As MIT’s accelerator closes a $200m fund targeting ‘tough tech,’ insiders try to lure start-ups and capital away from California.
New Yorkers may not always be aware of it, but nearly nine in 10 lettuce leaves they eat come from California. And it’s not just salad. The Golden State remains US leader as the largest producer of agricultural products, accounting for 11 percent of the total.
This, combined with Silicon Valley’s pre-eminence, means California continues to attract the lion’s share of early-stage capital raised by agrifood start-ups. At $1.2 billion, the state saw nearly 10 times more money invested in the sector in the first quarter of this year than Texas, its closest challenger.
But not everybody adheres to the status quo. “While the Valley boasts more than 300 venture capitalists […] the Midwest tech scene is using their strengths to become the ‘Silicon Heartland’,” Michael Helmstetter, founder of Kansas-based TechAccel, told Agri Investor.
He argued that the Midwest has “ready pools of talent” as graduates, lured by the region’s growing entrepreneurial ecosystem, come to the area. “It attracts younger talent that oftentimes cannot afford to buy or rent in one of the major tech hubs.”
While setting up shop away from the coasts may sound adventurous, others argue the real inventions are being prepared closer to the Atlantic.
This week The Engine, the start-up accelerator of the Massachusetts Institute of Technology, said it had raised an updated total of $200 million for a fund dedicated to “tough tech,” three months after announcing it had closed the vehicle on $150 million.
Launched in 2017 and backed by MIT through a $25 million pledge, the Engine Accelerator Fund I is the organization’s first investment vehicle. Its other LPs include family offices and other institutions “aligned with the fund’s mission,” according to The Engine.
The vehicle is generalist but agtech features prominently in its initial focus. The first seven companies backed by EAF, unveiled this week, include Analytical Space, which provides high-speed data from space to facilitate tasks such as precision ag, and C2Sense, which builds digital olfactory sensors for use in food and agriculture.
“Today’s group of start-ups have massive ambitions and are working on transformative innovations poised to solve some of the world’s most complex challenges,” said Katie Rae, The Engine’s chief executive and managing partner. “The Engine aims to transform the status quo venture ecosystem and to make Boston the heart of tough tech innovations.”
Back in the Midwest, Helmstetter highlights the “successful programs” put in place with investor funding to support the local entrepreneurial ecosystem, such as the KCRise Fund, a sidecar vehicle investing alongside venture capital. But he also suggests other factors are at play.
“If you know a Midwesterner, then you know they are known for a just-the-facts approach to business. The typical Midwestern work ethic serves as a backbone for polite networking and a willingness to roll up their sleeves and get the hard work done.”