Venture in the Middle

Exploring Investment Opportunities Across the Midwest

Kauffman Fellows
7 min readMay 4, 2022


The economy is shifting at an unprecedented pace driven by technology. The middle of the United States is the epicenter for tech-enabled transformation in foundational industries like manufacturing, agriculture, supply chain, logistics, transportation, and construction. While these industries have an impressive impact on the American economy, the technological shifts that have revolutionized business processes in other sectors are just now becoming mainstream in these foundational industries.

Throughout the month of May, Maggie Kenefake (KF Class 25), Venture Partner with Royal Street Ventures, guest hosts six investors who are driving innovation in these massive sectors where 50% of GDP is concentrated. Join us on this journey to learn how the middle of the U.S. offers unprecedented access to customers, untapped opportunities, and a wealth of talent for founders and investors alike.

Click the links below to tune into each episode and catch a summary of Maggie’s mini-series below by flipping through an eBook summarizing some of the key findings from her conversations.


Maggie kicks off her miniseries, “Venture in the Middle”, with two inspiring episodes. Karen Kerr (KF Class 1), Founder and Managing Director of Exposition Ventures, and Victor Gutwein (KF Class 22), Founder of M25, explain the advantages of Midwest startups, the unique opportunities they’ve found, and the investment strategies that have helped them find success.

Catch each episode below or on iTunes, Spotify, and

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

Exposition Ventures Managing Partner, Karen Kerr, On Investing in Industrials in the Midwest

In an exceptional first episode, Maggie Kenefake sits down with Karen Kerr. As the Founder and Managing Director of Exposition Ventures, and a member of Kauffman Fellows Class 1, her expertise in industrial tech is unmatched. Together, Maggie and Karen explore the differences between investing in industrial tech versus traditional B2B enterprise tech and the keys to understanding the immense opportunities available.

Tune in and catch some of our favorite soundbites below!

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

On the advantages of centering in the Midwest

Karen shares the perks of being located in Chicago

“Strength number one is talent and technology. I look at the Big 10 schools; the Big 10 engineering schools are fantastic. There’s a lot of manufacturing in the Midwest. The Midwest and manufacturing: they go together. When I started the practice for GE…I told him, ‘Why don’t I do it from Chicago?’ It’s close to the healthcare businesses manufacturing up in Milwaukee. It’s close to aviation manufacturing in Cincinnati. The transportation business was headquartered here. And they had a lot of their digital business here because they were next to the largest intermodal yard in the country here in Chicago, close to the customer.”

On manufacturing as a systems play

With problems and trends running horizontally across the value chain, it’s challenging to break down technology solutions into discrete and tidy segments.

“Industry 4.0 really is about democratizing the data across the value chain. That’s where you’re going to get the most value by being able to have people in sales see what’s happening in the inventory or where things are going in manufacturing. Or for people who are designing products to understand what’s actually happening when the product is being used under real-life conditions. So you want to have that flow of information. It really is democratizing data, so you have to look at it as a systems play.”

On what differentiates investing in industrial tech from traditional B2B enterprise tech investing?

Investing in industrial transformation is not well understood by traditional B2B enterprise tech investors, but what’s different about it? What’s key to understanding the opportunities?

“I think that B2B Enterprise tech can be thought of as a subset. I think industrial tech is looking across that entire value chain. I think in the B2B tech side, traditionally, folks have tended to focus on sales and marketing or HR tech, and some enterprise resource planning. And maybe the biggest differentiator is really the understanding on the industrial tech side that I also need to do hardware. There’s an automation piece of that. There are physical products that are being moved. And so I think that’s also a differentiator.”

On how she perceives investing in 2021 compared to just 5–10 years ago

As always, change demands adaptation and those who adapt more readily will gain an advantage. The pandemic, besides being tragic and traumatic, has been an accelerator.

“There’s really two main differences in my mind. I think the pandemic has created a sense of urgency that is helping to grease the wheels on some of those boundaries between operations folks and IT teams. When we first started in this space, people were starting to do those experiments, and they were experimenting with different use cases. I think people have done a lot of them and they found some value. And now we’re moving to a time where folks can scale those experiments across the enterprise. And there’s some urgency to do so because we’ve seen the need for it.”

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

M25 Founder, Victor Gutwein, on Midwest-Focused Investing

In her second episode, Maggie Kenefakes sits down with M25 Founder and Managing Director, Victor Gutwein (KF Class 22). Throughout their discussion on midwest-focused investing, they cover the benefits and challenges of geographically-focused funds, M25’s investment strategy, and why he loves working with Midwest startups.

Tune in and catch some of our favorite soundbites below!

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

On how a geographically focused fund can work well

Though Victor noticed abundant opportunities in the Midwest, the capital wasn’t following.

“I think about 10% of all US venture deals are here, but there’s only about 5% of the capital. And that’s a big mismatch. And I saw that it’s particularly harmful for the founders. And it’s particularly an opportunity for the investors at the earliest stages where we invest, usually in that early revenue phase where they’re less than a million dollars in annualized revenue.”

Because the companies are Midwest-based, they’re often unknown to the venture capital world in general, as they can’t be found on Crunchbase or Pitchbook.

“It can’t be analyzed, just by looking at their financials,” Victor said. “It really depends on the team in the immediate vicinity of the opportunity. And sourcing that before it’s out and about, and everybody knows about that company already.”

On the advantages of Midwest startups

It might be easy to overlook the cost advantages of startups that aren’t located on either coast, but those advantages can be substantial.

“There are huge, huge advantages in cost-of-living and labor costs, and that’s not a one-way street. I think the most interesting piece about that is, I found that when you control for cost of living for engineers, companies pay their developers and engineers less here, but their standard of living is on average, typically higher. So the engineers are better off but also the company is better off too. They need less capital to get the same production, but they’re also not shortchanging their employees.”

On the larger risks in the business world and the opportunities they present

Cybersecurity has recently come to the fore with the Colonial Pipeline issue, Victor said, and M25 has made several investments around cybersecurity that are relatively simple technology being applied to very large but focused enterprise applications.

“A company in the healthcare space called Authentics is all about listening to your customers at scale, and being able to take things that could have compliance and regulatory issues, something wrong with a medication at scale, something wrong with how care is being provided, to even just billing and payment issues to even just more like marketing and insights about how your customers are responding to your brand.”

This is something that can be a critical need, that isn’t being serviced right now. And we have the ability to sell into that and then prove out a value proposition and make a large, successful tech company out of it. So the possibilities are endless.

So it’s not just having a great technology; it’s also about getting it in the right people at the right time.”

On M25’s investing strategy

Though they’ve made a lot of deals, the company is selective, Victor said M25 invests in about 1% of deals it investigates every month.

“There are so many unknowns there that we’re trying to make our best-educated guess on the investment. But we also know that a lot of these are going to fail. And we want to not leave it up to chance that we return really good returns for our investors.

We have gone on a side of ensuring we capture outliers with more investments that are also very targeted and intentional, but ensuring that we capture a lot in a portfolio to spread out that risk given that we’re among the earliest investors.”

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



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