There is a history of successful tech companies in Minnesota founded during recessions. These resilient startups didn’t just survive- they proliferated under pressure. Jamf, which recently raised $468M in an IPO, is the largest, latest, and highest-profile example. Jamf was founded in 2002 out of UW-Eau Claire, and is headquartered in Minneapolis. Jamf is now valued at $4.7B.
Looking into startups that were founded during recessions, you wouldn’t expect to find a list of successes. But by digging into public data on Crunchbase and in local publications, a surprising number of successful companies emerged that were started up in during the dot-com bust (2000-01), or the Great Recession (2007-2009).
Here are examples of startups founded during recessions in Minnesota, that found success.
| Company Name | Description | Year Founded, Names of Founders | Exit/Valuation/Funding Raised* |
| ProtoLabs | Automated quoting and manufacturing systems to produce commercial-grade plastic, metal, and liquid silicone rubber parts | 1999 (significant growth in 2000-2001), Larry Lukis | Successful ~$70M IPO in Feb 2012 with a current Market cap of $3.2B |
| Modern Survey | Provider of employee survey services. The company provides employee survey and talent analytics service that enables companies to understand their workforce and drive business performance by creating an aggregated, holistic view of the employee lifecycle— from the candidate experience, new employee onboarding to engagement, and exit interviews. | 1999 (significant growth in 2000-2001), Don MacPherson and Patrick Riley | Acquired by Aon Hewitt in Feb 2016. Terms were not disclosed. |
| NativeX (aka W3i and Freeze.com) | PC publishing platform and mobile content and app delivery | 2000, Ryan and Rob Weber | We peaked in 2012 at $70 million in revenue and $10 million in EBITDA, with 170+ total employees. |
| Inbox Dollars | Online rewards club that pays members cash for their online and mobile activities. They reward members for their everyday activities such as reading emails, taking surveys, playing games, and signing up for offers. | 2000, Daren Cotter | Acquired by Prodege in May 2019 for an undisclosed amount |
| Ability Network | Connecting thousands of hospitals, skilled nursing facilities, home health agencies, clinics, and tens of thousands of physicians across the country with each other, and with the nation’s largest payer: Medicare. | 2000, Amy Coulter | ABILITY Network was acquired by Inovalon for $1.2B on Mar 7, 2018 |
| GovDelivery | As the number one referrer of traffic to hundreds of government websites, GovDelivery enables public sector organizations to connect with more people and to get those people to take action. | 2000, Scott Burns | GovDelivery was sold to Vista Equity Partners in a $153 million deal in Oct 2016 |
| Code42 | Code42 provides data loss protection, visibility, and recovery solutions. | 2001, Brian Bispala, Matthew Dornquast, Mitch Coopet | Code42 has raised $138M total, through their Series B round in October of 2015 |
| CVRX | Medical device company that develops implantable technology for the treatment of high blood pressure | 2001, Robert Kieval | $340.6M total raised in 8 rounds Most recently raised $93M in a Series G in 2019 |
| Jamf | World leader in macOS and iOS management with offices around the world. They deliver, support and service the solution for Apple management needs in education and business. | 2002, Zach Halmstad | Raised $468M in 2020 IPO. Current Market cap of $4.7B |
| Compellent | Develops and provides enterprise storage software and hardware solutions that automate the movement and management of data | 2002, Phil Soran | Acquired by Dell in 2010 for $820M cash |
| DoApp | Mobile ad network and consumer and business app developer for websites, desktops and mobile devices | 2007, Joe Sriver | Acquired by Newscycle Solutions (Now Naviga) in 2016 for undisclosed amount |
| ZipNosis | Hospital and healthcare company that specializes in online diagnosis and triage, telehealth, and virtual care | 2008, Jon Pearce | Zipnosis has raised $25M in funding total through a Series B round |
| Calabrio | Delivers workforce optimization (WFO) and analytics solutions that elevate the customer experience and drive strategic business growth | 2008, Brett Shockley | Calabrio was acquired by Kohlberg Kravis Roberts (KKR) in 2016 for $200M |
| SportsEngine | The leading provider of web software and mobile applications for youth, amateur and professional sports | 2008, Carson Kipfer, Greg Blasko, Justin Kaufenberg | Acquired by NBC Sports in 2016 for an undisclosed amount |
| Field Nation | World’s most active Freelancer Management System (FMS) ensuring successful collaborations in today’s rapidly changing world of work. Field Nation enables companies to find, hire and pay contractors anywhere and easily manage their workforce. | 2008, Mynul Khan | Raised a total of $30.2M |
| HomeSpotter (aka Mobile Realty Apps) | Helps brokerages, agents, and MLSs build relationships amongst one another and with clients. Allow agents to collaborate with ease, work on the go, and increase their productivity. Brokerages and MLSs are better equipped to support and retain agents and help grow their businesses. | 2009, Aaron Kardell | HomeSpotter has raised $3.9M in funding |
You can see that I’m on this list with my brother, Ryan Weber, with our former company NativeX. Several other founders from this list are people we have recruited as operating partners for Great North Labs, such as Joe Sriver, Carson Kipfer, Mitch Coopet, Brian Bispala, Patrick Riley, and Daren Cotter.
Capital Efficiency and Resilience
Resilient startups and founders find ways to adapt, persist, and succeed in spite of the challenges they face. The startups on this list found success coming out of challenging times with limited capital availability.
Across the entire Midwest, both the quantity and value of early-stage deals went down during the past two recessions. You can see in the chart below that the dot-com bust in the late 90s led funding to drop off a cliff, with a long climb back up hindered by the Great Recession in 2008-2009.
We live in a region where startups have to be capital efficient. We simply don’t have the amount of early-stage capital other regions get. This leads to more competition for capital, and to higher capital-efficiency among startups.
“This is good news for investors, as the returns in the Midwest are more favorable for investors compared to investing in VC in other regions.”
While that means the Midwest’s 10% of VC-backed startups receive under 5% of funding, it also means that the Midwest startups that make it to exit return the highest median multiple on investment (5.17x). This is good news for investors, as the returns in the Midwest are more favorable for investors compared to investing in VC in other regions. But, it puts greater demands on early-stage startup operators, who need to operate in a way where they can maximize their chances of success with the capital available.
How do you Scale Resilience?
Great North Labs’s approach to early-stage investing includes cultivating resilience in the regional startup ecosystem, identifying it in opportunities, and developing it into our portfolio startups.
We cultivate resilience in the startup ecosystem by supporting important organizations with our Founder’s Pledge, and teaching disciplined startup methods through our startup school initiative.
When identifying opportunities and developing resilience in portfolio companies, in addition to our own experience, we include resilient founders with startup success in Minnesota and the Upper Midwest as operating partners. We believe that successful founders and operators make the best early stage investors because they’ve had to scale an emerging technology company before. We also believe that the best way for founders to grow is to learn from the experience of others who have been in their shoes.
By having startup operators who have not only been there before with a startup, but have found a way to thrive coming out of tough times, and have done it all in our region, facing the same regional capital availability issues that persist today, are invaluable when it comes to providing guidance for other early-stage founders in Minnesota and the Upper Midwest.
Using this approach Great North Labs is:
- Building capacity in Minnesota for developing breakout startup opportunities
- Identifying and investing in breakout startups opportunities early on, in Minnesota and the Upper Midwest
- Guiding portfolio companies to success using our operating experience and networks, and the operating experience and networks of our operating partners
Our plan and hope is that after the current recessionary period, we will be able to look back over our portfolio companies and at other Minnesota startups fighting through these times, and add many more to this list of successes.
