Do Midwest Ecosystems have an Identity Problem?

Here's a question every early-stage founder gets asked, usually by a mentor trying to make them uncomfortable: who exactly are you building this for? The typical answer, "this can be for everyone," is almost always wrong. Narrowing your Ideal Customer Profile, the specific type of person or company you are solving a problem for, feels counterintuitive, like you're ignoring 95% of potential customers to chase 5%. But it's one of the most important decisions a startup can make because focus creates clarity, and clarity creates momentum.

Startup ecosystems, filled with founders who preach this kind of focus from day one, ironically often don't apply that same thinking to themselves. What is this ecosystem uniquely better at than anywhere else? What's the one thing that, if you wanted to build in that space, would make this city the obvious choice? For most Midwest innovation ecosystems, there isn't a clean answer to that question, and that's a real problem.

My opinion on this is pretty straightforward: every Midwest ecosystem should have a clear calling, a specific domain where it is genuinely the best in the country, not competitive, not respectable, but the best. I think it's far better to be exceptional at one thing than to be decent at everything, and I think that's especially true here in the Midwest, where we don't have the luxury of being all things to all people. The coasts can afford to spread resources across every industry because the abundance is already there. If you're building in San Francisco or New York, you can find deep expertise, experienced operators, and relevant capital in almost any sector you choose. That infrastructure has been compounding for decades. That is simply not the reality for most Midwest cities, and pretending otherwise by trying to serve every industry equally means spreading already limited resources so thin, it’s harder for people to get what they actually need.

Midwest branding doesn't help either. If you live here, you already know it. Your city is likely associated with being boring, with remarks like "isn't it just corn???" or "I think I've driven through there…" Even as someone who genuinely loves the Midwest, I'll admit most cities here are underselling themselves badly, and the story they're telling doesn't come close to matching the reality on the ground. That gap between expectation and reality is a branding failure. There's real substance across the Midwest. What's missing is the story, and more specifically, the focus that makes the story worth telling.

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Why Identity Matters Beyond Tourism

It's easy to look at ecosystem identity as a tourism play, and yes, tourism matters. But the stakes are much higher than hotel bookings and convention revenue. This is fundamentally about attracting and retaining talent, pooling resources toward a concentrated area of strength, and building the kind of cultural gravity that compounds over time.

My home state of Indiana is actually a great example of the talent problem in action. The state does a remarkable job attracting students, with world-class universities drawing talented people from all over the country and indeed the world. But those students don't arrive expecting to stay. They come for the education and leave for somewhere that has a story, somewhere with an identity that matches what they want to build. The pipeline is full and the drain is leaking, and a friendlier business environment and lower cost of living aren't enough to close it on their own.

What's missing is a compelling reason to plant roots here, a clear answer to the question of why this city should be the place where they build their career and their company. Indiana can offer a friendly business environment and a lower cost of living, but I don’t think that’s enough. At least, it doesn’t seem to have been enough until this point. A founder building in a focused Midwest ecosystem gets to tap into a concentrated pool of relevant mentors, investors who understand their industry, and a community of peers facing the same problems. A founder building in a Midwest city that's trying to serve every industry equally gets a little bit of everything and not enough of anything.

The best talent, given a choice, will go where they can find the deepest support for what they're actually building. Every year we produce talented graduates and watch them leave for cities that have done the work of building a specific, magnetic identity. That's not a pipeline problem, it’s an identity one. And identity is what turns a place people are from into a place people choose.

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Case Study: Nashville

Nashville is the clearest example of an ecosystem that made a deliberate identity decision and followed through on it. It wasn't always obvious. Before the commitment, Nashville was a mid-sized Southern city competing for relevance without a clear lane of its own.

In the early 2000s, the city made a conscious decision to stop hedging and fully own what it already did better than anyone else. The results speak for themselves. According to the Nashville Chamber, the music and entertainment industry now supports more than 56,000 jobs and adds $9.9 billion directly to local GDP. Those numbers represent nearly double the industry's footprint from when the city first made that identity commitment.

Nashville still has a diverse economy, strong universities, and a booming healthcare sector. But it has an identity that precedes all of that. When someone wants to build something in music, the answer of where to go is obvious before they even start asking around. That kind of clarity is worth more than any incentive package a state economic development office can put together.

