Comeback Cities Venture Capitalist Tour Kicks Off in Youngstown
YOUNGSTOWN, Ohio – Venture capitalist Patrick McKenna knows how fortunate he is to have been successful in his career. But he also knows that not everyone in America has been afforded the same tools and opportunities as he has.
That disparity is creating a cultural divide that in turn is driving a political divide. It’s one of the reasons the founding partner of High Ridge Venture Partners said he is working with U.S. Rep. Tim Ryan to help nurture the economy beyond the Silicon Valley.
“If the system isn’t working for everybody, it’s not going to work for anybody,” McKenna said.
McKenna was among the participants in the Comeback Cities Venture Capitalist Tour led by Ryan, D-13 Ohio, and U.S. Rep. Ro Khanna, D-17 Calif.
The goal of the tour is to introduce venture capitalists who primarily operate on the East and West Coasts to opportunities in America’s heartland. It kicked off with visits yesterday to the Youngstown Business Incubator and America Makes before heading to the Butler Institute of American Art for a brief tour and lunch, and then on to Akron.
“This is not some act of ‘come here and give a handout,’ ” Khanna said. “The strategic interests of these companies would be better served if they expand their imagination and look at where a lot of the talent is.”
Khanna represents the Silicon Valley “but he understands what’s happening there needs to happen in other places across the country,” Ryan, D-13 Ohio, said.
Khanna pointed to a couple of reasons for companies in his congressional district to look elsewhere for opportunities to expand.
Youngstown Mayor Jamael Tito Brown, Warren Mayor Doug Franklin, U.S. Rep. Ro Khanna, U.S. Rep. Tim Ryan, and Mike Morley at the YBI discussion.
“The cost of living in my district is going up and the salaries are astronomical, so it makes economic sense for us to be looking at other parts of the country,” Khanna said. “Here, people are hungry. They have the talent and they want the opportunities.”
The Comeback Cities Capital Tour, which also takes the delegation to Detroit, Flint, Mich., and South Bend, Ind., is being paid for by the venture capitalists and the two congressmen’s offices.
“We’ve got to be in partnership with other communities that are like us if we’re really going to get the attention of venture capitalists and Silicon Valley,” Ryan said. “They’re not just going to come to Youngstown. They’re going to want to come to the Midwest. So we’ve got to highlight all of these cities.”
About a year ago, Ryan hosted another group of venture capitalists in Youngstown. That group also included McKenna, who helped connect Ryan and YBI leaders with Ai-Media, the Australian company that subsequently established operations here.
“The way I can contribute to addressing the political divide and the cultural divide in the country is to do what I do best, which is actually work on the economic issues,” McKenna said. “The more that I can bring the know-how, the capital and the knowledge networks that I’ve built in Silicon Valley and in New York to places like Youngstown, this is the way that I can make my biggest philanthropic contribution to the country.”
During roundtable discussions at YBI and America Makes, community and business leaders discussed how the Mahoning Valley has worked to reinvent itself.
“Manufacturing was part of our DNA as a community, but we’ve taken on the challenge of reinventing ourselves and changing our DNA. We’ve learned from our mistakes,” Warren Mayor Doug Franklin said.
Entrepreneurship tends to be lower in regions dominated by a single, large employer, as individuals tend to go to work for others rather than be encouraged to think about starting their own companies or “building that better mousetrap,” said Barb Ewing, CEO of the YBI.
Among the challenges local startups face is funding, particularly at the pre-revenue stage, Ewing said.
“We know we don’t have enough venture capital in this community. It’s a struggle that we face,” she said. “If we’re going to be successful, we have to address that gap in funding.”
America Makes Executive Director Rob Gorham address venture capitalists.
Two years ago, YBI began working with community partners to form Valley Growth Ventures, a micro-seed fund to grow existing companies faster and attract deals to the region. YBI also is working with partners including America Makes, Youngstown State University to become “the Silicon Valley of additive manufacturing” and build a successful additive manufacturing cluster in the region.
In response to a question about where a company or potential investor to go to find out about local sites, Ryan said the Youngstown/Warren Regional Chamber could formulate a response with various local resources, incentives and potential sites within 24 hours.
Members of the delegation were surprised by the technological advancements and sophistication in this community, Ryan said at the news conference.
The next step is to get venture capitalists to bring both their money and their expertise to communities like the Mahoning Valley “so that they can help elevate the game of the companies in our community,” he said.
Fund managers participating in the tour were already discussing connecting companies at America Makes to funds that are more directly involved with additive manufacturing, he said.
“What I’m seeing here is extremely exciting,” said Lan Xuezhao, founding partner of Basis Set Ventures, a San Francisco-based fund that invests in work productivity improvement companies. She said she is looking forward to staying in touch and looking at opportunities to potentially make investments here.
Stephanie Palmeri, a partner at Uncork Capital in Palo Alto, Calif., said she was intrigued by what she saw in Youngstown yesterday.
“The additive manufacturing piece is really interesting to us. We certainly invest in quite a bit of hardware. So the opportunity to look at companies and places where there’s talent that potentially do manufacturing here in the United States is very interesting to me,” Palmeri said.
Uncork provides early stage capital to business-to-business, business-to-consumer and computer hardware companies.
“What’s interesting as you look at the community here is you do have a fairly robust angel community, and companies are looking for capital to take it to the next stage,” Palmeri continued. “What’s interesting for me as a Silicon Valley-based investor is also looking at opportunities for companies that I can partner with in the Valley to think about where they can open second offices to support expansion.”
Ryan, more than anyone else in Congress, has been focused on the jobs of the future and how to bring them to places like Youngstown, Khanna said.
“You see here the melding of cybertechnology and the traditional manufacturing so we’re going to compete in the 21st century,” he continued. “Having people from Silicon Valley come here is not just about creating jobs in Youngstown. It’s about America’s competitive advantage.”
Copyright 2023 The Business Journal, Youngstown, Ohio.