Pittsburgh entrepreneurs work to make Rust Belt states centers of high-tech innovation
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Over the course of three trying decades, the Rust Belt has scraped off years of oxidation and is in the process of polishing itself into a shining new landscape of technological advancement. But try telling that to the rest of the country.
"When people think of the Rust Belt, they think of a hard work ethic, blue-collar values, stick-to-itiveness. There's always a sense of true American grit associated with the Rust Belt, which I don't think we take advantage of as much as we should," said Sewickley-based startup adviser Kit Mueller.
He's part of a group planning to try to change that -- both by improving the links between innovators in the seven states that make up the Rust Belt and then by using that bulked-up presence to raise awareness of the possibilities to the nation's coasts and around the globe.
In November, an initiative called RustBuilt.org was launched by Mr. Mueller, a veteran tech entrepreneur and co-organizer for Pittsburgh Startup Weekend, along with marketing specialist Paul Burke, attorney Adam Kelson and marketing consultant Ellen Saksen.
"We saw other people in other cities suffer from a similar fate as Pittsburgh's. It's been revolutionized in terms of its economy, it continues to be a fantastic city, but ends up seeing challenges in early-stage innovation circles," said Mr. Burke, a managing partner at Thinktiv.
"If everyone's doing good things by themselves, what would happen if we all think about doing [things] together?"
After gaining sponsorships from East Liberty-based venture accelerator Thinktiv, Saul Ewing LLP, Seahawks Studio and Mr. Mueller himself, the group launched a Word Press site and picked up more than 100 Twitter followers during the first two weeks. Details on the funding for the project was not released.
The seven Rust Belt states, as identified for this purpose, are Pennsylvania, Ohio, West Virginia, Illinois, Indiana, New York and Michigan. And, while the group hasn't officially made overtures, regional stakeholders in all of those places who have heard the preliminary plan say it's an idea that's long overdue.
"A rising tide lifts all ships, at least that's how we look at it in Buffalo," said Dan Magnuszewski, director of Buffalo, N.Y.-based tech incubator Z80 Labs.
He credited much of Buffalo's recent economic success with the fact that business is often conducted into nearby Rochester and across borders to Toronto in Ontario. The region, dubbed "Tor-Buff-Chester," has 22 million people and has had $530 billion in economic output since joining forces decades ago, according to an 2007 article by economist Richard Florida.
A several-state collaboration could also aid small cities or states that often lose talent because they're in the shadow of a metropolis.
The vast majority of the 101 venture capital deals made in Illinois in 2011 happened in Chicago, which ranked seventh in the nation in terms of investment dollars given to startups that year. Meanwhile, in nearby Indiana there were only 14 venture capital deals.
Brad Nellis, director of the Cleveland-based Northeast Ohio Software Association, said a more solid collaboration with Pittsburgh would make sense. He said it will be hard for a seven-state region to mimic Silicon Valley's connected network of entrepreneurs, but with the right use of online collaboration the network here could someday surpass the world capital of technology.
"Let's leapfrog Silicon Valley, make them want to become the next RustBuilt," he said.
In West Virginia, where coal still dominates, technology investments center largely around chemicals and advanced materials, biometrics, biotechnology and advanced energy. While the state economic development engine TechConnectWV has been in operation since 2006, many companies have only been established recently and the state's Angel Investor Network wasn't created until 2010, according to TechConnectWV executive director Anne Barth.
With West Virginia heavily promoting its most profitable sectors in tech, Ms. Barth said the RustBuilt initiative could be a good way to get the word out about software developers, IT professionals and other tech specialists.
"What people have to start doing in this space is take advantage of opportunities outside the state," she said. "They should look nearby first. There may be a company able to supply them or address an issue they need addressed to make their business complete right here in West Virginia or in another state in the region."
There's even more to gain from an investor's standpoint, said Mark Heesen, president of the National Venture Capital Association. He said the chance to visit one area and learn about six others is golden for professionals who often value time over money.
"Anytime a region does something like this it's going to help, because a venture capitalist from another area doesn't want to have to go to Pittsburgh, Cleveland, Indiana and Illinois twice if they can come in and look at the entire region in one fell swoop."
One of the plan's greatest benefits could be a chance for smaller cities or cities with negative reputations to showcase their accomplishments to the country's stakeholders, said Leslie Smith, president and CEO of startup incubator TechTown in Detroit.
Noting that the Michigan city is "light years ahead of where it was five years ago," she said Detroit has a goal of transforming its image similar to how Pittsburgh has on the national level.
"TechTown is adjacent to the largest health system in the state. We have a huge burgeoning biotech innovation space that no one ever thinks of when they think of Detroit. This is an opportunity to expand Detroit's image to what and who we are today," she said.
Meanwhile, in West Virginia, Ms. Barth sees the network also a chance to expand on a positive legacy that already exists.
"Products of the coal industry and the steel industry made battleships that helped this country in war and helped make this country great," she said. "There's an enormous amount of pride in that background.
"It's a good thing to take time to stop and remember that so we can get back to that level of success again."
First Published December 2, 2012 12:00 am