Can the Upper Midwest drive digital innovation in manufacturing and logistics?
Legacy Manufacturing Hubs
Manufacturing and farming ecosystems in the US and around the world have developed around a combination of the following ingredients: raw materials (minerals, crops), energy (electric, hydro, wind, solar), logistics (bays/ports, rivers, roads), talent/labor pools, and viable operating economics. A combination of investment capital, balance sheet leverage, and public policy has provided the needed financial backing to scale up.
In the US, several manufacturing ecosystems have come to exist in different regions over the decades, focusing on aerospace/avionics, automotive, food and farming, healthcare, metals and mining, oil and gas, and semiconductors/electronic components/systems. Upper Midwestern states are prominent in this list. These ecosystems have been using current-generation industrial/process controls systems, heavy equipment, and ERP systems.
| Industry | Region | Anchor Companies |
| Aerospace/Avionics | California | McDonnell Douglas, Hughes Aircraft. |
| Kansas | Beechcraft, Cessna. | |
| Washington | Boeing. | |
| Automotive | Michigan, Indiana, Ohio | Chrysler, Ford, GM, Visteon. |
| North Carolina | Borg Warner, Bridgestone, Caterpillar, Continental, Cooper, Daimler, Denso, Freightliner, Goodyear. | |
| South Carolina | BMW, Mercedes, Bridgestone, Volvo, Magna. | |
| Food and farming | Central Valley, California | Del Monte, Dole. |
| Wine Country, California | Gallo, Mondavi, Jackson, J Lohr, Korbel, Rutherford, Sebastiani, Sutter, Wente. | |
| Minnesota | Cargill, General Mills, Land O’Lakes, Hormel Foods. | |
| Missouri | Monsanto. | |
| Wisconsin | Schreiber Foods. | |
| Iowa | Rembrandt, Burke, West Liberty. | |
| Idaho | Simplot. | |
| Healthcare | Minnesota | Boston Scientific, Mayo, Medtronic. |
| Illinois | Abbott Labs. | |
| Industrial Equipment | Illinois | Caterpillar. |
| Iowa | John Deere, Vermeer. | |
| Minnesota | Honeywell. | |
| Wisconsin | Rockwell Automation. | |
| Metals | Pennsylvania, Ohio | Bethlehem Steel, U S Steel, USX. |
| Mining and materials | Minnesota | 3M. |
| Oil and gas | New Jersey | Arco. |
| Texas | Exxon-Mobil, Schlumberger, Valero. | |
| Paper | Idaho | Boise-Cascade. |
| Semi-conductors | Silicon Valley | ICs – Broadcom, Intel, nVidia, Marvell, SanDisk/Western Digital. IC manufacturing equipment – Applied Materials, LAM Research. |
| San Diego | ICs – Qualcomm. | |
| Idaho | ICs – Micron. |
Table 1: US regions, manufacturing ecosystems, and key anchor companies.
Digital Manufacturing – Requirements
In the age of ‘traditional’ manufacturing, the resources needed included:
- Skilled labor.
- Power (electricity, coal, hydro/wind/solar).
- Raw materials, natural resources (e.g., farm products, ore, water).
- Railroad, shipping, air transport.
In the age of digital manufacturing, from design to shipping, the following capabilities are important:
- Internet infrastructure.
- Rapid prototyping.
- Automation – robotics, self-navigating vehicles.
- End-to-end integration with supply chain and logistic partners for real-time visibility.
- Advanced STEM professionals in computer science, materials science, and life sciences (clinical medicine, plant biology, molecular biology, and biochemistry).
- Digitally-literate labor with skills (e.g., workers who can operate analytic software or fix a clean room air shower to maintain low ppm particle levels).
- Predictive analytics for preventive maintenance, resource management, etc.
Advanced technologies useful for these capabilities include:
- IoT (e.g., for discrete automation, process controls, asset tracking, robotics, infrastructure management).
- Machine learning (e.g., for instrumentation & control).
- New materials, including nanomaterials.
- 3D printing for prototyping, small-batch quick-turn manufacturing, and on-demand inventory.
- Secure technologies such as block-chain (e.g., for transactions, contracts, logistics).
- AI/predictive analytics (e.g., for monitoring and control, preventive maintenance, ERP).
Next-generation digital manufacturing initiatives have taken root in regions where current manufacturing ecosystems have existed. For example, Tesla’s California factory is housed in the earlier NUUMI (General Motors and Toyota) plant in Fremont in Silicon Valley, where the plant was originally set up in 1960 by General Motors due to cheap land, the port of Oakland nearby, and a freight railroad along the Bay. Similarly, SpaceX (Hawthorne, CA) has leveraged design and manufacturing resources originally set up by McDonnell Douglas and Hughes Aircraft in the Los Angeles area near the port of Long Beach.
The Upper Midwest
Considering the extraordinary value creation of companies such as Tesla and SpaceX, there is a significant investment thesis in enabling next-generation manufacturing organizations to arise in the Upper Midwest, where many similar current-generation manufacturing ecosystems already exist.
