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Congressman Ryan leads venture capitalists on Rust Belt tour
By Justin Wier
YOUNGSTOWN
U.S. Reps. Tim Ryan and Ro Khanna hope their five-city bus tour will help build relationships with the Silicon Valley and spur growth in the nascent tech sector emerging from the rust of the post-industrial Midwest.
The congressmen kicked off their “Comeback Cities” tour Wednesday in Youngstown, arriving at the Youngstown Business Incubator with 15 venture capitalists in tow, primarily from Silicon Valley, the heart of which Khanna represents.
Ryan of Howland, D-13th, said the tour – which left Youngstown for Akron on Wednesday with stops planned in Detroit, Flint, Mich., and South Bend, Ind. – is an attempt to diversify the economy beyond main-line manufacturing.
“These cities are about the future,” Ryan said. “They’re about everything that’s going on with tech and automation.”
The trip follows one a year ago when Ryan brought a smaller group of venture capitalists to the area including Patrick McKenna, founder of High Ridge Venture Partners, who came on this year’s trip.
“We’re here on a second trip building this relationship much like you would build an actual company,” McKenna said.
On Wednesday, the investors participated in a roundtable with local businessmen at YBI before receiving a primer on the advances made in additive manufacturing at America Makes.
Barb Ewing, CEO of YBI, told the group the area lacks the venture capital necessary to invest in its ideas.
“It’s a struggle we face with every company we try to grow,” Ewing said. “We have to address this gap in funding. We can’t be successful if we don’t.”
Ray Leach, CEO of Cleveland’s JumpStart Inc., said the struggle arises when companies develop a concept but need $8 million to $10 million to move it to the next stage.
At America Makes, local businessmen positioned Youngstown as a hub attempting to connect its industrial past with the technological advances occurring on the West Coast.
“We need the cyber horsepower of Silicon Valley to bond with our inherent [manufacturing] DNA,” said Mike Garvey, CEO of M7 Technologies.
J.D. Vance, who documented the decline of Appalachia in the bestselling memoir “Hillbilly Elegy,” joined the group.
Vance, who left his hometown of Middletown and worked at a venture capital firm owned by Peter Thiel of PayPal fame, recently returned to Columbus to focus on investment in areas overlooked by Silicon Valley.
He said the tour serves as a first step in restoring economic dynamism to areas like Middletown and Youngstown.
“It’s going to be a long row to hoe,” Vance said, “But it’s an important start.”
Xuezhao Lan, whose Basis Set Ventures focuses on improving productivity through artificial intelligence, said the developments in Youngstown are very exciting.
He said it’s important to continue to build relationships
Khanna emphasized that the potential investors aren’t driven by a sense of charity. Silicon Valley firms could realize benefits from investing in the Midwest as well.
“Cost of living in my district is going up, salaries are exorbitant,” Khanna said. “It makes sense to look elsewhere in the country.”
A local businessman estimated companies could employ programmers in Youngstown for about half what it costs in the Bay Area.
Mike Hripko, vice president of research at Youngstown State University, said the concentration of colleges and universities within an hour of the city creates a large pool of potential talent for companies to draw on.
Looking forward to the rest of the tour, Ryan said it’s important for cities in the Midwest to band together. Youngstown may not attract investment on its own. “We’ve got to be in partnership with other communities,” Ryan said. “We’ve gotta start thinking a little bit bigger.”