stuff that’s happening at like a massive, massive, massive rate. And you see that a lot of it in Kentucky too, a lot around ag, food, and food safety and food insecurity is going to be something that we’re going to be working on for a long time. So finding ways to grow better food to have better systems is going to be key. And then manufacturing, right? Like these are all legacy industries, like you were just saying, that have not been touched by tech and digitization. But these are the things that are going to push our economy forward. And so I think you’d have to look at the south and the Midwest in other places as the place where this innovation is really going to start coming from because of the people on the ground or the people who’ve been doing this work for so long. Funny enough, though, I don’t invest in it. Well, I can’t invest in some of that. But I don’t. When I decided to start our fund, part one was obviously around diversity and inclusion. Part two was actually around the things that I think you guys do much better than us. I mean, Columbus has what the largest number of like, selling houses and stuff like that, like within a certain area like CPG companies retail, there’s no one doing that, where I’m from, and that’s my only background is retail, like we’re retail CPG and consumer. So I now get the opportunity to really focus on founders that are building direct to consumer brands that are building creative economy tools that are building future work tools, while also doing some food and other stuff like that. But what we now get to do because it’s so new, is introduce some new stuff. And that is what’s going to really push things forward. Because we also have the industry in the universities to match.

Elisa Sepulveda – EIR, MATH Venture Partners 

Yeah. And I think to, like, marry all this together, like a lot of this is happening from what you were saying, Kelli, which is the universities have been, we have incredible universities throughout the Midwest, and through the South. All of the research that’s being done there is contributing to the ecosystem. The original IBM Watson lab team was here in Austin, it started in Austin, I was on the commercialization team for Watson. And I’ve started to see how this technology over the past five years has really changed legacy industries like especially in logistics, in manufacturing. So it’s a really exciting time to be here, because you can get in on the ground in a lot of these innovations.

Samantha Lewis – Principal, Mercury Fund

Yeah, I think there’s another important piece just to keep going deeper on this, that COVID changed everything, right? So now, not only do we have the industries that need innovation, not only do we have all these universities that are spitting out talent, we also have a workforce that is super mobile, going back to what you were saying earlier, we have this workforce that is comfortable living anywhere now, that’s comfortable picking up and moving to Austin to see if they like it for three months, or to Houston, less go to Houston, but we’re working on changing that. But we have, like we have people now picking up and moving to, I don’t know, Chicago, Iowa, wherever they want to go. And they’re doing that because they’re like, hey, why not let me go try somewhere that’s cheaper, somewhere that has a vibrant up and coming economy somewhere that has places that I can actually make an impact on, like Christy was saying earlier. And so it’s how we have all that and then on top of that capital has also flown in. And because capital is coming to the middle of the country, now our valuations and our exit valuations from a VC standpoint, and, and a company standpoint, aren’t kept like they used to be. And so now we’re getting these amazing venture returns being in the middle of the country, but we’re not paying as much to do it, because it’s just cheaper to live here. Especially in Texas with our taxes and some other things that exist right now. Like there’s a lot of benefit for, for being in the middle of the country, and not a lot of downside anymore. And so COVID kind of got rid of the downside for us the talents here and the capital is here now.

Paul O’Brien – CEO, MediaTech Ventures

I’ve always been pretty interested in the notion of whether or not capital follows the opportunity, or vice versa. A lot of conversations have to do with how we need capital in order to be innovative. But I would almost argue that what’s been happening in the center of the country is proving otherwise that no, what we need are entrepreneurs and collaborations and communities and the companies involved. And then the capital will come right? It’s coming here for a reason. Is it valid that the capitalist more so to me an indication of the fact that we’re doing something incredible in the world, in this part of the United States? Because the money is moving here, given that opportunity.

Samantha Lewis – Principal, Mercury Fund

Yeah, I think people were like, hey, I can get on Zoom and invest over zoom now. And so why be geographic constrained? It’s actually not smart for your returns to only invest on the coast, if you live in San Francisco, when you can invest in Houston and, and get like fine, just as good entrepreneurs there. I think what we’re missing and what we still really need to build – so we have the capital and we have the valuations now, what we really need to work on is continuing to build the ecosystem, which I think we’re all doing. I think we’re all trying and each one of our respective cities and regions, but you have to have the collisions, you have to have the ecosystem. And so making sure that that’s all the next piece, I think is the next step of our journey here.

