US Reps Bring West Coast VCs To Detroit To Meet New Investment Opportunities

Congressman Tim Ryan (D-Ohio) said there’s no perceivable disconnect between what investors want and what the midwest offers.

“I’m listening to what the venture capitalists say and what the entrepreneurs say, and they’re all kind of talking the same lingo,” Ryan told Benzinga. “I think they’re seeing the talent, the sophistication, and they hear people talking like they talk and think ‘OK, we’re talking the same language here. We get the same ideas of how we’re going to do this.’”

The parties just need introduction.

To Ryan, facilitating those connections and building relationships is step one in stimulating heartland economies.

“The main issue is that the entrepreneurs need the capital,” he said. “They need the investment, and the investors are always looking for places to invest their money, but we’re all guilty of just not leaving our comfort zone, and they don’t know anyone in Detroit or Youngstown.”

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A Non-Political Solution

To bridge the gap, the congressman partnered with Rep. Ro Khanna (D-California) to lead a delegation of venture capitalists on a three-day tour of Michigan, Ohio and Indiana cities.

“It’s not just the government that has to spend money,” Ryan said. “There’s a role for that, and I’m supportive of that, but at the end of the day you need private sector investment to hire people into the private sector and pay them a good wage so that they can have a good living. That’s what this is all about.”

The Comeback Cities Venture Capital Tour gathers coastal-based VCs like Founders Fund and Softbank — backers of SpaceX, Airbnb, Uber, Spotify and Facebook Inc FB — with startups like Autobooks and StockX to discuss existing opportunities and the factors sought after in potential investments.

It also provides a platform to make the pitch.

“We have the ability to do our research and development of our product line a little bit longer because we’re not so pressed to hit the market, because your margins are so low in other areas that are more expensive to live in,” Ivy Simmons, vice president of membership services and outreach at the National Business League, said. “You can hire people at a lower level because the cost of living is lower here, so you can get X more talent at a liveable wage so you can create your business opportunity.”

Simmons came away from the event with a better understanding of how to pitch the Detroit story, position community members to be seen, and leverage midwest connections.

The Inland Opportunity

Three cities into the tour, Ryan has found a recurring interest and synergy in the topics of autonomous vehicles, drones and next-generation tech manufacturing.

While the Detroit stop was meant to highlight technology opportunity, the VC interest extends beyond machinery to other industries prevalent in the region.

“The conversations I’ve had on the bus with some of the people, they’re getting into food, they’re getting into agriculture, so they’re into a wide variety of things,” Ryan said. “...There’s all these different opportunities that are here. It’s about breaking down that wall and having those conversations.”

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A Place For Policy

Connecting capital was the primary focus of the trip, but Ryan also left with clarity on the role government can play at both the local and national levels. He looked to Pittsburgh as the model — winning Uber’s business with ordinances friendly to on-road AV testing.

“That didn’t even cross my mind,” Ryan said. “They need local ordinances that allow them to do research, and if they can do research, they’ll send teams of engineers to your town, making lots of money, paying taxes to develop this product, and then your town looks like what they call a frontier city because you’re allowing these companies to do these kinds of things and managing the safety in the process.”

Recovery and progress doesn’t all fall on the little guys, though. The federal government can help improve the climate.

“We need a complete revamp of the Department of Commerce,” he said. “The Department of Commerce might as well be in the Stone Age.”

He said the pace of innovation and the need of innovators require greater DOC involvement, particularly in the form of facilitating introductions and streamlining processes to get businesses off the ground.

“They spend a lot of time and resources trying to develop relationships with foreign countries,” Ryan said. “How about Detroit and Youngstown and Akron and Toledo and Gary, Indiana? How about building relationships with these communities and getting these venture funds? Don’t put these people on a plane and send them to Europe or Asia. You can do that, too, and that’s important.

"We’re not diminishing that, but bring them to Detroit. Then the incentives build in and the small business investment programs and the early-stage capital.”