At DVRGNT Ventures, we see this transformation as a catalyst for new investment theses and growth opportunities, particularly across The Great 38™️—the underinvested regions of the U.S. that stand to benefit most from this decentralization.

From Density to Distribution: A New Innovation Map

Historically, major urban centers—New York, San Francisco, Los Angeles, Chicago—have been engines of capital, talent, and technology. The pandemic disrupted this concentration, driving out-migration to smaller cities, regional hubs, and exurbs. While population losses in core metros may appear destabilizing, they also create a distributed innovation landscape that redefines how ecosystems form.

This dispersion of talent and capital presents an opportunity: regional clusters can now emerge as viable innovation centers if they leverage digital infrastructure, specialized workforce development, and targeted capital formation.

Innovation Opportunities in Suburban and Mid-Market Economies

The suburbanization of innovation does not mean simply replicating urban models outside of cities. Instead, it requires designing for the unique needs and growth levers of distributed markets:

1. Digital-First Service Models

   With fewer residents relying on traditional city infrastructure, industries like healthcare, education, and retail must adopt digital-first approaches. Telehealth, online learning platforms, and direct-to-consumer logistics models are poised to thrive.

2. Next-Generation Logistics

   Population shifts strain traditional supply chains. Suburban and mid-market regions are incubating new logistics solutions—from AI-optimized warehousing to drone and autonomous delivery networks—driven by the need for cost-effective distribution at scale.

3. Housing & Community Infrastructure

   Demand for affordable, sustainable housing in secondary markets is rising. This creates white-space opportunities in modular construction, energy-efficient design, and mixed-use developments that serve both residential and innovation-driven workspaces.

4. Workforce Rebalancing

   As knowledge workers relocate, regional economies can capitalize on fresh talent pools. Venture-backed startups in smaller markets can recruit top talent at lower costs, accelerating innovation in places once overlooked by traditional VC.

Implications for Capital Allocation

For investors, the lesson is clear: value creation is no longer confined to coastal metros. The pandemic accelerated a trend toward distributed innovation that aligns with long-term demographic shifts. Capital deployed into these ecosystems is not only catalytic but also strategically advantaged:

• Lower competition for deals compared to oversaturated coastal hubs

• Favorable valuations and longer runways for startups

• Policy alignment with states and municipalities seeking to attract innovation capital

• Enhanced resilience as distributed markets diversify systemic risk away from a handful of urban centers

The DVRGNT Ventures Perspective

At DVRGNT Ventures, our thesis has always centered on unlocking the overlooked potential of The Great 38™️. The Brookings data affirms that talent, ambition, and consumer demand are no longer confined to Tier 1 cities. The future of innovation will be distributed, resilient, and deeply rooted in communities that were historically underinvested.

We believe the next decade will not be defined by a single Silicon Valley, but by dozens of regional valleys of innovation—each creating solutions tailored to its economic and cultural context. For founders and investors alike, the imperative is to recognize this shift and build accordingly.

Conclusion

The population realignments of the pandemic are not a retreat from innovation—they are a reconfiguration. Just as industrial hubs once spread across the Midwest, and tech clusters rose in California, today’s migration is creating fertile ground for new models of growth.

For those willing to invest boldly and strategically in these emerging geographies, the upside is clear: innovation will not only be more distributed, it will be more inclusive, resilient, and enduring.

We’d love for you to join the conversation:

For Investors:

What products have you seen gain unexpected momentum because of their cultural cachet, maybe even through a surprising media alignment?

Leave a comment

For Founders:

Are you building a product with inherent cachet that’s ready to capture the imagination of tastemakers, especially from The Great 38™️? We want to hear from you.

Leave a comment

Apply at the link below to learn more about our founder-first approach.

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We see an underutilized lever for both investors and corporations: treating M&A not just as a late-stage growth tool, but as a deliberate derisking strategy for early-stage portfolios.