Elisa Sepulveda – EIR, MATH Venture Partners 

Like the beautiful thing about being in Texas, I have been working and building communities for a long time here in the Austin ecosystem. And what I love about Texas cities, and starting to get to know Chicago through MATH ventures, is that people are incredibly collaborative. Like, everything’s new here. There are no like, you know, like, there’s no beef between people, everyone wants the same thing. We want the pie to be bigger for everyone. So it’s been really wonderful getting to know colleagues in different areas of the Midwest and being able to collaborate on deals and share different ideas.

Navin Goyal, M.D. – Cofounder, LOUD Capital

I want to compare – oh, go ahead, sorry.

Christy Cardenas – Managing Partner, Grit Ventures

I just was gonna. I to your point about capital. I think there are a lot of different kinds of capital, like I immediately think of the universities and R&D money coming from the federal government that’s pumping directly through universities. You know, the Biden administration committed $10 billion to emerging hubs. And so all of that is in addition and also attracts the venture money, which we’re already seeing. So I just think it’s important to think about it a bit more holistically.

Paul O’Brien – CEO, MediaTech Ventures

Yeah, I agree. We’re short, it’s, it’s definitely a little bit more of a flywheel in ways that I’ve explored in some stuff. I’ve written that it is a flywheel. It’s as each piece innovates more and connects better and collaborates more. The whole wheel just continues to spin more, more, more quickly, hence the word acceleration, right? It’s just a matter of keeping up with it.

Christy Cardenas – Managing Partner, Grit Ventures

And the – I was gonna ask a question, if you guys don’t mind. What do you guys think it is that finds the Midwest and Texas, the South, you know, Texas together? I think there are some commonalities that I see. But I’d be interested in your thoughts.

Navin Goyal, M.D. – Cofounder, LOUD Capital

I have one word. Or maybe I have a few. Underdogs. Oh, yeah. Sure, it’s that chip on your shoulder of we’re nice people, we’re capable people. We have universities, we have companies, we have entrepreneurs, we have money. Why the heck is that there, this ecosystem that everyone’s talking about in the east and west. And so I had a discussion earlier today, where it’s like, there has been a lot of capital invested, there has been a lot of great entrepreneurs. But it takes a while for that boiling pot to just rip off the lid and you start having the exits. And then you have the new wealth that is now investing and you have the college folks that are now saying, I don’t need to leave Austin, why would I not just stay here and join this amazing company? So it takes a while. And I think we’re all here now. And now I was gonna flip over to an investor mindset from an LP mindset. I’m a corporation, institution, I’m an individual, and I want to invest in ventures. I want to invest in good people, I want to make a shitload of money. But, and save the world, I want to do it all. And so I’m going to. I’m going to compare – who likes wine here? Who likes to drink wine, anybody? I love wine. And I love Napa. I love California wines, I actually like wines from a lot of different regions. But you know what I do when I go to a restaurant right now? And I like to talk about this because this is how my analogy to venture in the Midwest and South versus the coast, is I no longer go for that Napa bottle. I love Napa wines. But you are paying a premium for the real estate there. The environment is high cost. So the quality of wine is just as good as it was five years ago. It’s great wine, but I’m going to pay a lot. Recently, I’m going to Rioja, which is the Tempranillo grape in Spain. And if anyone wants to know that I’m telling you, go straight to the menu, order Rioja. And that’s going to cost you probably 1/5 the cost, but it’s going to be fucking delicious. And everyone is going to be like, this is amazing. And you just saved money, but you invest it in amazing conversation and wine just like you want it. That was the goal. That’s what the Midwest and South is for an investor. It’s a younger, more moldable ecosystem that is not priced by peers and FOMO. Again, I’m not downplaying quality, everywhere, but when you’re talking about value, ROI, and investing in probably more community, more touchpoint-based ecosystems, so no brainer.

Christy Cardenas – Managing Partner, Grit Ventures

Opportunity. 

Navin Goyal, M.D. – Cofounder, LOUD Capital

Absolutely. If we’re just talking numbers, it is the best business sense

Paul O’Brien – CEO, MediaTech Ventures

What I really love is the word underdog, because that’s sort of the Spirit of the Entrepreneur anyway, that “I’m already at a massive disadvantage because I don’t have a business model. I’m inventing something new. I don’t have any customers. But I’m going to do it. I’m going to figure this out. And we’re going to make something better in the world.” Coasts, other places in the world don’t that necessarily have those underdogs, perhaps they don’t have as many entrepreneurs, perhaps they don’t foster that culture of, of can do and will do. And that really creative spirit that says we’re gonna fix things and do it better.

