Startup Ecosystem Survey_Make It MSP_Beta

Entrepreneurial Ecosystem

SURVEY SUMMARY

BROUGHT TO YOU BY:

2E N T R E P R E N E U R I A L E C O SYST E M S U RV E Y S U M M A RY

FORMER FOUNDER

SERVICE PROVIDER

COMMUNITY BUILDER

INTERVIEWS & SYNTHESIS CONDUCTED BY:

ReedRobinson

@ I N D E E D I TS R E E D R E E D @ B E TA . M N

3

CARSON KIPFER

E N T R E P R E N E U R I A L E C O SYST E M S U RV E Y S U M M A RY

JOY LINDSAY

THOMPSON ADERINKOMI

DAN MALLIN

PAUL HINES

CASEY HELBLING

KYLE ROLFING

RYAN BROSHAR

DANIELLE STEER

MELISSA KJOLSING

MARK MOE

DAVID AMOR

PAMELA YORK

Respondents

Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N


Respondent Breakdown

8

3

8F O U N D E R S

I N V E STO R S

C O M M U N I T Y B U I L D E R S

4

9M A L E

F E M A L E

2

11

N O N - W H I T E

W H I T E

GROUP GENDER ETHNICITY



TEMPERATURE CHECK

How are we doing?Our respondents were asked,“On a scale of 0 to 10 (where “0” is nonexistent and “10” is the most perfect example of one) how would you rank the Twin Cities as a startup community?

0 1 2 3 4 5 6 7 8 9 1 0

M E A N : 5 . 8

M E D I A N : 6



General Consensus

FOUNDERS

6INVESTORS

5.7COMMUNITY

BUILDERS

5.8

MALES

5.8FEMALE

5.8WHITE

5.7NON-WHITE

6Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N

Why are we a 6and not a 0?

WHAT IS WORKING

WHAT IS WORKING

Quality of LifeWorking in a startup is stressful. Thankfully, we have the foundations in place to alleviate a portion of these pressures in the form of a functioning infrastructure, affordable housing and office space and positive peer pressure that embodies a healthy work-like balance.


The Twin Cities is an attractive place to live; it’s possible to have a good life here.”

We have phenomenal parks

and recreation options all year long, which I don’t equate to

the success of a startup, but it’s

a nice relief from the pressure.”

We have good amenities and

we’re generally keeping up with

technologies that other cities

enjoy – Uber, Lyft, etc., which

are fundamental things that are

required to be a startup hub.”

W E H AV E T H E B AS I C S

When you’re a startup, you’re living in squalor, but our

squalors are better here.”

There is accessible and

affordable workspace.”

I T ’ S A F F O R DA B L E

“

We have a quality of life here

that is important to founders. It can be an advantage to

those that want to work in this

field at a sustainable pace.”

On top of that other benefits

like good schools and

affordable housing, nature

and work-life balance are also attracting outside talent.”

W E ST R U C K A B A L A N C E


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TalentMinnesota’s workforce tops listsfor higher education and we rank second in most Fortune 500 companies per capita (with 17).

We’re one of the few major metros with a large student body adjacentto downtown. And we have a population base that volunteers its time more than most other states.

I’ve always been struck by the sheer number of incredibly talented people in the area.”

People’s willingness to

volunteer their time is amazing. People seem to

make it a priority to make

themselves available.”

A lot of people are willingto engage in the form ofhours, time and energy in

organizations that support

startups.”

G E N E R O U S , E N E R G I Z E D

We have a strong group of

mentors with deep domain expertise – retail, clean tech,

med tech, etc.”

The level of knowledge –

business practices, technology,

etc. – is second to none.”

SUBJECT MATTER EXPERTS

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We have a lot of talent, and

it’s younger, which is a better indication of our future upside.”

Our education system –MAC, St. Thomas, the U, etc.– breeds a lot of young

people who are ambitiousand talented.”

YOUNG, AND GROWING


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WHAT IS WORKING


CorporateResourcesMinnesota’s corporate community is very big and very diverse; our 17 Fortune 500 companies represent these industries - healthcare, retail, agriculture, manufacturing, food, energy, transportation and financial services.

We have one of the best corporate communities.”

There’s a saying that great

things happen at the intersections of disciplines;we have a richness of

industries that is very rare.”

We have diversity in termsof industry, which maps wellto the same diversity we seein our local Fortune 500

companies.”