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Case Study: Detroit

Detroit tells a different kind of story, one that I got to see up close this past Friday. Pulling up to the Michigan Central district, the first thing I noticed was what's been built into the road out front: America's first public wireless EV-charging road, developed using technology from a Newlab member company. That detail tells you everything about how Detroit operates. The innovation isn't in a lab waiting to be commercialized. It's already in the ground beneath your tires.

Newlab itself, housed in the historic Book Depository building adjacent to Michigan Central Station, made the mobility identity impossible to miss. Four stories of active work in drones, electric bicycles, motorcycles, robotics, and prototyping labs, all centered on the future of how things and people move. Over 100 member startups have chosen to base their work here, coming from across the country and around the world specifically because Detroit is where this work belongs.

What makes Detroit's story so powerful is how deep the roots go. This isn't branding applied from the outside; it's cultural in the deepest sense. Detroit was built on the automotive industry in a way that filtered all the way down to the individual family level, where you were a Ford family, a Chrysler family, or a GM family, and your household identity was tied to the car in your driveway. That kind of ecosystem identity, one that originates at the highest level of innovation and reaches all the way down to everyday civilian life, is extraordinarily rare.

Detroit lost its boom and went through a genuinely difficult stretch, but rather than trying to reinvent itself as something new, it has now doubled down on what it always was. The result is a city that feels focused in a way that's hard to manufacture, and that focus is now attracting exactly the kind of talent and investment that mobility innovation demands.

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Indiana's Opportunity

As the Ecosystem Navigator for central Indiana, which yes, is actually my job title, I've had a front-row seat to what Indianapolis is building, and Indianapolis is actually a useful example of what leaning into an identity can start to look like in practice.

Indiana is already investing heavily in life sciences and has a strong backbone of manufacturing that isn't going anywhere. Those industries are important, they're embedded in the state's DNA, and they'll be a core part of the economy regardless of what identity the ecosystem builds around. The point isn't to abandon everything else. It's to choose something to be the absolute best at and then build around it with real intention.

Indianapolis has pointed toward sports, and I believe that instinct is right. But the city can push that identity significantly further, particularly around sports innovation, because what Indianapolis has that most cities don't is a concentration of resources that goes well beyond loving your home team. The NCAA headquarters is here. The NFL Combine is here. The Indy 500 draws a global audience every May. The amateur sports infrastructure is among the best in the world. Major executives, governing bodies, premier facilities, and marquee events are all operating in the same city. For a founder building in sports technology, athlete performance, fan experience, or sports data, the raw ingredients are here in a way that no other city can match. The work now is turning those ingredients into something founders can actually access and build on.

The missing piece is making that access deliberate. The NCAA, the professional teams, the event infrastructure, and the amateur sports ecosystem need to be actively and easily accessible to the startups trying to build the future of the industry. When founders know they can walk through those doors, Indianapolis stops being a city that loves sports and becomes the city where sports innovation happens.

Organizations like Sports Tech HQ are already working toward exactly that, with a direct focus on turning Indianapolis into a global hub for sports technology. That's one powerful player pointed in the right direction. The opportunity now is for the broader ecosystem to rally around that direction, layer more resources on top of it, and build with the same commitment that Nashville made to music two decades ago.

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Why it matters

Ecosystems don't have to choose between having a diverse industry mix and having a clear identity. The best ones have both. Nashville has its music identity and a thriving healthcare sector. Detroit has its mobility identity and a growing technology scene. Having a focus doesn't close the door on other industries; it creates a center of gravity that makes everything else easier to build around.

But for the Midwest specifically, identity isn't just a nice-to-have. It's a strategic necessity. We are not the coasts. We don't have the decades of compounding capital, the deep bench of serial operators across every sector, or the sheer density of resources that makes San Francisco and New York able to support almost anything.

What we do have is plenty of top talent, an abundance of  work ethic, and in many cases infrastructure that is already quietly world-class in specific areas. The move is to stop worrying about not being everything and start doubling down on the things we're actually best at. Pick a lane, resource it properly, build the connective tissue that makes your city a no-brainer for the right founders, and create something that nobody else can touch. That's the same lesson we teach founders from day one, and it's past time for ecosystems to take it seriously too.

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‍Sebastian Penix is the Entrepreneur Ecosystem Navigator for the Central Indiana SBDC, based at Butler University’s Lacy School of Business. He is also the founder of Heartland Valley, a platform spotlighting startups and innovation across the Midwest. His work focuses on building connection, visibility, and momentum within the region’s entrepreneurial ecosystem.