Samantha Lewis – Principal, Mercury Fund

Yeah, I think there’s a key piece here too, that comes back to diversity, which I think each one of us like, I know each one of us cares about. I’ve heard you two talk. I know us three have had a lot of conversations about it. But what’s really cool is when you’re thinking about entrepreneurs, you think about build, right? People who are builders. That’s great. What we can do now, though, in all these newer ecosystems, not saying we’re completely new, but a newer ecosystem is we can be super intentional about those. And so now we can say, Oh, hey, it’s not just about who you know, in some of the more tight, like older, more mature ecosystems, it’s all about who you know. And so what did that mean? It meant women were getting less than 2% of VC funding even worse for black women, right? Even worse for LatinX women. And so it’s okay, how are we rebuilding that in a way in each one of our ecosystems to where we don’t already create that exclusivity? Because exclusivity is actually bad for innovation. It’s bad for business. Having a more diverse team increases your retention rate for customers and for employees, like all the data is there, right? It’s better to have diverse teams, but certain coastal cities aren’t listening to us and they’re still doing it. So then why not make the change here in our cities? And so we’re building out ecosystems that look like our cities actually look.

Christy Cardenas – Managing Partner, Grit Ventures

Yeah, I would agree with Sam, I think we’ve got a shot here. You know, we did not pave territory, these aren’t paved networks. You know, we haven’t been doing this for very long. And the same opportunity that Texas and the Midwest have, people of color and women have. It’s the same. It’s about teaching entrepreneurship. Like, we definitely have the culture like I know, we all have, what the hearts for it, for creation, and driving new value, I’m not worried about that part. It’s about sorting out how to do it. And I think that’s what I know, that I know, I’m willing and dedicated to and I think everyone on this panel is just really strongly committed to creating new entrepreneurs, you know, and investing in new value creation. That’s really what we need. And that’s what’s gonna change the world,

Samantha Lewis – Principal, Mercury Fund

Or creating the resources, So people are willing to make the jump, right? Or having you as a resource to go to [about] building everything.

Paul O’Brien – CEO, MediaTech Ventures

How many y’all are in town for the rest of South by Southwest and music and film? You’re in? You’re all in?

Navin Goyal, M.D. – Cofounder, LOUD Capital

How long is this here?

Paul O’Brien – CEO, MediaTech Ventures

Months, actually, I know. One of the one of the industries that I think can tie us together is the music scene, to be honest, because most, most people when they think of the Silicon Valley’s when they think of the startup community, their minds go right to tech, but but the fact is, if you go back historically enough, it has much more to do with culture. It’s more of, the reason San Francisco turned into Silicon Valley was the hippie culture. And it was for Berkeley. And that counterculture, that progressive culture. And I think that’s why Austin’s boomed. And so I’m really personally excited about the Houston music scene, the Austin music scene, the Chicago music scene, the Detroit music scene that has been overshadowed by the coasts for decades, as [well] as the entrepreneur class, we bring that together, we bring the arts back to the to the ecosystem.

Elisa Sepulveda – EIR, MATH Venture Partners 

And people wouldn’t think of these things. Like I was in Houston a couple of weeks ago, I am a huge EDM fan, I saw one of my favorite DJs at like, some backyard bar in Houston. And it was really, really incredible. We have incredibly like, thriving music in all of the cities like both, you know, Chicago, and throughout Texas.

Samantha Lewis – Principal, Mercury Fund

This is where I have to make my shameless plug for the thesis that I laid out Mercury, which is our Web3 thesis. And the reason that I do that is a lot of the things we’re talking about today, like we get in on the ground floor of building an entire new industry. And we get to do that and do it in a way that’s like really impactful in the way we want to do it. But a big piece of that is now enabling creator economies. So music, film producers, book authors, right, book publishers, there are now new ways for them to monetize – gaming, right? There are now new ways for you to monetize creation that you were never able to do before. And there’s no reason that in 10 years from now, the code should own that, like that could be decentralized. That sounds cheesy, sorry. But it’s true. That could be across the country, right? And so like, why not like that’s a new industry, let’s seize it. And that’s a perfect opportunity. I think, for us, building out part of our thesis in Texas, Midwest, in the South.