E XC E L L E N T D I V E R S I T Y O F I N D U ST R I E S

We have a strong industry

knowledge in certain industries;

this is due to the large

corporations we have in town.”

There are so many Fortune

500 companies, with people

that are very talented, that end up being corporate escapees.”

DEEP INDUSTRY KNOWLEDGE

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We’ve also started working

well with local Fortune 500

companies that are interested

in supporting startups, without getting in their way.”

The corporate environmentis becoming more engaged;

they are taking meaningful

steps to figure out their role,

and they have the resources

to back it up.”

BEGINNING TO ALIGN WITH STARTUPS


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WHAT IS WORKING


Startup CommunityMany have witnessed the incredible growth of the Twin Cities’ startup community. As recent as five years ago just a handful of gatherings existed that were sparsely attended; now, nearly every vertical has its own showcase events, each drawing hundreds of people.

The community tries to support each other.We regularly share resources and feelcomfortable asking for support.”

Visibility and access for

entrepreneurs is plentiful– MN Cup, Beta.mn, etc. Not

all of them know how to enter,

but once they are in, they are in for good.”

We have a lot of great

grassroots organizationsthat are helping to build abetter community – Minne*,Beta.mn, etc.”

W E ’ R E C E L E B R AT I N G O U R STA RT U P S

Area services (legal, design,

marketing, etc.) are well

capable of supporting startups.”

Services are coming online that

will help create an even better

startup workforce (Prime

Academy as an example).”

OUR SERVICES CAN SUPPORT OUR STARTUPS

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We have a strong University

(the U of M) that continues to

produce valuable IP.”

Being able to find someone

via the SciTech experience

(through the U of M) has been

game changing for helping us

find talent.”

EDUCATION IS INVOLVED


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WHAT IS WORKING


MomentumClaims like “the fastest growing state for tech jobs” and “one of the top states for Millennial startups” are stacking up as national publications have begun to take notice of our resources, enthusiasm and accomplishments.

We have momentum; things are headingin the right direction. And the energy thatwe are seeing at events is incredible.”

Our startup community has

been getting a lot of national attention in the form of

investments, media,

accelerators, etc.”

The outside attention we are

getting is building and that is

very good for us.”

AWARENESS IS RISING

Historically, we’ve been known

for healthcare, but recently,

we’ve started to expand

beyond that vertical into retail

(with Techstars), Food & Ag

(with Grow North) and others.”

Companies like Microsoft, Google,

Amazon, etc. are opening offices here because they are seeing

local opportunities.”

VERTICALS ARE EXPANDING

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We’re also seeing the region

becoming more comfortable

with investing in startups; it’s

more normal for startups to

be a part of an individual’s

investment portfolio.”

MONEY IS MOVING


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WHAT IS WORKING


We’re seeing the region becoming morecomfortable with investing in startups;it’s more normal for startups to be a partof an individual’s investment portfolio.”

Momentum– InvestmentsA wave of young, profitable, growing tech startups is forcing local and national fund managers to rethink their attitudes towards investment opportunities in the Twin Cities.We should also expect to see a string of meaningful exits in thenext two years.

There is far more activity now

than there has been in the last 20 years; there’s more startup

groups, more entrepreneurs

and more angel investors.”

There’s a growing desire forall things startup - the MN Cup,

Beta.mn, investments, the angel

tax credit, etc.”

APPETITE FOR INVESTING IS GROWING

We’re just getting to the end of a cycle where some startups

have exited, and theoretically

should soon be reinvesting.”

We’re on the cusp of multi-

generational success, where wewill start seeing a number of local

success stories begin to reinvest.”

REINVESTMENTS ARE ON THE HORIZON

“

The Angel Tax Credit rebate

has been incredibly helpful.”

NEW FUNDING OPTIONS ARE NOW AVAILABLE


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Equity crowd funding is now

an option; that’s cool!”

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WHAT IS WORKING


Why are we a 6and not a 10?

WHERE WE CAN IMPROVE



I don’t see anything that stands in the way of us being more successful. The momentum is there; it’s just a cultural thing that takes time. It’s just something that needs to play out.”

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CultureDamn this conservative, agrarian heritage of ours! The very same planful, pragmatic nature that has produced a rich, stable, diverse corporate culture, is the same influence throttling us from modern progress.

Prominent people in this

community are afraid of failing.

I’ve been in conversations with

some who have told me that

even if they had 100 people behind them, they would still

be reluctant to take a risk.”