Given the democratization (i.e., global availability) of some of the new technologies, the presence of global companies such as Google, Amazon, and IBM in most of the major cities in the Upper Midwest, and the significant academic centers across the region; highly-trained resources are available throughout the region to enable advanced digital manufacturing centers of excellence.
The Upper Midwest also has strong attributes to attract and retain relevant labor pools. Table 2 shows the relative desirability of different regions in the US as destinations for STEM workers. The statistics for the Upper Midwest, broadly including the greater Cincinnati, Columbus, Chicago, Denver, Madison, Minneapolis/St. Paul, and Pittsburgh areas, speak for themselves.
| Rank (1=Best) | Metro Area | Total Score | Prof Opptys | STEM Friendliness | Quality of Life |
| 1 | Seattle, WA | 73.60 | 2 | 4 | 15 |
| 2 | Boston, MA | 71.94 | 7 | 1 | 43 |
| 3 | Pittsburgh, PA | 65.90 | 12 | 11 | 9 |
| 4 | Austin, TX | 65.15 | 6 | 8 | 27 |
| 5 | Minneapolis/ St. Paul, MN | 64.95 | 19 | 6 | 17 |
| 6 | Madison, WI | 64.00 | 13 | 16 | 13 |
| 7 | Salt Lake City, UT | 62.96 | 9 | 14 | 18 |
| 8 | Springfield, MA | 62.80 | 36 | 2 | 7 |
| 9 | Chicago, IL | 60.71 | 49 | 13 | 8 |
| 10 | Atlanta, GA | 60.69 | 5 | 27 | 31 |
| 11 | Cincinnati, OH | 60.51 | 16 | 33 | 14 |
| 12 | San Francisco Bay Area, CA | 60.50 | 3 | 7 | 67 |
| 13 | Columbus, OH | 59.71 | 33 | 21 | 21 |
| 14 | Denver, CO | 57.73 | 10 | 24 | 37 |
| 15 | San Diego, CA | 57.39 | 59 | 23 | 16 |
| 16 | Sacramento, CA | 57.20 | 44 | 20 | 25 |
| 17 | Colorado Springs, CO | 57.00 | 17 | 54 | 20 |
| 18 | Worcester, MA | 56.88 | 43 | 3 | 65 |
| 19 | Richmond, VA | 56.58 | 8 | 32 | 44 |
| 20 | San Jose, CA | 55.79 | 18 | 18 | 53 |
Table 2: Desirability of cities in the US for STEM professionals. (Data Source: Richie Bernardo/ WalletHub, “2018’s Best & Worst Metro Areas for STEM Professionals”).
Superimposed with Table 1, Table 2 shows the opportunity for these regions to become magnets for next-generation manufacturing.
What Do the Next-Generation Manufacturing Innovations Look Like?
As a result, disruptive new companies are emerging in these regions, creating the investment opportunity to fund them from early-stage growth to scale-up. These companies are working with the incumbents shown in Table 1 to accelerate their evolution towards advanced digital manufacturing.
Examples of innovative companies focused on manufacturing and transportation in the upper Midwest include:
Proto Labs[i]– Rapid prototyping: allowing quick turnaround manufacturing.
FactoryFix[ii]– Contingent labor for equipment: predictive diagnosis for timely repair with skilled labor and relevant spare parts for better customer experience at lower cost.
Basin Commerce– River transportation: harnessing of shipping capacity on lake and river waterways using barge booking software.
Rambl[iii]- AI: sales call CRM logging and intelligence that analyzes calls for specific criteria and actions to surface insight.
Stemonix– Drug discovery: tissue manufacturing for testing potential side-effects of new drugs for neurological and cardiac diseases.
Aker– Crop management: Use of drones for crop management based on weather databases and image-based diseases detection.
The Four Legs of the Innovation Stool
Infrastructure, technology, labor, and capital are the four legs of the innovation stool. The Upper Midwest has all of these.
Through new digital manufacturing technologies focused on topline and bottomline benefits, today’s manufacturing ecosystems are ripe for significant new value creation.
At Great North Labs, we are focused on providing early-stage capital to innovators in the Upper Midwest, with an emphasis on next-generation manufacturing. We leverage partners and advisors with market and operating experience in manufacturing. We invest in, and provide guidance and advisory resources to technology startups like FactoryFix that are poised to disrupt the traditional manufacturing and logistics industries in the Midwest.
[i] Donald Krantz, Director at Proto Labs, is an advisor to Great North Labs
[ii] FactoryFix is a Great North Labs portfolio company
[iii] Rambl’s co-founders, Mitch Coopet and Brian Bispala, are advisors to Great North Labs
Exponential Technology
Intel co-founder Gordon Moore famously predicted that computing power would grow exponentially by doubling every two years (“Moore’s Law”). The implications of such rapidly improving computing power are now evident all around us, but back when Gordon predicted such growth it was hard to imagine a future with such incredible computing power.
In March, we held our first-ever Exponential Technology and Leadership workshop to address the inevitable trends that will disrupt many industries.
