Midwest Startup City Rankings 2025: Winners, Gaps, Reality Checks.

M25’s annual ‘Best of the Midwest’ rankings were published a few weeks ago, and while there weren’t many surprises, we figured that enough time had passed to take a deeper dive and see what this - alongside complementary data from other sources - can tell us about the states we cover: Illinois, Minnesota, Indiana, Michigan, Ohio, and Wisconsin. 

In short, there’s good news. At least one city in every state sits at the top of the pile, indicating the diversity of opportunity available across the region: Chicago, Minneapolis, Indianapolis and Ann Arbor all make the top five, with Columbus in 6th.

None of these are surprising - these are the Midwest’s legacy hubs for capital, talent, and density. 

Scratch the surface, however, and the data tells a more complex story. 

Top 5 Rankings (M25 Overall)

Chicago, IL – #1 overall, by a mile. Scores top marks in startup environment, momentum, exits, and connectivity. Where it slips is cost; labor and living expenses both rank in the 60s out of the 64 cities in the data.

Minneapolis, MN – #2 overall and leading the second group of cities which are clustered tightly together, with strong exits (#3) and a top-tier startup environment especially in health. Connectivity is excellent (#2 in airports), and it has maintained its second position throughout the history of these rankings, just like Chicago. But also similar to the Windy City, high costs are an issue.

Indianapolis, IN – #3 overall and could be considered the greatest beneficiary of this annual list. Started in 8th position in the first edition in 2017 and has continually risen over the years - never taking a backward step -mto sit firmly in 3rd in 2022. Balanced sub-rankings across funding (#2), exits (#2), and business climate (#4).

Ann Arbor, MI – #5 overall and #1 in startup density. Research muscle from the University of Michigan props up the ecosystem, but government programs and tax climate rankings are middling at best.

The total score is based on comprehensive and detailed data collection across 25 different metrics. While this delivers a comprehensive analysis of each city’s benefits and drawbacks, it also means that while 10% separates 2nd ranked Minneapolis from 5th placed Ann Arbor in total score, the difference between Chicago in 1st and Minneapolis in 2nd is a whopping 36% in that metric. 

Meanwhile, if you’re looking at our list of cities we shared above and saying to yourself “I know how to count and there is no 4th in that list above”... you’d be right. That would be Pittsburgh. 

But that’s a discussion for another day. 🙂

Beyond the Top 5: State-by-State Deep Dive

If we stopped at the top rankings, we’d miss some of the more interesting subplots playing out across the Midwest.

Wisconsin: Madison comes in at #9, leveraging its university research strength and deep bench of STEM graduates. Milwaukee trails, but according to the insiders we talk to, innovation in hard tech - including the state’s manufacturing backbone - should continue to shape its funding and economic outcomes. Think nuclear tech (Shine Technologies’ for example) more than flashy consumer apps.

Ohio: Columbus may be #6 overall, but Cincinnati ranks higher in momentum (#5 vs. Columbus’s #16). That might be a warning shot: momentum can predict where the next wave of capital will flow. That said, both Cleveland and Cincinnati have fluctuated over time from previous highs in the top 10, whereas Columbus has maintained consistency in recent years.

Indiana: Indianapolis is the obvious heavyweight, but Bloomington and Lafayette have punched above their size thanks to Indiana University and Purdue’s research ecosystems. This was further emphasized in our Midwest startup rankings with Purdue in 12th overall.

The lesson: one of the Midwest’s strengths will continue to be its economic, talent and technological diversity outside legacy hubs. The ‘second-tier’ cities in this list - Madison, Cincinnati, Bloomington, Cleveland - are often where we’re finding the most interesting new stories.

The Outliers and Oddities

Ann Arbor’s density vs. size: #1 in startup density but only #29 in population, makes A2 a concentrated cluster. This indicates the outsized influence of the University of Michigan upon the town (and maybe even the state), and differs from the sprawling metros of almost every other city in the top half of the list. There is also a question mark here on costings data. According to Nomad List, it costs Ann Arbor $5,658 per month to live in Ann Arbor, more than any other city in the top 5 and scarily close to San Francisco.

