Startup Ecosystem Profile: Dayton
More than a century after the Wright Brothers' first flight, innovators in Dayton are again cleared for take-off
On December 16, 1903, Orville Wright said: "If we worked on the assumption that what is accepted as true really is true, then there would be little hope for advance." Less than 24 hours later, he piloted the first powered flight in human history.
The Wright Brothers designed and built the first flying machine in their hometown of Dayton, Ohio, during the city’s heyday of innovation. At that time, Dayton boasted the most patents per capita in the nation. However, much has changed since then: yesteryear’s trailblazers were developing “heavier-than-air flying devices” and building manufacturing empires, while today’s pioneers are launching rockets into space and constructing kingdoms in the cloud. Despite our evolution, Wright’s quote remains relevant. To change the world, we must challenge it.
On today’s stop on the MidBest tour, we will briefly touch on Dayton’s storied past, dive into the city’s present-day startup landscape, and discuss the future of entrepreneurial innovation in the region and how to maximize that opportunity. We are so grateful for the 10+ people who met with us on the first day of our trip and shared the background and color to help us tell this story.
A city built on innovation
Dayton’s history of invention extends far beyond the airplane. The cash register, liquid crystal display (LCD) screens, and modern refrigeration and air conditioning technology are just a few of the city’s advances in the first half of the 20th century. Its population grew rapidly in that period as well and reached its peak in the 1960s.
In the latter half of the 20th century, white flight and suburbanization gutted Dayton’s urban core, and the local economy stalled. Then came the 2008 financial crisis and ensuing recession that delivered a near-knockout punch: Dayton’s one-million-square-foot GM plant closed, the area’s last Fortune 500 company, NCR, moved away, and the 2010 census revealed the population had declined by over ten percent in just a decade. Things were bleak. However, the experience of rock bottom also provided a blank slate upon which Dayton could rebuild.
Led by Mayor Nan Whaley, the city reinvested in its downtown core and injected life into its once-stagnant economy. Aviation continued to play a critical role, as Wright-Patterson Air Force Base, the largest employer in the area, provided a steady stream of highly skilled technical talent to the region. The base is home to the Air Force’s Materiel Command, which controls 31% of the branch’s $150+ billion budget. It also hosts the Air Force Research Laboratory, which produces world-changing technologies a decade before the private market could begin to bear their R+D costs and allows for commercial spinoffs similar to university research.
A look at Dayton’s present-day startup landscape
Today, Dayton is one of three metro areas in Ohio to report population growth over the last decade, and the local economy is in the nascent stages of fostering a startup ecosystem. The nucleus of that community is The Hub, a coworking space/incubator/housing/commercial center housed in the historic Dayton Arcade. While the presence of the massive Air Force base provides natural support for defensetech startups, it’s far from a single-industry town. A growing family of technology and media startups is beginning to dot the landscape.
Our first meeting of the day was with Tangram Flex, a defensetech company that has grown from three employees to over 65 in just three years and was the fastest SaaS company to raise capital in Ohio’s history. At an earlier stage is ConsumerOptix, an insurtech company that’s riding Ohio’s increasing dominance in the industry and is currently raising a seed round of funding. There’s also Viddoe, a platform to allow online shoppers to select and purchase items while watching videos featuring those items. Lastly, the region’s most mature high tech startup is Marxent, a 3D visualization platform that allows users to design and configure rooms before a single piece of furniture gets delivered. It has raised nearly $30 million in venture funding.
On the digital media side, we met with a few founders looking to fill a supply gap for local content in an increasingly nationalized market. Curafied is a weekly, bite-sized newsletter delivering local news and events via text. CEO Arielle Jordan Cassidy, a New Orleans native and Silicon Valley Women’s Startup Lab alum, is rolling it out this fall. Nearu TV recently unveiled its streaming service featuring locally produced and curated video content. It’s led by partners Andrew and Lauren White, who founded the city’s first coworking space, which was ultimately acquired and became the foundation for The Hub. Both Nearu TV and Curafied have long-term plans for expansion to other markets to create networks of localized content.
What does the future hold for startups in Dayton?
Our conversations with founders and key players in Dayton’s startup scene were exciting and illuminated the limitless possibilities for the region, but they also revealed the work that must be done to reach that potential.
Dayton has a couple of comparative strengths. The first is the Air Force Base, which controls tens of billions of dollars, conducts groundbreaking research, and brings highly skilled engineering talent to the region. Matt Farrell of Tangram Flex shared the insight that the secretive nature of the base’s work means that many of its employees don’t have LinkedIn pages, which obscures high-level accounting of the region’s talent pool. The second advantage is the low cost of building a business, which allows for longer bootstrapping periods, lower prices for investors, and better-developed businesses when it comes time to raise external funding. As one founder put it, “Ohio startups need series A metrics to raise seed-size rounds.”
Unfortunately, lack of access to capital is also one of the main obstacles for local founders, especially those from underrepresented backgrounds. Each of the companies we mentioned that are in the process of raising outside funds, or had already done so, are helmed by white men. In contrast, Curafied, Viddoe, and Nearu TV are all led or co-led by Black and/or women founders and expressed struggles in raising money. They often didn’t know where to start. Unequal access to capital and opportunity is as much a problem in Dayton as it is in Silicon Valley, but that doesn’t mean we have to accept it. In the words of Scott Koorndyk, who’s building a Dayton-focused $10 million pre-seed fund, “The startup community needs to look like the people we serve.”
A prime example of the issue is Viddoe. We’re especially bullish on the technology that CEO Dexter Gilliam-Beale has built and the market he’s addressing, but it’s clear he would benefit from venture backing and the guidance that comes with it. If he was a Stanford graduate in San Francisco, his prior career as a successful internet entrepreneur would profile him for an easy multi-million-dollar funding round; as a Black man living in Dayton, he has not gotten that same benefit of the doubt.
The Dayton startup scene is the youngest of those we visited, but it also possesses unique strengths (namely, the Air Force Base and its super-low cost). If the Midwest wishes to compete with the coastal giants, it must work as a collective and seize on each city’s distinct advantages. Dayton, located at the heart of the region, is perfectly situated to be the hub for collaboration.
Thanks for reading this edition of MidBest. Next week, Gaelen will guide you through Detroit’s ecosystem.