Midwest funding for Q4 2025

Midwest startup funding fell in Q4 in a way that looks ‘normal’ at first glance. Zoom out just a little, however, and the region seems to be taking the bad from national and international trends and accelerating it.

Businesses across Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin, raised $1.033B in Q4 2025. That’s down 14.7% from Q3, which is almost the same quarter-over-quarter (QonQ) drop as the U.S. total (down 14.9%). But compared to Q4 2024, our total is down 44.0%, whereas the national number set ‘non-pandemic’ records, being up 7.6%.

That split matters because it points to a familiar pattern that we’re starting to recognise over time on our site: when the national market cools from one quarter to the next, the Midwest cools in lock step. When the national market accelerates, the Midwest often lags: failing to see the benefit in the same time period.

The table below shows how uneven this quarter is inside the region.

‍

‍

Minnesota alone raised $465m, which was about 45% of the six-state Q4 total. Conversely, Michigan posted $32.7m in Q4, down 76.8% from Q3 and down 95.4% from the same quarter last year.

We wouldn't categorize that as a gentle decline. 

More rounds, fewer dollars

Two things can be true at once here.

First: a Q4 pullback is not a Midwest-only phenomenon. California dropped more sharply QonQ than the Midwest did. New York fell QoQ too. The national number moved down in the same direction.

Second: year-over-year, the national story is not down at all. The U.S. total is up, New York is up sharply, and Massachusetts is up. But the Midwest is down. Hard.

In other words, the national recovery, such as it is, is not arriving evenly across the map. Yet.

‍

‍

Other things are also occurring. If you only look at dollars for example, you’ll miss an important signal: deal activity.

The Midwest posted 123 funding rounds in Q4, that’s up from 117 in Q3 (a +5.1% increase). But compared to Q4 2024, the region’s round count is down from 142 (a -13.4% decline).

These numbers on their own do not really tell a story though. As we’ve detailed elsewhere, the number of rounds becomes a more visible signal over the course of a year, where we can see less activity but higher dollar values per investment. 

What this says about the market

Let’s start with the blunt part up front: we are a region where outliers hold sway. One deal changes a quarter, which changes a year. Likewise in this cluster of states which have no reason to be viewed as a cluster other than it gives us personally a reason to exist and keep writing about this stuff so we say it matters goddammit… where were we? Oh… Q4 looks like a quarter where the Midwest’s outcome depended heavily on one state showing up.

Without Minnesota, the Midwest’s six-state total would have been about $568m in Q4. Concentration isn’t automatically bad. It’s just revealing. When a region’s quarter can be carried by one state, it’s a sign that the market continues to be thin enough for the outliers to shape the headline. And that’s not actually a good thing.

Michigan sits on the other side of that pattern. It is the largest negative swing in the table, both QoQ and YoY. Michigan’s Q4 figure is so low relative to Q4 2024 that it drags the regional YoY down almost by itself. If Michigan had matched even a modest fraction of its Q4 2024 number, the Midwest’s YoY decline would still be negative, but it wouldn’t look more like a standard deviation. Literally.

Ohio and Illinois were the other big drags in Q4. Ohio fell nearly 50% QoQ and 37% YoY. Illinois fell 29% QoQ and nearly 20% YoY. Indiana is up QoQ but still down YoY. Wisconsin is flat QoQ, but down sharply YoY.

So yes: the Midwest’s Q4 total fell about as much as the U.S. total from Q3 to Q4. But it did so with a different internal structure: a few states falling steeply, one state rising sharply, and the overall deal volume ticking up while dollars fell.

That structure matters because it points to what kind of quarter this was. It was not a quarter where everything slowed down. It was one best described as ‘checks got smaller and results were lumpy’.

How this matches the macro situation.

Earlier this month, we argued that 2025 was “historic”: the region remains undercapitalized relative to its economic weight, and the funding gap versus the top coastal markets widened sharply.

That article makes two specific points that cleanly connect to the Q4 numbers.

One: the California comparison is not just large; it has become extreme. We pointed out that in 2025 California raised 22× the funding of the six Midwest states we cover, adding that “since 2010, that multiple has never been so high. In 2024 it was x13 and in the previous fourteen years prior to 2024 it averaged x7.5.”

Q4 doesn’t ‘prove’ that annual multiple by itself. But it does rhyme with it. In Q4 alone, California raised $41B, while the six-state Midwest raised $1.033B - roughly a 40× difference for the quarter. 

Two: our story flagged the number of rounds as a problem, saying rounds hit historic lows “almost across the board,” and calling out Illinois as a particularly stark example in 2025.

The Q4 round data doesn’t contradict that framing, although the Midwest is up slightly in rounds QoQ it is still down YoY. And the implied average dollars per round are down both QoQ and YoY. If the region’s issue were simply “we had a bad quarter,” you would expect a cleaner bounce in either dollars or deal count. Instead, Q4 looks like a continuation of a thinner market, with activity happening but at smaller sizes, and with outcomes shaped by a few big swings.

Our story also argued that ‘density’ matters: large hubs have a critical mass of investors, operators, and repeat patterns that are hard to replicate in smaller ecosystems.

Q4’s state-by-state volatility fits that. When density is low, a region’s totals tend to be more sensitive to a handful of deals (or the absence of them). In a denser market, you still get volatility. You just get it around a much larger base.

None of this tells founders what to do. It is merely to inform readers of what the market did.

And in Q4, the market did three things at once: it cooled in line with the national quarter-over-quarter pullback, it diverged sharply from the national year-over-year recovery, and it produced a headline carried by one state while another fell off a cliff.

2026 is gonna be interesting y’all.

‍