We have a culture where failure

now means failure forever; some

people even feel the need to

move to restart. In other places

failure is a badge of honor.”

F E A R O F FA I LU R E

(On the supply side) people

are not ready to jump into

startups; they expect the

same level of compensation

and don’t fully appreciate the

tradeoffs of risk and reward.”

People are hesitant or unwilling

to take a big leap, both in the

form of joining a startup and in

investing in one.”

M I S U N D E R STA N D I N G T H E T R A D E O F F S

Our corporate culture is too

risk averse, they are not

willing to be the first to work with startup.”

We are conservative; the strength of our big corporations

is great, but it’s safe and that

safety can discourage

entrepreneurial risks.”

C O R P O R AT I O N S A R E S LOW TO A D O P T

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Generally speaking, there’s a lack of early stage funding. And some of the reporting on these activities is overstated.

We only have one or two

active Angel networks, which

is nothing compared to other

similar cities. If you don’t have

those types of networks, it’s difficult to get some types of

companies off the ground.”

There is not enough seed

capital (below $1 million).”

M I S S I N G E A R LY- STAG E , S E E D F U N D I N G

VC money has disappeared.

The ones we’ve had have

become too successful tomake small investments (inthe $5 million range), whichhas created a gap in funding.”

I wish we had more larger VC

firms – the people that want

to write $2 to $5 mil. checks.”

O U R VC S H AV E D I SA P P E A R E D

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If we don’t get some true

exits in the next few years,no one will take us seriously.”

There is a lack of funding,

which is less about having a

lack of VCs; we are missing the multi-billion dollar exits by

past entrepreneurs that trickle

down to other startups.”

N OT S E E I N G M A J O R E X I TS


Funding OptionsA well known gripe among local founders... Though sometimes overstated, there is a specific lack of funding for certain startups and a very critical time in their lifecycle – early-stage or seed funding “

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We have a startup community, but there’s no central hub. The communities are segregated; there’s a lot of spokes, but no hub.”

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A HubThough the various startup support systems are meeting the goals of their individual charters, there lacks a central clearing house (both physically and functionally) to optimize the area’s startup activities.

We’re lacking a coordinated

effort. It’s disjointed; some

may say that there are too

many groups and support

systems. We don’t need to do more; we just need to

bring everyone together.”

There are a few areas with

concentrations of startup

activity, but it’s in pockets– the North Loop, CoCo,

Northeast, etc.”

AC T I V I T I E S A N D E F F O RTS A R E S I LO E D

There’s no central authority for

entrepreneurs; people don’t

know where to start.”

People want to start

companies, but they don’t know where to start.”

F O U N D E R S D O N ’ T K N OW W H E R E TO STA RT

We lack the nurturing

infrastructure that other cities

have, like what you’d find in

Chicago’s 1871 or Milwaukee’s

Gener8tor.”

We also suffer from a lack of accelerators and other

formalized training that have

proven to help startups grow.”

N O N U RT U R I N G I N F R AST R U C T U R E

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If we want more successful startups we need a broader set of people contributing to the process.”

D I V E R S I T Y I N O U R F O U N D E R S

M A J O R M E D I A C OV E R AG E

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C O R P O R AT E C O N N E C T I O N P O I N TS


Mindthe GapStartups are tough, but can be tougher for female founders and founders of color, who have not benefited equally from recent momentum.

We’re sorely lacking consistent storytelling of the activities of our startups across all verticals. And, corporate representatives who serve as a bridge to gap the vast distance between our startup and corporate communities.

We have a serious diversity

problem – we have too many

white people and have the worst

inclusion of women in tech.”

We’re nowhere near the pointwe need to be to have solvedthe diversity issue; I can’t think ofa single venture-backed startup

that is lead by a female founder.”

We need more/better local

media covering the startup

ecosystem. This type of

coverage legitimizes startup

activities, and makes it a more

common topic of conversation.”

There are some key

gatekeepers that dictate

awareness, which is creating

challenges.”

We haven’t found a wayto connect the startup and

corporate communities.”

There’s a great opportunity with

our corporate community that is

completely missing, foundations

too. Both are not optimized for the benefit of the startup

community.”

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WHO AM I?

INSIGHTS


What’s going to take us from a 6 to a 10?

More residents that are less risk adverse

More peer groups forstartup founders

More angel investors

A central hub forstartups to work together

More venture firms

More expansivemedia coverage

More employable startup talent

Better mentor/menteeopportunities for founders

More accelerators

Better educationalresources

More startup community support groups

A platform forconnecting startups

Bolder leadership

Better governmentalincentives

More opportunities for startups and corporations to work together


WHO AM I?