Kelli N. Jones – General Partner, Sixty8 Capital

I spent the bulk of my career in the music industry. And the main thing that I realized really early on is that the entire industry is built on technology from the way that we recorded, distributed, marketed and listened to it, every last one of those is a tech industry or tech company, right? So obviously, music has been the one that has pushed forward thinking when it comes to the development of new opportunities. What I’ve loved about the work that we’re doing now, similar to what you just shared, is that we put a lot of money into what we consider future work. Future work to me is creating economy and the infrastructure around it. And no one’s touching it, not touching it. Well, you know, the only things we’re seeing are, well, you do see sometimes are platforms to kind of pair influencers or creators with different things. But think about the hundreds of other things that we can do to help who’s now the new version of entrepreneur, right, like is their new Delaware C Corp that we’re looking at. But they’re individuals, giving them the opportunity to create wealth in a totally different way. I think the music industry has probably been the most innovative, although the labels haven’t been wanting to adopt it until it’s late. But they innovate first. And so that’s what I’m the most excited about over the next, you know, two or three years that we invest, is continuing to invest in the infrastructure around the things that people that look like me are doing anyway. And being able to really own it, and being able to really monetize it in a way where we have economic benefits, not just you know, your coastal VCs that, you know, get to make the trillions of dollars. But now you’re seeing people in Chicago and Detroit and Indiana and wherever else, Nashville, start to see those exits and start to bring a lot of exits and other resources into the community, which means we can continue to build more things. And I think that’s going to be the game changer for us. We get to be in front of that. I will also say that I believe the best music actually comes out of the Midwest and the South and I have historical data to prove it. The South owns hip hop, we know that, we do. And the Midwest owns r&b and soul. We can name them, name them. All of the Motown Michael Jackson prints. All Midwest, Ohio players, the Isley Brothers like, so really, is music coastal? Maybe they take inspiration though from us. And I think that’s important too. 

Paul O’Brien – CEO, MediaTech Ventures

Oh, my experience with the music business? 

Kelli N. Jones – General Partner, Sixty8 Capital

Oh I can say that. Yes, I did. 

Paul O’Brien – CEO, MediaTech Ventures

You did it because it’s right. That’s why it strikes me as having so much potential for all of us here because the the arts, the media industries, the music industry went to the coast because of market size, New York and Los Angeles, they’re more people here. It’s easier to get traction when it’s not decentralized, right when you’ve got to play the venue and you’ve got to sign the label and so forth. That’s why everybody would leave here to go to LA. And what’s beautiful is coming back one of the one of the verticals that we’re pretty, pretty excited about is actually the news business because notionally the same idea New York has had a you know, a chokehold on the news business and the news industry for decades, which then forces our attention to New York’s perspective on things and so as that becomes decentralized and more people, more journalists, reporters, can get to find their own success again, they can do that in Chicago and Detroit and Columbus and St. Louis and Oklahoma City and Dallas and Fort Worth, and we’re seeing that happen, and Houston what what, let’s wrap up on this thought. What more would you all encourage we do better together collectively, as as we’re having conversations like this what are really the next steps for us all to to connect with you all to to connect this room together better to get to connect the great audience here to how they can get involved and how they can move this forward with us?

Elisa Sepulveda – EIR, MATH Venture Partners 

I think it’s finding points in collaboration. You know me, I’m a community person, like I think this is the most important thing that we do, is share deals, talk to each other about what’s going on in each other’s ecosystems connect on the things that are important to us like diversity like ESG, like, consumers caring about the brands that they’re buying from, and being able to find meaningful partnerships that are actually making a difference supporting organizations like DivInc that are upskilling the people in these communities, especially the minorities in these communities, so that they can be a part of this incredible movement. Um, you can find me on Twitter, I’m @misselisas. I talk about VC, startups, and horses. So.

Samantha Lewis – Principal, Mercury Fund

Watson is her horse’s name. 

Elisa Sepulveda – EIR, MATH Venture Partners 

Yeah, no, it’s wonderful. But yeah, you can find me there or out in your community. This has been such an honor to speak with all of these wonderful people today. Thanks, Paul.

