If you grew up in Minnesota, you probably know someone who works for Best Buy, Xcel Energy, UnitedHealth Group, 3M, or any number of local Fortune 500 companies. And if you don’t know anyone, there’s still no escaping the news coverage. For many years, Minnesota has ranked second in the country for Fortune 500 companies per capita, and much of the local media coverage deals with Minnesota corporations due to their significant economic impact locally and internationally. By comparison, markets that don’t have the foundation of such strong, mature corporations naturally have more media space that can be devoted to startups and up-and-comers.
But companies like Cargill, Ecolab, and Target were startups at one point, and I’ve found them to be deeply invested in the success of their home state economies. Larger corporations are a true asset to startups as they provide critical on-ramps for entrepreneurs.
Filling the gaps
First, corporations often have or keep gaps in their solutions that leave opportunities for startups to fill. Take IT, for example. For a Fortune 500 company, IT services and infrastructure can be expensive and time-consuming to develop in-house solutions. Doing so can also divert talent from core business problems and programs. Instead, working with innovators outside of a corporation gives lesser-known creative solutions room to grow and the company more time to focus on customers and strategic initiatives.
Sometimes gaps are not purposefully created, but they evolve from a small offshoot or unintended application of a company’s technology that the market can rush to fill. We’ve all seen examples of the market taking a product or feature in a direction completely different than what the creators intended. Startups can work within these spaces to greatly benefit the company without distracting from its primary mission.
Partners, not competitors
While there is no shortage of opportunities for startups and their employees to network in the Twin Cities, the strong Fortune 500 base can offer newer organizations unique industry and market insight.
Going to market with a new product is inherently challenging. You have to establish name recognition and trust in the marketplace, and you have to find your customer (not just your end user). Startups have very little wiggle room when it comes to making mistakes and using resources, as they don’t have the luxury of throwing everything out there to see what sticks. Thankfully, Minnesota is rich with ecosystems and connections to help startups connect on go-to-market (GTM) with corporations.
Accelerators are also an important component in any startup ecosystem by lower the barrier to entry for startups. Perhaps most importantly, accelerators give founders access to experienced mentors, who can help avoid some of the pitfalls common to many startups. And corporate mentors in particular can give founders priceless industry knowledge and advice on how to think through the scale needed to work with large corporations.
One of the more noteworthy connectors in the Minneapolis space is Techstars, which came to market with a retail focus partnering with local sponsor Target. While Techstars can have a huge local impact, its model has scaled internationally, and now has 40 accelerator programs. Now Techstars is opening their second accelerator in the Twin Cities, Farm to Fork, which is focused on agriculture and backed by Ecolab and Cargill.
As the community becomes more connected, we see even more examples of established organizations working with startups in their various verticals.
- The University of Minnesota and the Holmes Center for Entrepreneurship have created several platforms dedicated to our local ecosystems, including Grow North, which works in the agriculture space. The Carlson School of Business also sponsors the MN Cup, a statewide startup competition.
- Healthcare.MN is dedicated to the health care industry and works with corporate partners including United Health Group and Boston Scientific.
- Both Beta.MN and Minnestar work with tech startups in the community. Beta.MN connects startups from various industries to corresponding Fortune 500s in town through its Bridge program. In a single afternoon, 20 startups are shuffled through meetings with companies like Target, Cargill, Best Buy, 3M, Medtronic, UHG, US Bank, General Mills, Wells Fargo, and more.
Whether you’re working in agriculture, health care, retail, or technology, you need to understand your mission, your product market fit, HR, and accounting. Sharing ideas between all these verticals makes everyone stronger.
New programs are continually coming to the market, focusing on different verticals in the startup community and helping the ecosystem become more robust. In February, for instance, Lunar Startups announced a new program working with American Public Media in the new Glen Nelson Center in St. Paul to incubate media startups.
The support that really counts: revenue
But the greatest thing that corporations can do to help startups is to pay for their products. Getting revenue into the books and real-world use cases up and running is what every startup needs.
More and more we’re seeing our largest companies extend pilots to early stage startups. Though limited, these pilots help validate a startup’s idea, service, or product, while providing critical feedback for future enhancements. And corporations also reap huge benefits, such as gaining access to cutting edge technology for a fraction of the time and cost it would take to build on their own.
Chip Pearson is cofounder and chairman of the board for Jamf, an Apple device management company based in Minneapolis.