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How One U.S. City Became an Unexpected Hub for Tech Startups

How One U.S. City Became an Unexpected Hub for Tech Startups
Image credit: Cincinnati USA Partnership for Economic Development
Over-the-Rhine, the historic Cincinnati neighborhood where startup accelerator The Brandery is located.

To judge from media coverage, one might think of the U.S. tech industry as a bi-coastal phenomenon. But between Silicon Valley and New York City's Silicon Alley lie 3,000 miles of countryside dotted with business hubs. One of these growing centers for innovation in tech is a city that might not otherwise be on your radar: Cincinnati.

Home to the headquarters of 10 Fortune 500 companies, including Macy's and Procter & Gamble, the metropolitan area also supports a growing community of tech startups through accelerator programs, low business taxes and unemployment, and the connecting power of established companies. In Cincinnati, "these big corporate strategic companies [are] baked into the startup space," says Rich Mitchell, director of strategic growth markets for Ernst & Young. While the San Francisco Bay Area, home of Stanford University and Google, may see the lion's share of venture capital, startups there don't receive the same support from large firms that early-stage companies in Cincinnati do, Mitchell says.

Mike Bott, co-founder of The Brandery, a Cincinnati-based startup accelerator, agrees. "There's a community of entrepreneurship [here] that you wouldn't necessarily expect in a flyover city," he says.

Recognized as one of the top accelerator programs in the U.S., The Brandery puts startups through a four-month program, providing each with $20,000 in seed money and mentorship. The support continues after the program ends, with Brandery staff tapping into their networks to set up meetings and help startups turn a profit.

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Among its local success stories are ChoreMonster, a set of apps that gamify household chores for kids, and Roadtrippers, a travel-planning service. Both have raised more than $1 million in seed funding since leaving The Brandery. More than half of The Brandery's graduates have stuck around in Cincinnati after completing the program.

Another local seed-stage investor is CincyTech, which focuses on startups in IT, biosciences and advanced manufacturing. Since its founding in 2007, CincyTech has invested $14.3 million across 41 companies, and these businesses have raised an additional $161.9 million from other sources, according to the company's most recent annual report.

While larger sums of money are thrown around in San Francisco, New York, Boston and a handful of other major U.S. cities, Bott and Tammy Riddle, director of the IT cluster at the Cincinnati USA Partnership for Economic Development, say that what sets Cincinnati apart is its unusually supportive ecosystem for new companies.

Large companies play a crucial part in that system. In 2012, Duke Energy, Procter & Gamble and other established companies in the region joined forces to start Cintrifuse, an organization that connects Cincinnati startups with mentors, investors and strategic partners. Cintrifuse, which also manages a $55-million venture capital fund-of-funds, is working to build a 38,000-square-foot campus and coworking space in Over-the-Rhine, a historic Cincinnati neighborhood where The Brandery is also located.

Cincinnati continues to evolve as a hub for tech entrepreneurs. "Startups don't fit into a square box," Riddle says. "So we're developing a system that will cater to what their needs really are."

Related: Microsoft Launches New Effort to Bolster Its Startup Support

Brian Patrick Eha is a freelance journalist and former assistant editor at Entrepreneur.com. He is writing a book about the global phenomenon of Bitcoin for Portfolio, an imprint of Penguin Random House. It will be published in 2015.

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