The midwestern United States provides many advantages and opportunities for investors. With lower costs of living and doing business compared to the coasts, growing tech hubs and startup scenes, and strong support for small businesses, the Midwest offers a thriving environment for investment. Key factors drawing investors include affordable real estate, tax incentives, highly-educated workforces, and industries like manufacturing, healthcare, and agriculture. By investing in the Midwest, one can find promising companies and assets at attractive valuations. However, the region’s slower pace of growth means identifying the right sectors and timing is key.
Lower costs benefit investors in the midwest
The Midwest provides a low cost of living and doing business compared to the coasts. Real estate prices are around 20-50% lower than cities like San Francisco and New York. Office rents and other overhead costs for businesses are also much more affordable. This gives investors and companies higher returns on capital invested. For startups and expanding businesses, lower costs allow them to stretch venture capital and invest more in growth vs just paying higher rents.
Growing tech and startup scenes
Major Midwest metros like Chicago, Detroit, Columbus, Indianapolis, Kansas City, and Minneapolis are developing strong tech startup ecosystems. Incubators, accelerators, co-working spaces, and venture capital are expanding. Universities in the region also provide solid talent pipelines. While not yet on the level of Silicon Valley, these emerging scenes provide big opportunities for investors to get in early.
Support for small business
State and local governments in the Midwest provide strong incentives and support for small businesses. Special tax credits, training programs, and initiatives to boost entrepreneurship make it attractive for startups. The lower costs allow small companies to bootstrap further before needing as much external capital. For investors, this means more mature investment prospects.
Key industries to target
Manufacturing, healthcare, and agriculture are major industries across the Midwest. Manufacturing productivity has risen substantially, healthcare systems continue rapid expansion, and farming technologies are advancing. Investing in these sectors and related technology vendors yields options not as readily available on the coasts. Finding the right niches and innovative companies can provide outsized returns.
The Midwest provides a compelling region for many types of investors to find opportunities. With a lower cost of living and doing business, growing tech and startup communities in major metros, and support for small businesses, the Midwest allows investors to get better risk-adjusted returns. Though not growing as fast as the coasts, drilling down into specific cities and industries can uncover ‘diamonds in the rough’.