Columbus momentum problem: Although it shares some similarities with A2, both being university towns, Columbus’ population puts it in 8th and that makes a huge difference. Despite some big wins in the past - including taking more than half all fundraising in Ohio some years - it’s only #16 in startup momentum in 2025, while Cincinnati is 5th.

Chicago’s cost problem: Top in almost everything except affordability. This is a problem that besets many large cities in North America and Chicago is, after all, the 3rd largest metro area in the country. Labor costs rank #60, cost of living is #63. It’s basically the San Francisco of the Midwest in this regard. In fact, according to Nomad List, Chicago costs $4,812 per month for an individual, which is not as far behind San Francisco’s $5,908 as you’d think… but still less than Ann Arbor.

Minneapolis: Number 2 overall, but outperforms much larger peers. Not great in startup exit density at #14 and surprisingly poor in government programs at #56. Minnesota in general could be described using the story of the Tortoise and the Hair: slow and steady wins the race. The city has consistently been number 2 on this ranking since its inception and has one of the lowest variances between high and low fundraising years over the last decade, according to our data. If you want solidity in the Midwest, Minnesota (and by extension Minneapolis) provides it.

Universities as Engines of Ecosystems

If there’s one thread running through M25’s dataset, it’s this: universities remain the Midwest’s most reliable startup factory.

Ann Arbor: #1 in startup density, thanks almost entirely to the University of Michigan’s research juggernaut. The population is small, but the concentration of STEM grads and federally funded research makes it an outsized contributor to the state’s startup pipeline.

Madison: The University of Wisconsin (5th in our University rankings, just behind U of M) is turning its research into a steady stream of spinouts.

Minneapolis: The University of Minnesota and Mayo Clinic underpin the city’s aforementioned consistency. Healthcare dominates - in data we’ve seen but not yet published, almost half of Minnesota’s total funding over the last decade has gone into health-related startups, the highest percentage of any state we tracked.

Universities don’t just provide patents and spinouts. They attract talent, stabilize ecosystems, and - as our deep tech story showed - they create the patient capital conditions needed for fields like biotech, chips, and autonomy to take root. If the Midwest is to compete with other similar regions across the country (and indeed, globally) it may not be able to do so on density or exits. The most likely path to greater success may be by competing on knowledge.

A Fundraising Reality Check from Q2 2025.

From our Q2 2025 fundraising coverage based on data from Dealroom:

Michigan: $2.2B total, but 95% from Acrisure. Without it, MI would be mid-pack.

Indiana: Quiet quarter, $153m raised. Biggest round was Syndeio with $90m.

Wisconsin: $77.15m total, led by Realta Fusion.

Illinois: $317m+, with Ocient and NuMat the top raises.

Minnesota: $176m, down 43% from Q1; healthcare startups still dominate (Corvia, Alpheus, Ace Vision).

Ohio: $424m, with Astronomer (yes that Astronomer) leading the way ($93m).

The Conclusion: Momentum vs. Stability

M25 tracks startup momentum as the percent change in startups alongside exits and “big outcomes”. It’s a useful lens - but only if you also consider stability.

Momentum markets: Columbus once led Ohio fundraising, but now trails Cincinnati on momentum. Ann Arbor looks strong in momentum, but its size means it will always be impacted by outliers - both good and bad.

Stability markets: Minneapolis (#2 overall) is the tortoise to everyone else’s hare. It ranks poorly in exit density (#14) and government programs (#56), yet holds #2 year after year. Minnesota fundraising fell 43% quarter on quarter in Q2 2025, but healthcare continues to dominate, providing that long-term resilience.

Hybrid markets: Chicago marries stability with constant refresh, top in exits and connectivity, but struggles in this comparison due to affordability pressures.

Momentum creates headlines; stability creates ecosystems. The Midwest needs both. Without momentum, you risk stagnation. Without stability, you can burn hot and fizzle out. The diversity of cities and industries across the region helps, and hopefully this ranking can continue to lead to more curiosity about what our neighbors are doing, and we hope for even more collaboration because of that.

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