Achieving Impact in the Midwest

Kauffman Fellows
6 min readMay 18, 2022


The Midwest has a powerful, centuries-long history of industrial success and is home to a quarter of the Fortune 500 companies, and yet, the number of startups is lagging. With plenty of goods, natural resources, transportation infrastructure, and more, the Midwest will continue to grow as a lucrative, industrial hotspot primed for more founders and investors.

In the final two episodes of Maggie Kenefake’s (KF Class 25) miniseries on venture capital in the Midwest, she invites John Tough, Managing Partner at Energize Ventures in Chicago, and Ginger Rothrock (KF Class 25), Senior Director at HG Ventures, to share why they chose to specialize in the region, how they found success, and what makes them optimistic for the future.

Catch each episode below or on iTunes, Spotify, and or read some of our favorite soundbites below!

This season of the Kauffman Fellows Podcast is produced in partnership with Mighty Capital. Together, we unravel what truly makes a great VC investor.

Energize Ventures Managing Partner, John Tough, On Investing in Industrials in the Midwest

Maggie Kenefake welcomes John Tough, Managing Partner at Energize Ventures in Chicago, a firm focused on innovating energy and sustainability. Together they explore the lagging digital transformation of our energy and industrial sector, how John discovered his passion for sustainable solutions, and what enticed him to focus on the Midwest.

Listen to the full episode above on Spotify or over on iTunes.

On the importance of digitizing the industrial sector

According to a McKinsey study, the energy and industrial sector severely lag behind other sectors in adopting digital technologies. Does this mean they’ll always be behind the curve, or is there a reason for optimism?

“I fundamentally believe that these industries, if you know how to approach them, are willing and open to adopting new digital solutions. They are the backbone of America. The manufacturing, the logistics, the energy, and the industrial machinery are a key part of our economy, and we need to help them get more digital. And there’s a whole new wave of individuals joining these firms who are going to think digital-first. And so we’ve made investments in the space that are going to help you infuse digital solutions into the industrial backbone of North America and actually globally as well.”

On what drives his passion in this space

Growing up in Canada, John enjoyed time in nature at camp and grew to believe that it’s possible to do good while making a substantial financial return.

“There’s been a huge focus on this sustainable revolution. I think the first industries that actually addressed it were the power industries, about a decade ago; really started thinking about decarbonizing, and they’re on a torrid pace now. But finally, the other traditional industries — industrials, manufacturing, transportation — are now all looking at a holistic adoption of more sustainable solutions. And a great way to do that is by being more digital and approaching efficient operations.”

On why the industrial sector is hot for VC interest now

Though the industrial sector has needed technological innovation for decades, VC investment tends to flow to other sectors. John said the VC approach was one point of failure.

“There was this idea that all these really cool technologies, data analytics, computer vision, machine learning, etc., that industry probably needed them. But the original way to sell into industrials was to just throw at them a lot of really cool technology and see what sticks. And that’s what failed dramatically.

In the last decade, we’ve seen increased respect from the venture capital community towards the subject matter expert, and if you can make the subject matter expert an ally in the adoption of technology, somebody who you are peers with, who you are not smarter than, the technology companies can have greater success selling into the vertical.”

On why he chose to focus on the Midwest

After years of experience and career success, John could have worked in any area of the country, but he intentionally chose the Midwest.

“There’s a mentality to tech investing that the customer doesn’t know what they want. That is so far from the truth when you invest in industrials because these customers do know what they want. And they are incredibly technically skilled, they have an incredible understanding of all the complexities.

“We’ve specifically constructed our fund with LPs like Caterpillar, based in Midwest; Invenergy, a large developer; GE has big offices here, Schneider Electric, big offices. And then beyond that, just literally all logistics companies who most people don’t know the names of or agricultural firms. They’re all within reach here. And it’s frankly a heck of a lot easier getting to know them from Chicago than it is from San Francisco.”

Listen to the full episode above on Spotify or over on iTunes.

Ginger Rothrock, Senior Director at HG Ventures, on achieving greater impact through VC

In the final episode of Maggie’s miniseries, she hosts Ginger Rothrock (KF Class 25), Senior Director at HG Ventures, an Indianapolis VC firm. Ginger dives deep into the opportunities in the Midwest, the advantages of investing in the region, and how she’s found success with her unique diligence process.

Listen to the full episode above on Spotify or over on iTunes.

On why the VC opportunity is biggest in the Midwest

The Midwest has a solid history in the industry and is home to many large companies, but the number of startups is lagging. Ginger sees huge opportunities in the Midwest due to several factors.

“The Midwest is known for manufacturing, for centuries. Customers are here, big ones. We have a quarter of the Fortune 500 headquarters. Why? The goods are here. We’ve got natural resources, iron ore, critical materials, there’s some oil…transportation infrastructure is here, tons of rail and interstate.

On an untapped advantage of the Midwest

Harder to quantify but clearly important are culture and people.

“People matter. People are unbelievably nice. Midwest-nice is a thing. If you think about all these studies that said the average successful entrepreneur is in their 40s, there’s a really good chance he or she has a family, and with capital becoming a commodity culture matters. The cost of living is fantastic. Public Schools are strong. The Midwest venture network is growing and strengthening.”

On her approach to due diligence

Approaches to due diligence vary throughout the VC realm and depend on both the key people in VC firms as well as the sector itself. Ginger keeps other factors in mind, too.

“Diligence is quite similar to how one might do software: team and founders. That’s incredibly important. And we probably consider that to be the most important thing. As many other investors do, we’re looking for folks that have a relentless pursuit of success.

In our industry, we have to be careful that it’s balanced with not being married to a specific technology solution. We’ve seen lots of founders that are relentless and dedicated, but unwilling to move or shift in that their solution may not be the best. And some folks do not tend to listen to customer feedback. So that’s something we keep an eye out for.

On the technology side, it’s really about what’s the secret sauce? Intellectual property comes into play in these businesses quite heavily. Companies outside the US or even inside the US can throw 50 engineers on something, but speed is not enough in our industry.

A lot of folks say software is about speed to market, but it’s intellectual property and building up those barriers. We also want to validate the science in our own labs. We love to analyze products if it’s in one of our industries. I’m like, “Hey founder, send a sample, let’s do a quick test on a waste stream or asphalt or whatnot. So that part’s pretty fun. I love that.”

On how working in VC offered her a greater scale of impact

Starting in hard science with a chemistry degree offered Ginger multiple career pathways, but areas with global impact have always driven her.

“My career is all about developing technologies to address my passion for solving big global challenges like energy and the environment. It sounds like flowers and butterflies, but it’s been really important to me my whole life. I enjoyed that transition from really focused on self and single products to multiple, and as a mentor as well and now a VC investing time and money at a meaningful level.

Listen to the full episode above on Spotify or over on iTunes.



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