m25 group

Guest Post | A Q&A about M25 Group’s startup rankings

Following a deluge of interest on a pair of studies on startup cities in the Midwest this week, we decided to reach out to one of the study operators to talk a little bit more about their meaning, StartupCincy’s position and all the things in between. (For those unfamiliar, Cincinnati ranked fifth in both reports.)

Read more: What’s in the numbers behind Cincy’s startup rankings?

M25, a Chicago venture capital firm, put together the “Best of the Midwest” report — a ranking of fifty Midwest cities based on startup activity, access to resources and the metro area’s economics and demographics.

At the helm of M25 is Victor Gutwein, Managing Director and Board Member. Victor is no stranger to Cincinnati — an investor in local startups such as Cladwell and Astronomer — so he was more than happy to share his thoughts on the study, StartupCincy and more. Here’s our Q&A.

Question: What are some of the first implications of a high ranking for a city in this study? Does this jump to outside VC interest?

Victor Gutwein: A high ranking, meaning that this city is a particularly strong place for startups to start and grow, should do a lot of things. First, investors have a limited amount of time to spend traveling and sourcing dealflow from cities – particularly those far away from their home cities (often on the coast). So an investor could use this to prioritize where they spend their time.

Q: What about entrepreneurs? Does this promote an area as a landing pad for those on the outside looking in?

Victor: I think a startup that has options on where to grow might use these rankings to think strategically on where they should base their HQ, or where they will be the best situated to scale and expand. That being said, this should only be a single factor in that determination, as other important considerations (a founder’s networks and specific resources of a locality) should play heavily.

Q: What other implications are we missing?

Victor: A big implication, not to be missed, are which cities are actually doing well compared to their peers, and which cities are experiencing some tech economy growth from a rising tide (but not particularly spectacularly independently). This could be seen as an independent validation (or discreditation) to community champions, government development agencies and others when they tout their city as being a “tech hub.”

Q: Given M25’s knowledge of Cincinnati, what anecdotal or qualitative background can you add to Cincinnati’s ranking at No. 5?

Victor: Cincinnati has a lot going for it, and edges out the other C-cities in Ohio, which it very well might rightfully deserve. We noticed Cincinnati scored particularly well with relatively high VC activity, a strong accelerator presence, and a high startup density.

Anecdotally, I’ve seen a large amount of community support – with Cintrifuse / #StartupCincy, huge turnouts at startup events, engaged Fortune 500s, great accelerator demo days and a connected founder population, as well as a great urban area (OTR) to foster a younger, techie environment.

Q: So what are we missing?

Victor: That being said, Cincy doesn’t have as strong of a base for intellectual property nor exceptional research universities, which didn’t help compared to their broader peers.

Q: What’s the biggest challenge or “thing we need?”

Victor: The lack of a huge startup exit and a core research university are likely the two biggest weaknesses.

Q: Is there anything else you’d like to share about Cincinnati, Ohio or the study in general?

Victor: Cincinnati seems to be on fire right now, and appears to be punching above it’s weight class. When I’m talking to larger, coastal VCs about the Midwest, they seem to have heard about Cincy’s tech ecosystem and are interested in the deals we’re seeing and investing in. There’s still room for growth, and we all have fingers crossed for a huge unicorn exit for the community in the near future!

To see the full M25 Group study, click here. To hear more about the decisioning and process behind the report, check out M25 Group’s Medium post.

Read more: Chicago venture capitalist gives his take on Cincinnati’s startup scene

Read more: Top 8 VC investors in the basketball-mad Great Lakes region

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