How Startups Are Thriving Smaller Cities

To attract the best investors and employees, startup founders once had to move to the coasts. But now they’re turning around and going back home. Are smaller cities becoming the place to grow big?

- Maggie Ginsberg

Nobody really wanted to fund us,” recalls Alex Kubicek, a soft-spoken Midwesterner with a shrewd scientific mind.

He’s thinking back to 2013. He was 25 and had already banked dual degrees in physics and electrical engineering from the University of Wisconsin–Whitewater, as well as a master’s in atmospheric science from top-tier UW–Madison. Then he’d created a hyperlocal weather observation company called Understory and landed it in the first-ever cohort of an accelerator in his hometown of Madison, which in turn sent him off on nearly a year’s worth of pitching to Wisconsin-based investors. But nobody put in money.

Was his company the problem…or was it the stock of local investors? He decided it was the latter, and moved to Boston—where his fortunes changed. A local hardware venture firm called Bolt invested first. San Francisco’s True Ventures went on to lead a $1.9 million seed round. Understory was on its way.

But back home in Wisconsin, something was changing. That Madison-based accelerator, Gener8tor, helped launch another 42 startups in the region while Kubicek was gone. After a ton of work by a group of local entrepreneurs called StartingBlock Madison, American Family Insurance helped open a $55 million, nine-story building, with space set aside for entrepreneurial groups. Other venture capitalists started popping up around town, including Greg Robinson, a Bay Area investor who launched a Madison-based firm called 4490 Ventures. Then Robinson got the idea to lure one of Madison’s homegrown startups back to town.