Cost, Talent, and Incentives: Why Startups are Thriving in the Midwest

by Stuart Gutwein

Now, more than ever, startup organizations are popping up and even moving to the Heartland. But what is it about the Midwest that has these startups trading the opportunity to sit beachside for flatland and grass? In other words, how are cities like Minneapolis, Indianapolis, Kansas City, and Madison luring new businesses to their respective states?

The Midwest is outgrowing the “Flyover Country” nickname, and it isn’t by accident. The lower costs, abundance of talent, and business-friendly policies found in the Midwest region all favor startup organizations. In fact, Forbes recently ranked the Best States for Business in 2016, and seven of the top fifteen are Midwest states. You read that right: half of the top fifteen states for business are located in the Midwest.

Our friends at M25 Group recently dug into this with their assessment of the best startup cities in the Midwest.

Still don’t believe it? Here are a few more reasons:


First, it’s well-known money goes further in the Midwest. The costs of labor, energy, and rent can make or break a new business. Let’s use rent as an example.

$1500 per month will get you drastically different amounts of space depending on where you’re doing business in the United States: New York—about 270 sq. ft., San Francisco—about 340 sq. ft., Boston—about 400 sq. ft. Compare those numbers to Indianapolis—more than 1700 sq. ft., Milwaukee—more than 1200 sq. ft., and St. Louis—1500 sq. ft.

Startups need space to not only increase their credibility at a vital point in their lifecycle, but it needs to be affordable, as well. And the Midwest has it.


You can’t build a business without the proper resources; and of course, people are an important part of that. Having a pool of well-educated applicants gives startups an advantage, specifically within the fields of engineering, computer science, business management, entrepreneurship, and law. The Midwest boasts top-ranked college programs in all of these fields.

Looking for an engineer? Purdue University has one of the top ten engineering programs in the United States. Need an IT specialist? The University of Illinois has one of the top five computer science programs.

And the best part it all? The Midwest’s affordability gives new graduates an increased quality of life. They can afford to go out, purchase a home, or get married. With the right startups around, they’ll come for the education, but stay for the lifestyle.


Midwest states want the innovation that startups bring to the table. And that’s one of the reasons you can find a variety of pro-startup policies throughout the Midwest. In fact, the tax incentives themselves might change the hearts and minds of startups and investors alike.

Heard of the Indiana Venture Capital Investment Tax Credit? Indiana offers information on this tax credit, other tax credits, connections to various organizations and programs devoted to funding and growing startup businesses, and many other incentives all on its government website.

Minnesota is another pro-investor tax credit state. For example, the Angel Tax Credit is available to those who invest in emerging, high technology companies. Missouri, too, is focused on technology; they have recently created the Missouri Technology Corporation, a public-private partnership dedicated to helping entrepreneurs in the high-tech industry.

But these policies are just a sampling of what’s available. Each Midwestern state has its own unique incentives that could be right for your business. That's why, over the next several weeks, we'll be providing a detailed look at the relevenat startup tax incentives for many Midwestern states. We'll start with Indiana, and then move onto Minnesota, Illinois, Missouri, and Ohio. So be sure to stay on the look out.

Interested in making the move to the Midwest? Or maybe you’ll already here. Either way, Gutwein Law is here to help you navigate your business through the various incentives throughout the Midwest. Whether you’re beginning your own startup, have a new business, or have been seeking funding for a few years now, locating your company in the Heartland may be the best business decision you make. If you have questions, or you’re ready to talk, give us a call at 765.423.7900.