Samantha Lewis – Principal, Mercury Fund

Yeah, thank you. This is great. It’s so nice to meet you new friends. So I think going on what Elisa is saying is there’s a piece where we don’t have the collisions in the same way, if we all lived in San Francisco, we would be having. And so how do we be really intentional about making sure we have those collisions as the funders, but also making sure that our founders are having those collisions, too? And I haven’t quite figured that out yet. I think a lot of the tools coming out with future work and hybrid and remote teams are gonna help with that, we have to figure out a way to where these collisions are happening. Right? And that they’re not happening because “oh God, I have to get on another Zoom.” And like, I love talking to you, but I hate getting on zoom all the time. So it’s like, how do I, how do we, make sure that we’re doing that in a way that’s like really fulfilling and fun for every person, and not just feeling like another Zoom meeting that we have to do? And I don’t know the answer to that. But I think it’s a really important piece to make sure that our entire ecosystem is growing together. Because together, we’re all stronger, together, we’re all bigger. And then I think the other key thing we all absolutely need to be intentional about and do is really be conscious about who we’re hiring, and make sure that we are hiring diverse teams, because we’re gonna perform better if we do so – data, promise. So you’re gonna, you’re going to perform better, but it’s also going to be better for the ecosystem in the long run. And so we have to not just think about ourselves, but we have to think about what we’re trying to build, and the ecosystem we’re trying to build, because that’s going to make the entire it’s going to be it’s going to have a very positive network effect. Also, I’m on Twitter, @sjolewis, I talk about Game of Thrones and venture.

Navin Goyal, M.D. – Cofounder, LOUD Capital

I was gonna say, everyone here seems to be really collaborative. And it seems like we do have clay here. And we’re molding it as we speak. When I think about venture capital, I think about economic development. And so it’s not just a funding source, and one slice of a whole journey of a vertical of what that means to the community. And so when you think about that, you know, you think about you think about talent, and, and ensuring there’s a lot of different people at the table. So I think there’s an opportunity for all of us to collaborate on talent, as our companies and portfolios are growing, to get great sources of talent. Number two, business development. We also, you know, all have great networks. And we’re building that by the day. And so we should be sharing in that, hey, I have a portfolio company that’s interested in looking for this, we should help knock down the doors together. And then number three, I always like to remind ourselves, including myself, about the young folks, whether you’re in middle school, high school or growing, we should take advantage of not only talking to them and understanding what they care about, but to include them. And so we’re like starting internships this summer with some of our portfolio companies. Because to me, that’s, that’s real, and there’s plenty of education out there, but experience is the gold. So I think there’s a lot of opportunity to collaborate. And to me, that’s first a mindset, which I think we all have here. For those who don’t have it. I think they’re missing out on a lot of opportunity. But great to be here. I’m not as active on Twitter. I’m still trying to figure out how that works. I think you guys are amazing at it. I’m on LinkedIn. I don’t know how that goes over here. Navin Goyal, MD on LinkedIn. I share about entrepreneurship, investing leadership and everything else.

Kelli N. Jones – General Partner, Sixty8 Capital

You guys said all the good stuff. I don’t know if I have anything else to add. I mean, yeah, collaboration I think is important. Sharing deal flow is important. I think staying connected after these moments is really important too. Whatever I can do to help just let me know, like, it’s really that simple for me. Like if y’all need anything in the audience, if anyone needs anything up here, more than happy to help where you can find me. I’m everywhere. @kellinikole. Instagram is my favorite platform. I don’t talk about venture on any of them. I mostly share tiktoks and funny gifs so if you’re in for a laugh, that’s what I’m here for, because I just don’t think I’m smart enough to talk about all that kind of stuff yet. So I just rather entertain you guys, when I’m on.

Christy Cardenas – Managing Partner, Grit Ventures

I would agree, you know, second everything. If you have a good idea, get it out there. Yeah, like open up. It’s scary, but your ideas are valid and your dreams can be real. You know, start a company, create something new, like, we need new ideas. We don’t want tomorrow to look like yesterday. And collaborate with each other and support the underdogs. Like that’s what I’m going to try to do. It’s hard, you know, but a rising tide lifts all boats, and I really – I – change breeds opportunity, who just had seismic change? You know, we’re just coming out of it. And who knows what’s gonna happen now with like World War Three, and you know, the world is crazy. So let’s take our shot, work together. And like I said, Christie Cardenas, I’m on the various…you can find me, Grit Ventures.