The Corporate Playbook: Buy, Integrate, Scale

McKinsey’s Buy and Scale research shows that incumbents accelerate growth by acquiring startups, integrating them into existing platforms, and scaling through established channels. This works when:

• Targets are strategically adjacent to the incumbent’s business model.

• Integration is disciplined, protecting innovation while leveraging scale.

• Growth accelerates by combining startup agility with corporate reach.

For corporations, M&A shifts from filling gaps to expanding into new businesses with speed and precision.

Applying the Model to Venture Capital

For early-stage investors, the same dynamic reduces portfolio risk in three key ways:

1. Clear exit pathways: Align startups with the acquisition appetites of industry incumbents, shortening the time from product-market fit to liquidity.

2. De-risked technology validation: Build startups with a clear line-of-sight to acquirer needs, increasing the likelihood of strategic interest.

3. Portfolio resilience: Relationships with incumbents provide pilot customers, distribution channels, and credibility—reducing binary outcomes.

Why This Matters for The Great 38™

Startups outside coastal hubs often lack dense capital networks or proximity to potential acquirers. Embedding M&A foresight into investment theses creates an “exit-enabling infrastructure”, making these ecosystems competitive nationally. Founders in Oklahoma, Ohio, or Alabama can see a structured acquisition as a real option—not just a distant IPO dream.

VCs as M&A Catalysts

The future of early-stage venture is funds acting as M&A architects—mapping acquisition pathways, cultivating corporate relationships, and building startups with both independence and integration potential.

At DVRGNT Ventures, we see this as more than tactical: it’s strategic. By lowering risk, increasing exit optionality, and accelerating founder outcomes, venture capital in The Great 38™ becomes not just viable, but transformative.

We’d love for you to join the conversation:

For Investors:

What products have you seen gain unexpected momentum because of their cultural cachet, maybe even through a surprising media alignment?

Leave a comment

For Founders:

Are you building a product with inherent cachet that’s ready to capture the imagination of tastemakers, especially from The Great 38™? We want to hear from you.

Leave a comment

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While around 80% of venture capital dollars flow to the coasts, the core of America’s economic output — and its long-term growth potential — sits in what we call The Great 38™.

What Is the Great 38™?

It’s our trademarked name for the 38 states across the South, Midwest, and Mountain West. Together, they make up the most economically and culturally powerful region in the U.S. — if you’re actually paying attention.

Here’s what the data says:

• 67% of the U.S. population lives in the Great 38™

• 60% of U.S. GDP is generated here

• Yet less than 25% of venture capital reaches the region

This disconnect isn’t an accident — it’s a miscalculation by firms still stuck in a coastal feedback loop.

Why This Region? Because This Is Where America Lives

When we say “underinvested,” we’re not just talking about capital access. We’re talking about overlooked value generators:

• 77% of Black Americans live in the Great 38™

• 66% of all U.S. women

• 55% of the Latine population

That’s not just demographic weight — that’s cultural and economic leadership. And yet? Entire venture ecosystems are pretending these communities and regions don’t exist.

We don’t see this as a social gap. We see it as the strongest alpha opportunity in the game.

From Thesis to Traction

Our financial model doesn’t rely on a unicorn lottery ticket. It’s built on intentional founder enablement, strategic network leverage, and measured risk.

Our 10-year roadmap is built to cycle capital, not just park it. We invest early, support aggressively, and exit with precision.

When we say we target 4x+ returns, it’s not a marketing line. It’s a product of disciplined pipeline development and rigorous founder alignment.

Why We Rebranded the Region

“Middle America” sounds like a second-tier destination. Like innovation and leadership live somewhere else.

We don’t buy that. The Great 38™ reflects what this region really is: a powerhouse of production, population, and potential. It’s time the capital caught up.

The future isn’t coastal. It’s continental.™ And we’re building it, one founder at a time.

