Hot war in Ukraine, cold war on the horizon with China and a newly expanded battlefield to cyber and space are all creating an unstable world. Will emerging technology shift the global balance of power? Will interdependent supply chains strengthen or weaken national security? Will soaring inflation and economic instability escalate tensions with emerging economies? And most importantly, how will our country respond to these challenges and continue to lead the world by example as the United States has done so many times before?

While the future remains uncertain, we can count on the Heartland to play a critical role in shaping our future leadership position and bolstering our defenses.

First up is ensuring that our country is less vulnerable to the manufacture of critical components like semiconductors. Over $200B in private investments, according to McKinsey, have already flooded into U.S. Semiconductor production, building new advanced facilities across Ohio, Texas, Arizona, and other Heartland states. The talent, logistics, and speed needed to produce these complex components drew this investment to the region. The $39B Chips Act bolsters this activity, targeted to support U.S. suppliers and offset higher operating costs. These chips are critical, primarily to mitigate vulnerabilities as much as possible. Out of the planned 50 expansion projects, over 85% of them are being built in the Heartland.

2022 Year in Review

Looking toward the future, chip manufacturing is only one part of the new defense landscape. With a 38% increase in cyber warfare last year alone, investing much more in cybersecurity is becoming increasingly important. Carnegie Mellon, Purdue, and the University of Michigan are a few of the country’s top-ranked cybersecurity university programs. In fact, schools in the Heartland represent 7 out of the top 10. This dominance in cybersecurity is one of the reasons why Duo, a $2B cybersecurity firm based around the University of Michigan in Ann Arbor, refused to relocate after being acquired by Cisco. 

The Deputy Secretary of Defense, Kathleen Hicks, understands the Heartland’s influence in protecting our digital world well. Hicks has “been a driving force behind the department’s efforts to adopt artificial intelligence across the force”. During her whirlwind tour to view technologies around the country to prepare for digital warfare, she visited the Oak Ridge National Laboratory in Tennessee, Wright-Patterson Air Force Base in Ohio, Scott Air Force Base in Illinois, and Purdue University’s hypersonics hub in Indiana – all facilities located across the Midwest.  

Texas is also pushing the boundaries of defense tech. In 2018, the U.S. Army chose Austin, Texas, as the home for its newest major command, the Army Futures Command (AFC). This command exists to “transform the Army to ensure war-winning future readiness” – a tall task to future-proof 1 million soldiers. Austin won this new command due to six key criteria: proximity to STEM workers, proximity to private sector innovation, academic research and development investment, quality of life, cost, and civic support. 

Today’s world, like many times in the past, is full of challenges. War, inflation, and recession weigh heavily on our minds. Yet, from bigger challenges come bigger solutions, and as in the past, the Heartland will play a significant role in keeping us safe and defining our place in the world.

Inside this issue

  1. Founder Story: Will Young – Sana Benefits
  2. Xchangepgh
  3. VCs go outside their comfort zone with bets on defense tech
  4. Semiconductor fabs: Construction challenges in the United States
2022 Year in Review

Will envisioned he would start a bay area company. Or at least create a company in a traditional venture capital hub – since he lived in New York, Boston, Los Angeles, and San Francisco at different points throughout his life. However, he had to change his strategy when he learned that his cofounder (the smartest guy he’s ever met) was moving to Columbus, OH. That led Will to hire remote talent from all over the country – completely changing his understanding of the potential of the Heartland. Watch here

Pittsburgh on track for standout VC year

XchangePGH is a joint initiative to help Pittsburgh’s innovation tech ecosystem grow to its full potential.  On April 28, we will host a tech employer roundtable and job fair where tech employers will gather to discuss the future of work. Key topics include:

  • Apprenticeship programs
  • Upskilling
  • Community based hiring strategies
  • Attracting and retain tech talent
  • Statewide and county resources for Pittsburgh tech employers

Register to attend as a job seeker or employer here!

Electric Battery Company Building $2.6B Plant in Atlanta

A.fter years of shunning investments in military and security-related technology startups, VCs are raising their profile in the sector as part of the U.S effort to gain a technological upper hand against new threats from adversaries like China and Russia.

More investors have also flocked to portfolio companies whose satellite, robotics and software tools can do double duty as military and commercial “dual-use” technologies. Read more.

Electric Battery Company Building $2.6B Plant in Atlanta

The semiconductor industry is booming, with expected average annual growth of 6 to 8 percent through 2030 and yearly revenues forecasted to reach $1 trillion. The industry will have to double semiconductor production to keep pace with future demand, but most fabrication plants, commonly called fabs, are already operating at capacity. To increase supply, many companies have announced plans to build new fabs and some are already in the construction phase. And in a coordinated push to achieve a microelectronics resurgence, the United States is becoming a hot spot for fab construction. Read More.