Paul O’Brien – CEO, MediaTech Ventures

Thank you. No better example of, I hope, we’re leading by example a little bit – the microphone doesn’t like me. We’re here in Austin, Texas, to kick this off at South by Southwest, which in and of itself is highly collaborative. Everybody here is sharing ideas and being creative and talking about technology. But we’re intentionally spending time with Midwest House, right, to show that, to prove it, that in Austin, Texas, I want to have a conversation about Chicago and Detroit and Indianapolis and, and, and Ohio, right, that there’s more potential and are working together than working separately. And I think this is hopefully good evidence to that start. And it is a start. Thank you all very, very much. It’s a start because we’re gonna produce this as Funded House. We’re going to start to take this on the road a little bit. Hopefully get it to your town, your city. We’re going to do a whole series of interviews throughout the center corridor of the country. So thank you for kick starting this with us. My name is Paul O’Brien, from MediaTech Ventures. Everybody in the room, have a good time. Thank you.

Samantha Lewis – Principal, Mercury Fund

I felt like you need to create NFTs for everyone in this room for being part of like the very first. Yes. So good. All right. Let’s do it. Let’s do it.

Paul O’Brien – CEO, MediaTech Ventures

Thanks, everybody. Have a good night.

Join us this year at SXSW at Funded House 2023! Leveraging education & fostering meaningful connections, Funded House is on a mission to help funded startup leaders navigate the difficult task of growing their business; through an integrated series of meetups, lounges, panels and parties.

We host VCs from all over the world and guide funded startups. Learn more about MediaTech Ventures at SXSW 2023 here and sign up to participate in Funded House here!

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Comments on Venture Capital in the Center Corridor of the United States; Synergies between the Midwest and Texas

  • https://mediatech.ventures/profile/andy-lee1/ Andy Lee

    Learnt from a talk of Austin Startup Week, Texas is #4 in VC deal count:
    1. California: $90.9B in 3851 deals
    2. New York: $24.1B
    3. Massachusetts: $16.4B
    4. Texas: $7.7B in 600 deals
    Source: PitchBook-NVCA Venture Monitor as of 2022 Sep 30th

    • https://mediatech.ventures/profile/seobrien/ Paul O’Brien

      Big part of my thesis in this Central Corridor narrative, besides just Texas alone, is that one can *EXPECT* that Venture Capital investors lean in where opportunity is emerging.

      That is, that at this point, one can rightly expect that Texas is higher on the list. So much in moving from 1. 2. and 3. on that list @andy-lee INTO the center of the country as Chicago, Detroit, and Texas booms, among others, that we should see that funding shifting much more substantially.

      Now though, the point in highlighting that, isn’t to complain; it’s to highlight that IF (since) it isn’t happening… what’s wrong?

      What can we fix or do better??

      * Are Central Corridor startups less compelling? If so, why?
      * Are most of the mentors / advisors misleading? Are they more so *business* advisors (which aren’t the same as startup advisors?)
      * WHY don’t regional investors and wealthy individuals see the potential? Or is it that they don’t have a clue how startups work so they won’t move capital to entrepreneurs?
      * How are the effective startup programs falling short of having a more substantial impact?

      Just suppositions. The rub I’m proposing is that the data itself is interesting but it’s really only telling. The question is why is it so?

      • https://mediatech.ventures/profile/andy-lee1/ Andy Lee

        Some data here indicates that US might get more impacts on economic change than global average. Not sure if it’s the right timing to attract more international Venture Capital to this Central Corridor.

        In comparison to 2021 Q1-Q3 / 2022 Q1-Q3:

        IPO #:
        Global: 1773 / 992, 56%
        NAMER: 420 / 116, 27.6% <=
        APAC: 816 / 608, 74.5%
        EMEA: 537 / 268, 49.9%

        Fund Raised # (USD B)
        Global: 341.7 / 146, 42.7%
        NAMER: 134.1 / 7.5, 5.6% <=
        APAC: 128.7 / 100.8, 78.3%
        EMEA: 78.9 / 37.7, 47.8%
        (Source: EY, in CN, https://infogram.com/–1hnq410mgnjjk23)

Venture Capital in the Center Corridor of the United States; Synergies between the Midwest and Texas

by Paul O'Brien time to read: 33 min
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