We’d love for you to join the conversation:

For Investors:

What products have you seen gain unexpected momentum because of their cultural cachet, maybe even through a surprising media alignment?

Leave a comment

For Founders:

Are you building a product with inherent cachet that’s ready to capture the imagination of tastemakers, especially from the Great 38? We want to hear from you.

Leave a comment

Apply at the link below to learn more about our founder-first approach.

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This is a story of resilience and reinvention. But it’s also a story of inequality.

Meet the Great 38™️

We call them the Great 38™️: the South, Midwest, and Mountain West states that are home to two-thirds of the U.S. population. These states include powerhouse cities like Atlanta, Dallas, Minneapolis, Phoenix, and Nashville, along with hundreds of rural communities fueling agriculture, manufacturing, and energy.

Despite their economic diversity and demographic strength, the Great 38™️ remain chronically under-capitalized. They produce more than one-third of venture-backed startups, yet receive less than 20% of venture capital. The result? Trillions in untapped potential.

A region rich in talent—but short on capital

The Great 38™️ is home to the majority of America’s women, Black, Hispanic/Latinx, Indigenous, and LGBTQ+ entrepreneurs. These founders are building companies, often in overlooked industries like logistics, health care, and advanced manufacturing. But they operate outside the dense investor networks of the coasts, meaning they must work harder to secure funding and scale.

This gap isn’t just unfair—it’s costly. Racial discrimination alone is estimated to have cut U.S. GDP by $16 trillion between 2000 and 2020. A disproportionate share of that loss fell on the Great 38™️. Closing gender and racial gaps in entrepreneurship could add hundreds of billions of dollars annually to the region’s economy.

AI is reshaping the landscape

In 2025, AI startups captured nearly two-thirds of total U.S. venture value. But while AI mega-deals dominate headlines, the real opportunity for the Great 38™️ lies in applied AI—tools that make local industries more productive.

• Manufacturing: Generative design, predictive maintenance, and digital twins.

• Agriculture: Precision farming, water optimization, and supply-chain forecasting.

• Health care: Telehealth, revenue-cycle automation, and clinical decision support.

• Logistics: Route optimization, warehouse robotics, and demand sensing.

These are the backbone sectors of the Great 38™️—and AI is the lever that can transform them.

The rise of micro-economies

Economic uncertainty, geopolitical shocks, and federal dysfunction are pushing communities to become more self-reliant. Across the Great 38™️, we’re seeing micro-economies emerge: ecosystems of talent, capital, and supply chains that keep growth local.

Cities like Tulsa, Columbus, and Birmingham are investing in accelerators, workforce development, and venture funds. The goal isn’t to mimic Silicon Valley—it’s to build resilience rooted in local strengths.

Why virtuous capitalism matters

At DVRGNT, we believe in virtuous capitalism: a model where profits and know-how are reinvested into overlooked communities and founders. It’s not charity—it’s smart economics.

Imagine if even a fraction of the billions that leave these states in federal tax outflows were redirected into local innovation funds. We could double venture activity in the Great 38™️ without spending a single extra federal dollar.

Supporting diverse founders isn’t just the right thing to do. It’s the growth opportunity of our generation.

A call to action

The Great 38™️ have the people, industries, and ideas to lead America’s next chapter of growth. What’s missing is equitable access to capital and structured early-stage support.

The question for investors, policymakers, and business leaders is simple: What might happen if we finally invested in the people and places that built America?

The future of American innovation isn’t confined to the coasts. It’s already taking shape in the Great 38™️. Now it’s time to fuel it.

We’d love for you to join the conversation:

For Investors:

What products have you seen gain unexpected momentum because of their cultural cachet, maybe even through a surprising media alignment?

Leave a comment

For Founders:

Are you building a product with inherent cachet that's ready to capture the imagination of tastemakers, especially from the Great 38? We want to hear from you.

Leave a comment

Apply at the link below to learn more about our founder-first approach.

Apply Now