Where the Midwest Should Replicate Silicon Valley

For two decades, the most common question I’ve heard while helping build the Midwest tech and startup ecosystem is, "So, you're trying to recreate Silicon Valley?"

It’s a question asked of economic boosters in cities across the world, from Detroit to London, whenever they try to jumpstart local innovation. It used to make my skin crawl. For twenty years, my answer was always the same: "No. There is only one Silicon Valley. We aren’t trying to be them."

While Chicago—where our team at TechNexus is based—has had enormous success over the last couple of decades, true opportunity emerges when local communities look in their own backyards to understand the unique assets they can leverage. We aren't aspiring to replicate Silicon Valley's end product, and frankly, we are not yet achieving the unique opportunities we have here.

However, today I am going to break 20 years of precedent. I am changing my answer to the Silicon Valley question.

Silicon Valley didn't happen spontaneously. It wasn't a happy accident of geography or weather. It was a logical, engineered sequence connecting universities, the private sector, and the emergence of venture capital. We believe the Midwest has built tremendous momentum over the last quarter century, but we can accelerate much faster by replicating Silicon Valley’s specific historical path.

To understand where we need to go, we have to look at where they started.

‍

The Terman Blueprint and the True Spark

In the 1950s, Frederick Terman was the Dean of Engineering at Stanford. At the time, Stanford was a regional university, and the "tech industry" was dominated by massive East Coast corporations. Terman looked at his engineering students and said, We can't just educate these kids and watch them disappear to the East Coast.

Instead of complaining about the brain drain, he engineered a solution. He invited collaboration with private companies and encouraged his students, Bill Hewlett and David Packard, to turn their thesis into a company. That was the spark.

But the ecosystem didn't truly ignite just because universities had good ideas or startups had garage space. The real spark was the birth of the venture capital industry. When nascent venture capitalists like Tom Perkins finally stepped in, they acted as the ultimate coordinators. They connected the disparate pieces—universities, entrepreneurs, and massive corporations—around shared, aligned economic interests. Venture capital became the translation layer that universities and governments simply couldn't build by themselves. That alignment is what lit the fire.

‍

The Midwest’s Innovation Paradox

I believe the Midwest is standing at that exact point in history right now.

We are living in an innovation paradox. The Midwest creates a century’s worth of science but lacks the translation infrastructure to bring it to market. The statistics are staggering: our region holds ~20% of total University R&D and patents. We have the raw intellectual capital.

Yet despite this abundance, the Midwest captures only ~4% of venture capital, revealing a structural translation gap. The gap is even greater when looking at VC dollars flowing into Midwest university-born innovations (i.e. venture-backed companies licensing university IP). 

‍

We cannot just hunt for the next photo-sharing app. The Midwest's destiny is to build the systems that power the world.

‍

The region encompasses an enormously diverse industrial base cutting across many different sectors. The customers are here. The use cases and the massive, systemic problems for technology, AI, and automation to solve—in agriculture, finance, manufacturing, logistics, and beyond—are sitting right in our backyard.

We are great at "what is possible" in the lab, but we are failing to bridge the gap to "what is scalable" in the market. Why? Because we have historically lacked that economically aligned coordinator to tie the pieces together.

‍

Building the Next Industrial Era

We cannot just hunt for the next photo-sharing app. The Midwest's destiny is to build the systems that power the world. We need to focus our collective commercialization efforts on the pillars of global re-industrialization where we already hold deep expertise:

• Electrification: With 40% of global electricity demand soon coming from digital systems, the region must drive breakthroughs in power electronics and grid modernization.
• Quantum & Materials: The opportunity isn’t just quantum algorithms. It’s the industrial backbone—materials, tooling, precision manufacturing, and control systems that every quantum platform will depend on.
• Advanced Mobility: The challenge of the future isn't just software; it is solving the materials science that dictates 80% of an EV’s performance.
• Infrastructure: We have the industrial base to bring AI and sensors to the $4 trillion construction and infrastructure market.

These are not software plays. These are hard sciences. They require a different kind of capital and a different kind of support to bridge the "Valley of Death" between government grants and Series A funding.

We at TechNexus recognize that we have a responsibility here. We have a unique role to play that goes beyond what a university or a government program can accomplish alone. Frankly, the lack of this coordinating venture force is exactly why regional efforts have struggled in the past.

We have spent the last decade and a half mastering the connection between the corporate community and the startup ecosystem, making over 200 venture investments that align entrepreneurs with the deep demand of our corporate partners. Now, we are turning our attention upstream—to act as the economic coordinator bridging the lab and the industrial market.

‍

The Question—and the Invitation

We are ready to provide the commercialization engine: connections to a corporate community capable of partnering, piloting, and acquiring. We’re raising capital to ignite the flame.

But to truly replicate the success of the Terman model, we cannot do it in a silo. We need partners who are ready to act. So, my question to the region is no longer just rhetorical. We want to know exactly who you are.  

• To the University Leaders: Where’s the Frederick Terman in your organization? Are there leaders within your labs, Deans, or Provosts ready to break the mold and say, "We won't just educate students to send them to the coasts; we will build the industry here"?
• To the Corporate R&D Leaders: Are you looking 10 to 15 years down the road? Are you actively searching for the raw, hard-science breakthroughs in electrification, quantum, or advanced materials that will redefine your industry?

Does this resonate with what you are seeing on the ground? If you are nodding your head as you read this, we need to talk.

We are ready to build the bedrock of the next industrial era. Let’s stop talking about what the Midwest could be, and start coordinating the systems that will power the world.

Get in touch with us. Tell us what you are building, what you are looking for, and who the Termans are in your orbit. Let’s get to work.


Terry Howerton is a lifelong entrepreneur, having founded his first company while in high school. He is the founder and CEO of TechNexus Venture Collaborative, a Chicago-based firm that helps large corporations invest in—and create venture ecosystems around— ambitious startups. Since 2017, TechNexus has made more than 250 venture investments in startups that have gone on to raise more than $4 billion in total funding.