Midwest startup funding Q1 2026: a record US quarter, but Midwest share shrinks

On July 30, 2025, Start Midwest published its first quarterly funding report - a short look at what Michigan raised in Q2 2025. We covered all six states for that quarter and may do so again. But for now, that means we have a full year of numbers since we launched: from Q2 2025 through Q1 2026, the six states we cover in the Midwest raised roughly $7.349 billion across all funding deals.

Before getting to the Q1 2026 numbers for the Midwest, some housekeeping about the rest of the country.

The TL;DR? We live in unprecedented times.

According to Dealroom, $250.5 billion was raised in Q1 of 2026 across the US. That is a record. The previous high was $107.4 billion in Q4 2021. I.e. you don’t need to be a mathematician to see that Q1 2026 more than doubled it. For context, Q2 2025 totaled $49.6 billion and Q3 2025 totaled $83.3 billion; therefore Q1 2026 alone was larger than all three of those quarters combined. California accounted for $219.7 billion of the Q1 2026 total: 87.7 percent of all US funds, in a single state, in a single quarter. We’ve never seen a quarter quite like this, and it may not be the last.

In the same quarter, the Midwest raised $1.1 billion.

That $1.1 billion is 0.44 percent of the US total, the smallest share of a US quarter in the year we have been tracking this. For comparison, the Midwest was 2.10 percent of the US total in Q4 2025 and 2.43 percent in Q1 2025. The denominator exploded, while the numerator contracted.

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The regional ledger

The state-by-state breakdown, all figures in USD millions:

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Two states went up in Q1 2026. The other four fell, with three of them falling hard year over year. Michigan raised $66 million, less than one-eighth of what it raised in Q1 2025. Indiana raised $32.3 million. For context, Michigan is currently at $650m for Q2, with one company receiving that just this week; yet another example of the role outliers play in our region. These are small numbers across an entire quarter, but Ohio's 81 percent QoQ drop is the sharpest decline in the set, though that may also reflect an unusually strong Q4 2025 more than a collapse in Q1.

Wisconsin's fifteen-fold jump deserves its own footnote, which we’ve included in the next section.

Outliers, still

The Q3 2025 quarterly report called the quarter "uneven, outlier-driven, and sober." Q1 2026 is the same story with different names on the term sheets.

The top five Midwest raises of the quarter:

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Those five deals together account for $538 million — 49 percent of the entire Midwest quarter. Shine Technologies alone is 22 percent of the region. Remove Shine and Wisconsin's quarter falls from $264 million to $24 million; the state that looked like it broke out looks more like one very good day at one Janesville fusion company.

Illinois placed three of the top five. Strip those three out and Illinois raised $219 million — respectable, but unremarkable. Michigan, Indiana, and Ohio did not place a company in the top five at all.

This pattern is not new, and it is not unique to the Midwest. Concentration at the top of venture capital rounds is a fact of life now, everywhere. But it is worth naming when we see it, because regional totals flatten it. A quarter of $1.1 billion in total is in practice one fusion deal, a couple of Chicago rounds, some life science, and everyone else wondering what Q2 will bring.

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What to read into it

Probably not much, in isolation. A single quarter is just a snapshot. The 0.44 percent figure is the most striking data point in this report, but it is also a statistical artifact of a US total skewed beyond recognition by a handful of California AI mega-rounds. $172 billion of Q1 2026 funds went to three Bay Area companies, and the rest of the country therefore looks like it has been squeezed. The real question is does that capital flow through elsewhere, and if so… when?

All that said: the Midwest total of $1.1 billion is not a problem for California. Q1 has historically been softer than Q4, and several of the states that usually carry the region — Michigan, Minnesota, Ohio — posted their weakest individual quarters for a while.

The question that shaped our year-in-review and our outlook piece — whether 2025's weakness would carry into 2026 — now has a partial answer. The first data point of 2026 says yes.

A year ago, Start Midwest set out to cover this data because we felt it was important to tell the region's funding story in one place. A year in, the story is a difficult one: total capital flowing into Midwest startups is down, concentration at the top is up, and the national benchmark is a category our region is not really in. That is the honest read for the moment. Q2 will tell us whether it continues to be a trend.