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Authored by Nathaniel Harding
Five years ago, we launched Cortado Ventures with a belief that ran against conventional wisdom: that the Midcontinent wasn’t a flyover region for innovation, but one of the most compelling and underwritten opportunities in venture capital.
We launched in the middle of COVID. Capital was scarce and coastal gravity was strong. More than a few people told us that building a venture firm here didn’t make sense. If you wanted scale or ambition, you were supposed to go somewhere else.
Five years later, the companies — and the data behind them — tell a different story.
This past year marked a meaningful milestone for Cortado. Not simply because we crossed a five-year mark, but because 2025 felt like the year when the compounding effects of patience, focus, and regional conviction became visible.
What follows is a reflection on what 2025 taught us, and why 2026 feels like a genuine inflection point, not just for our firm, but for Midcontinent innovation more broadly.
We invested just over $7.5 million across eleven companies, split between follow-on investments where conviction had been earned over time and a small number of new companies where the underlying problems felt urgent and durable. We also saw several exits during the year, which matter more than ever in the DPI drought, putting us near the top decile of all VC funds. As we closed out the year, our portfolio represented roughly $1.9 billion in total enterprise value and attracted $345 million in co-investment and follow-on capital.
One of the clearest patterns throughout the year was how dramatically AI compressed the distance between domain expertise and execution. Across energy, logistics, manufacturing, healthcare, and defense-adjacent markets, experienced operators are now building real products faster than ever — not because they suddenly became engineers, but because the tooling finally caught up to their understanding of the problem.
This is where the Midcontinent has a quiet advantage.
For decades, enormous operational knowledge lived inside incumbents, spreadsheets, and people’s heads. The bottleneck wasn’t insight — it was translation. In 2025, that bottleneck began to break. Ideas that once took years to prototype now take months. Products that once required large teams now emerge from small, focused groups with real leverage.
What’s changed isn’t just speed — it’s selectivity. As we look toward 2026, AI capital is already shifting away from speculative experimentation and toward execution and return on investment. Enterprise adoption is accelerating where AI drives real productivity gains, automates previously manual workflows, or reshapes how work gets done inside organizations. In many cases, that means fewer layers, smaller teams, and clearer accountability, especially in sales, operations, and product functions.
We’re seeing this directly in companies like Dockware, Equipt, Tobe, Apricot, and others. These aren’t startups chasing novelty or abstract use cases. They’re teams solving problems they’ve lived with for years, now finally equipped to do something about them. In regulated and high-stakes environments like healthcare and infrastructure, the emphasis is increasingly on explainability, cost savings, and measurable outcomes — not generalized models or hype cycles.
That shift also helps explain another data point from the year: more than 70% of our 2025 investments involved diverse founders. The number matters, but the reason matters more. We didn’t pursue diversity as an outcome in itself. We pursued underserved markets, overlooked geographies, and non-traditional founder paths. Diversity tends to follow when you stop optimizing for pattern recognition and start underwriting real problems in real places.
A few lessons crystallized over the course of the year. Smaller teams with real leverage consistently outperformed larger teams with higher burn. Operators tended to outperform storytellers, particularly as capital remained constrained. Governance and ownership matter just as much as picking the right company on day one. Follow-on discipline proved to be a feature rather than a limitation. And regional ecosystems don’t move linearly — they compound slowly, then suddenly.
That last point matters. Five years in, the Midcontinent no longer feels like an emerging story. It feels like a region finding its footing.
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Which brings us to 2026.
If 2025 was about proof, 2026 feels like an inflection point.
Liquidity is returning, but not in the way many people expect. We don’t anticipate a return to 2021-style exuberance. What seems more likely is a selective reopening: strategic M&A driven by necessity, narrower IPO windows for real businesses, and a growing normalization of secondaries and structured liquidity. Capital is flowing toward durability, margins, and real customers.
That environment tends to favor companies built in capital-efficient regions, where founders are focused less on headlines and more on building something that lasts.
At the same time, frontier technology is shifting from a theme to a necessity. National competitiveness is no longer abstract. Energy resilience, domestic manufacturing, space infrastructure, logistics efficiency, cybersecurity, and advanced materials are now policy- and budget-backed priorities. Capital is increasingly targeting the structural enablers underneath these systems — the infrastructure, security layers, and deep technical foundations that make long-term value possible.
What’s notable is where much of this work is happening. Many of the most consequential solutions aren’t being built on the coasts. They’re being built near factories, test sites, customers, and operators — close to the industries themselves. That reality has shaped how we’ve been investing and where we’ve been spending time, including selectively leaning into later-stage frontier companies like Anduril that sit at the intersection of national priorities and venture-scale outcomes.
AI is also reshaping organizational design in ways that will matter even more in 2026. The most compelling startups increasingly look “too small” by historical standards. Lean teams are reaching meaningful enterprise traction with a fraction of the headcount that would have been required even a few years ago. For investors, this forces a reset around efficiency, discipline, and earlier governance.
It’s also changing how we think about our own role. We’re expanding the Cortado team, adding people with operating depth and sector experience, including leaders like former NASA Administrator Jim Bridenstine and soon an operating partner dedicated to working alongside portfolio companies. The goal isn’t scale for its own sake. It’s to show up earlier, lean in deeper, and help founders navigate the messy middle between first traction and real scale.
Looking ahead, our optimism is grounded less in any single technology and more in the convergence underway across frontier sectors. Space, energy, advanced manufacturing, biotech, and security are moving from the periphery to the core of economic and national priority. The constraint is no longer technological feasibility, but whether the surrounding systems — capital, infrastructure, governance, and execution — can support sustained progress.
Space illustrates this shift clearly. For decades, advancement was driven by bespoke, mission-specific programs coordinated by institutions like NASA. Today, commercial platforms developed by SpaceX and Blue Origin have lowered launch costs and increased cadence, fundamentally changing the economics of access to orbit. That progress has expanded what’s possible, while also introducing new challenges around coordination, prioritization, and long-term stewardship. The frontier challenge has shifted from access to execution.
The same dynamic is playing out across other frontier industries. Capital is increasingly flowing toward structural enablers — platforms, infrastructure, and security layers that allow innovation to scale reliably over time. The advantage is shifting away from proving that something works once and toward building systems that work repeatedly and at scale.
This is where we believe the Midcontinent holds a structural edge. Builders operating close to these industries understand not just the technology, but the operational, regulatory, and physical constraints that determine whether progress endures. That proximity favors durability over novelty.
As we head into the year ahead, our focus remains straightforward: back founders early, stay close as they scale, and be prepared when a small number of companies grow into something materially larger. We’re building with patience and intent, and 2026 feels like a year when execution becomes as decisive as invention in shaping the future of frontier technology.
The work ahead looks familiar in principle, but broader in scope, and we’re positioning ourselves accordingly.