Re: a hub, who needs to be there?

Techstars

Local universities

Corporate innovation groups

Local VC groups

Tech.mn

Prime Academy (coding schools)

Impact Hub

CoCo (co-working space)

The MN Cup

CoCreateX

Minne*

Venture Lake

Mentors

Healthcare.mn

Service providers

Accelerators or incubators

Maker-space

Accel.mn

Greenhouse.mn

Local VC Groups

INSIGHTS



WHO AM I?

I T WAS B E N E F I C I A L TO T H E B U S I N E S S

I L I V E D H E R E

C U R R E N T LY O P E R AT I N G AS A STA RT U P F O U N D E R

Why did you start here?



WHO AM I?

Why did you start here?

“Our initial offering was

hockey specific, and the Twin

Cities was/is the epicenter of

youth hockey.”

“We had to convince global that

Minneapolis was the right place to

launch a new branch. It took us a

couple months, but in the process

we recognized that the Twin Cities

had the same ingredients as what

we had in the Bay, so we started

building plans to create a hub.”

“Medgineering started in

Florida, but we brought itto the Twin Cities to have

access to all of the healthcare

companies in the area.”

“With Grow North we saw challenges

– silos, resources, awareness –

where resources were lacking that

we wanted to fill.”

“We were deciding between

Minneapolis, Chicago and Madison.

We picked Minneapolis because

there was a greater opportunity to

start something new. Here I could

recognize an immediate impact.”

“This is one of the best places

to start a healthcare company.”



WHO AM I?

Would you encourage a friend to startup a business here?

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5

E M P H AT I C Y E S !

Y E S , B U T. .



WHO AM I?

Yes, but… “If the COMPANY WAS MORE MATURE (like at a Series B or C in their fundraising)

then yes, this is a good place to come toget acquired.”

“For FIRST TIME FOUNDERS , outsideof healthcare, whose company requires

SEED CAPITAL to make it, I would say ‘NO.”

“There are CERTAIN PEOPLE who can walk into this community and do well– young, white, men who are confident and

outgoing, and who already speak the

language and know the culture. People who

don’t fit that mold require more effort.”

“This is NOT THE BEST PLACE to start some

businesses - pure consumer plays (like a social

network) require large populations to bring

something to life. We don’t have that here.”

“I think that WOULD DEPEND on the

business. There are areas of saturation

(nationally) – knowledge bases, mentoring,

funds, connections, etc. – that follow

verticals, which is the next generationof how regions are likely to develop.”

“It would DEPEND ON THE TYPE of company.If it was a software company, then maybe,

but Silicon Valley makes more sense. If it

was a med-tech company, this place makes

more sense.”



WHO AM I?

Yes!

“Here, you can TAP INTO A NETWORK

QUICKLY. I could introduce them to a few

people, and they would have access to 80%

of the people that the startup would need to

talk to find success.”

“Our ecosystem is BIG ENOUGH TO DO

SOMETHING INTERESTING, but SMALL

ENOUGH TO NAVIGATE.”

“PEOPLE ARE WILLING TO HELP and offer

their time. We have good service providers,

good talent and the WORK ETHIC is second

to none.”



What can we do with this information?


Make It. MSP. – a collaboration involving 150+ companies, cities,

universities and nonprofits – is an initiative to better retain and

attract talented people in the Minneapolis-Saint Paul region.

We believe a place that supports innovative people – from

entrepreneurs and social innovators to artists and “intra-preneuers” at

large institutions – is a place that does better retaining and attracting

everyone. With that in mind, Make It. MSP. is motivated to understand

what innovators need to come, stay, and thrive in our region.

We also know that a communities such as our startup communities,

are driven by individuals – doers, founders, changemakers and

builders. That’s why we are motivated to work with partners like

Beta.MN, which builds and supports its community by focusing on

founders. This report is the beginning of an intentional effort to go

straight to the source and listen to what people think is working in

the Minneapolis-Saint Paul region, as well as what could improve.

We are committed to working together to make this an even better

place to build what’s next.

S P E C I A L T H A N K S TO :

Thank you.Questions? Comments?

R E E D R O B I N S O N | @ I N D E E D I TS R E E D | R E E D @ B E TA . M N

mailto:[email protected]

Startup Ecosystem Survey_Make It MSP_Beta

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