Minnesotans don’t like talking about themselves, so you probably haven’t heard much about the startup scene here in the North. Fortunately, it’s my adopted home (I’m originally from Florida) and I have no problem shining a light on a hidden gem.
Nine years ago, I was an early-stage tech entrepreneur living in the Greater Washington D.C. metro area before making the move to Minnesota’s Twin Cities: Minneapolis and Saint Paul. What pulled me in? One of the area’s many Fortune 500 companies — I was a trailing spouse.
Upon arrival, I loved most of what the Twin Cities had to offer but was admittedly disappointed by the tech scene. In 2009, it was difficult to find or connect with other entrepreneurs. This was probably part economy, part ecosystem, and part my being absorbed in my company.
Regardless of the reason, the Twin Cities have come a long way in nine years, and people are moving to an entirely different Minnesota. Outside of Chicago, the Twin Cities are often ranked as the best entrepreneurial ecosystem in the Midwest. And we are just getting started, as evidenced by the 40 percent increase in startup investments between 2016 and 2017.
Connected, collaborative, and supportive
How have we come so far in less than a decade?
First and foremost, it’s about the people. Subjectively, I have watched several entrepreneurs step up to create programs and support systems for other entrepreneurs. Twin Cities entrepreneur currently serve as mentors for programs like Techstars Farm to Fork (which I am the managing director of) and Techstars Retail. There’s also Minnesota Cup (the largest statewide startup competition in the country), Gener8tor, and many, many more mentor-driven entrepreneurial programs.
Once people here had some direction, a wave of mentors emerged, volunteers showed up, more founders took the leap, and more employees came aboard.
And the support doesn’t stop with advice and guidance. If you are new to town, people are willing to meet and make introductions for you. One organization, Make it MSP, even pays to fly people in during Twin Cities Startup Week to check out the scene.
It’s tough to gather data on how much more connected the tech scene has become, but you know it when you see it. In 2018, there are fewer excuses for anyone who wants to plug in. There are lots of events and organizations that make it easy to connect — and more of them are focusing on better connecting underserved populations.
- Impact Hub
- Lunar Startups
- Startup Weekends
- Bunker Labs
While many ecosystems have events and organizations like these, the difference is how ours work together. Forge North was founded in 2017 by a group of local entrepreneurs and community builders, in part to provide a platform to keep the entire community talking and connected all year round. According to Techstars data, Twin Cities Startup Week is now the second-largest in the country. It’s an impressive collaboration among all these groups and dozens more. As a community, we believe that by helping one another we all get better. Entrepreneurship is not a zero sum game.
The big players
I’d be remiss if I didn’t mention the role that Minnesota’s large enterprises play in helping entrepreneurs. There are currently 18 Fortune 500 companies here — and that doesn’t include Cargill, the largest privately held company in the U.S by revenue, or Mayo Clinic, the top-ranked hospital. All but one of them grew here organically. Simply put, this state builds giant, successful corporations.
As a result, the enterprise scene here is diverse, from food to finance to retail to health care and manufacturing. This diversity adds a level of stability that is rare in most regions. And these organizations play five vital roles for Minnesota entrepreneurs: They act as customers, help attract talent, keep local talent in the region, provide support for entrepreneurship programs with mentors and dollars, and may invest in or acquire startups later down the line.
A common thread among most entrepreneurs in Minnesota is the desire to solve real problems. You don’t find a lot of “nice to have” startups here, and while we have founders starting companies in almost every vertical, three areas stand out.
Minnesota has historically been known for food and agriculture. There is now an amazing amount of food innovation in the city. Anchor organizations include Techstars Farm to Fork, which is working in partnership with Cargill and Ecolab; Grow North, an amazing land grant University; and five of the world’s 30 largest food and ag companies: Cargill, CHS, General Mills, Land O’Lakes, and Hormel. No region in the world is better positioned to lead food and agricultural technology, in my opinion.
A second area of strength is health care. Minnesota is the birthplace of open heart surgery and the pacemaker. From 2013 to 2017, companies in Minnesota’s “Medical Alley” collectively raised more than $2.5 billion.
Finally, Minnesota’s unique concentration of large corporations has resulted in many startups building enterprise-level B2B solutions. Recent notable startups include Inspectorio, Branch Messenger, and Code 42. The Techstars Retail Accelerator in partnership with Target is a great example of focus on enterprise tech in the Twin Cities.
The future of entrepreneurship in Minnesota
While we are on the right path, entrepreneurship in Minnesota certainly still faces challenges. Three pain points stand out from a recent study of more than 100 founders conducted by Beta.mn. First, these founders believe the traditional corporate path is so prevalent here that it has created a risk-averse culture and dampened people’s willingness to start or invest in a new company.
Second, our ecosystem is still largely made up of early-stage companies. While Sport Ngine’s recent acquisition by NBC Sports made headlines, there have not been many recent big exits. We are still very much on a credibility watch and need more notable exits to help recycle capital back into the ecosystem.
Finally, the Twin Cities lacks a central hub for entrepreneurs. Chicago has 1871, DC has 1776, but Minnesota has a very distributed ecosystem. Saint Paul’s Osborn 370 building is taking steps to fill this gap, though that effort is still in the early stages.
But every ecosystem faces challenges. Minnesotans are getting increasingly comfortable telling their own stories and starting new ventures. You’ll see Minnesota’s growing startup scene in the stats and rankings, but more importantly, you’ll discover it by talking to the entrepreneurs, investors, and collaborators working in the region.
Brett Brohl is the managing director of Techstars’ Farm to Fork accelerator.
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