Could tech wealth be spread to revive the Rust Belt? Some wealthy folks are willing to experiment.
Steve Case, the billionaire co-founder of America Online, is ramping up his new fund to identify and help promising startups in the industrial Midwest. Called Rise of the Rest, it began with Case’s interaction with J.D. Vance, author of “Hillbilly Elegy,” the best-seller about the decline of the region and a book often cited to help explain the rise of Trumpism.
The fund has a relatively modest $150 million, but that may only be a start. According to the New York Times, Case has assembled many of the richest people in America, including Jeff Bezos and Howard Schultz, as well as the Kochs, the Waltons, Eric Schmidt of Google parent Alphabet, and venture capitalist John Doerr.
“The fund, said Mr. Vance, was meant to construct an ecosystem like the one in Silicon Valley that will provide support and connections to entrepreneurs in small towns,” the New York Times reported. “Mr. Case and Mr. Vance hope to seed investments in start-ups in underserved cities and then bring in some of their big names to invest even more money in them. ‘We’ll be curating interesting companies,’ Mr. Case said.”
It sounds like a worthy idea, but some caution is in order.
First, not least because of the monopoly-seeking and financial plays that include many of Case’s Who’s Who list, American startups have been declining at a dramatic rate in recent decades. The merger mania that began in the 1980s also devastated the corporate and banking ecosystems of most American cities and towns, further hurting new business formation. Promising startups tend to reach adolescence only to be bought by a coastal giant.
Second, as I’ve written before, Silicon Valley is sui generis. It can’t be cloned elsewhere. All of its assets and critical mass, and the way they work together, allow it to continue prospering despite extremely high costs. Then there are other centers at the commanding heights of the tech economy — where the talent, innovations and executive decisions are made. Among them: San Francisco, Boston, New York City, Seattle, North Carolina’s Research Triangle Park and Austin. These receive the vast majority of U.S. venture capital.
Pittsburgh, for example, has top-notch universities, including world-class Carnegie Mellon. It’s a beautiful city with great urban bones. The rap on Pittsburgh has been that it can’t…