The Role of Investment in the Heartland

American private investment dollars have long been concentrated on coastal cities, drawing interest from policymakers, businesses and researchers eager to understand and leverage its impact. Private equity (PE) firms, which invest in mature companies to streamline operations and drive profitability, and venture capital (VC) firms, which fund and advise early-stage startups, play a crucial role in shaping the private market landscape, and as a result, impact state and local government. 

Researchers have analyzed employment trends at venture-backed companies, tracked state-by-state VC growth and speculated on the next big sectors for investment. While these studies provide valuable insights into investment patterns, they often overlook a key perspective: what actually attracts PE and VC firms to certain states in the first place? For states outside traditional investment hubs, understanding these factors can offer a roadmap for unlocking capital and fostering economic growth. So, what makes a state appealing to investors, and how can heartland-based firms set themselves apart in a competitive market?

To get a closer look at what draws investment to the heartland, let’s turn to Oklahoma’s private sector.

Oklahoma on the Rise: A Case Study in Heartland Investment Growth

From 2012 to 2022, the state’s growth in VC capital was nearly three times its GDP, which could be attributed to the financial services sector and materials & resources sector. Policy initiatives launched in 2021 allowed public pensions to be invested in local PE, VC and growth funds, called Invest in Oklahoma. Reflecting the growing presence of VC in the private market, Oklahoma ranked fifth among heartland states for VC investment in startups from 2019 to 2023. 

Beyond this compelling recent growth, what truly makes Oklahoma a heartland investment hub?

Tulsa Innovation Labs, a key player in Oklahoma’s economic transformation, has some answers. As the lead agency for the Tulsa Hub for Equitable & Trustworthy Autonomy (THETA Tech Hub), Tulsa Innovation Labs has helped position Tulsa as a leader in the Oklahoma investment space. The organization is additionally backed by a $51 million investment from the U.S. Economic Development Administration (EDA), which designated Tulsa Innovation Labs as a “Tech Hub”. This designation denotes the EDA’s confidence in the region’s ability to build a thriving technology and business ecosystem—something that is increasingly attractive to private capital.

Innovation and investment are thriving in Oklahoma City as well, the heart of which is located at The University of Oklahoma. The Price College of Business offers courses to equip students with VC financing expertise, supporting a direct workforce pipeline into Oklahoma’s growing private investment landscape. Meanwhile, University Research Park, which is home to more than 35 science-based companies and the University of Oklahoma’s Health Sciences Center, fosters public-private partnerships which serve to drive the city’s creative and innovative momentum.

There are several compelling advantages of investing VC and PE funds Oklahoma, given strong economic indicators such as:

• Cost of living: Tulsa and Oklahoma City offer a high quality of life at a lower cost of living — an estimated 49.5% lower cost of living than San Francisco, CA, which is a point of attraction for retaining top tech talent.
• Direct talent pipelines: Research institutions like Oklahoma State University and University of Oklahoma and industry-connected institutions like the University of Tulsa reinforce the workforce while capitalizing on the sectors that make Oklahoma thrive, like energy and materials & resources. 
• Innovative Programs: Tulsa Remote is fostering a new definition of community while attracting valuable remote employees. The Oklahoma City Innovation District aims to revitalize the entrepreneurial landscape by fostering connectivity and collaboration across the city.

With a growing track record of investment, innovation, and strategic support, Oklahoma is proving that the next wave of high-growth companies doesn’t have to be born on the coasts.

Strategic Incentives: How Pro-Growth Policies Attract Private Capital 

Beyond leveraging their unique business environments, heartland states use strategic incentives to draw private investment. 

• Angel Tax Credits: Many heartland states support early-stage funding through tax credit programs, often called angel tax credits, which help mitigate investor risk and encourage backing for high-growth, high-risk ventures (these programs exist in Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, North Dakota, Tennessee, Wisconsin). 
• VC Development Funds: Other states take a more direct approach by matching private VC investment in an early stage company or providing funding to the company itself—helping to keep capital local and fuel regional innovation (Arkansas, Indiana, Iowa, Kentucky).
• Strategic Efforts: Some states created initiatives that actively champion small business investment, making it easier for entrepreneurs to access the capital they need to scale (Ohio, Kentucky).

The heartland is building a dynamic financial ecosystem of its own—proving that with the right support, innovation and investment can thrive outside America’s largest cities. Through targeted incentives like angel tax credits, venture capital development funds and small business investment programs, these states are creating an environment where private capital can take root and fuel economic growth. 

These incentive programs build on strong workforces, the appeal of quality of life, and the strength of local research institutions. As investors increasingly look beyond traditional hubs, the heartland offers a compelling frontier—one where policy, opportunity and entrepreneurial ambition intersect to shape the next era of American business.