Whether it’s AI, IoT, medicine, space, or even blockchain, it was evident throughout this bootcamp that proactive, exponential thinking is necessary to maintain a competitive advantage in all industries.
Participants had the opportunity to hone in on their skills development through the process of question storming, developing moonshot ideas, and rapid prototyping.
If you were unable to attend, you can still sign up for our next workshop on April 23rd.
See Tickets for April 23rd Workshop
Welcome, new Advisors!
Candice Savino – VP of Engineering at Trunk Club; Formerly Senior Director of Engineering, Groupon
Nicolas Thomley – Henry Crown Fellow at The Aspen Institute, Co-Founder & CEO of Morning Sun Financial Services, Founder of Pinnacle Service
Suk Shah – CFO at Avant; Formerly CFO at HSBC
Paul Longhenry – SVP – Strategy, Corporate, and Business Development at Tapjoy; Formerly Venture Capital Investment Director at D.E. Shaw Ventures
Top Midwestern Spots for Startups
It’s no secret that the startup ecosystem is rising in the Midwest. “…the amount of money being invested into startups is on the rise in the Midwest and throughout many other parts of the country, reaching fresh multi-year highs in 2017. Almost one full quarter into 2018, the trend appears to continue unabated.”
Read more from Crunchbase about why the Midwest is now being coined as a “goldilocks zone.”
Check out the Great North Labs Portfolio
Upcoming Classes
4/10 – Lean Startup Bootcamp
4/23 – Exponential Technology & Leadership Workshop –
4/28 – Agile Scrum Crash Course
Lean Startup Bootcamp
Follow the Lean Startup Path to create your next startup, realize your potential in Product Management as a career, and master the skills needed to find winning business models through Lecture and Labs.
Our work-friendly bootcamp is over three Tuesday sessions: 4/10, 4/17, and 4/24 from 6:00 – 8:30 pm at Great North Labs in St. Cloud.
Exponential Technology & Innovation Workshop
The implications of rapidly improving computer power are evident around us – gain a competitive advantage and avoid disruption through this workshop. Become familiar through our Intro to Exponentials, review Disruptive Technologies, expand your Exponential Leadership, and develop skills to broaden your perspective.
Monday, April 23rd from 8:00 – 4:30 pm at Fueled Collective in Minneapolis.
Learn and begin applying the foundational concepts of Agile Scrum to improve work transparency on your team. Review the history of Agile, problems that can be solved via Agile, and tackle software development complexity.
Saturday, April 28th from 9:00 – 5:00pm at Fueled Collective inMinneapolis.
Minnebar is April 14th
Great North Labs’s Managing Partners, Ryan and Rob Weber, will speak three times at this annual tech and software conference which has been a Twin Cities mainstay since 2006. The all-day event will be at Best Buy Headquarters. Tickets are free.
Tweet to Meet with Rob (@robertjweber) or with Ryan (@mnvikingsfan) at the event.
Do you know any investors interested in sharing investment opportunities? Have them contact us!
June Newsletter
Demystifying Startup HR
Head of Finance & Fund Administration- Venture Capital Firm (Remote)
Demystifying Startup HR
3 Portfolio Companies Make Inc. 5000 + Quicklly & Instacart Expand
3 Portfolio Companies Ranked on The Inc. 5000 List
iraLogix closes $22M + Branch expands with Uber
iraLogix closes $22M Series C
Flywheel lands Gates Foundation grant
Venture Capital Analyst
Orazio Buzza, Founder and CEO of Fooda – on Episode 13, “Execution is King”
$40M Fund II Raised!
Eric Martell, Founder of Pear Commerce: Episode 13, Execution is King
Great North Ventures Raises $40 Million Fund II
Investment Thesis: Fund II Strategy
Investment Theme: Community-Driven Applications
Investment Theme: Digital Transformation Through AI
Investment Theme: Solving Labor Problems
Trends in the Gig Economy + Work in the Metaverse
Portfolio raises $125M + talking fundraising with Branch CEO
Omnia Fishing closes $4M round, joins Great North portfolio!
Atif Siddiqi, Founder/CEO of Branch: Episode 11, Execution is King
Michael Martocci, CEO and Founder of SwagUp: Episode 10, Execution is King
Yardstik new to portfolio, closes $8M Series A
First venture studio startup comes out of stealth!
Insights for founders from a data guru, + FactoryFix raises a Series A!
Una Fox: Episode 9, Execution is King
Start With a Mobile App, Not a Website
2ndKitchen acquired by SoftBank-backed REEF + advice from an early Googler
Joe Sriver, 4giving: Episode 8, Execution is King
2ndKitchen Acquired by REEF
Venture studio startup jobs + advice for founders from founders
Best Advice from the Great North Annual Event: Episode 7, Execution is King
Newsletter: Do you fit our investing themes?
Jonathan Treble, PrintWithMe: Episode 6, Execution is King
Anna Mason, Revolution: Episode 5, Execution is King
Mynul Khan, FieldNation: Episode 4, Execution is King
Nick Moran, New Stack Ventures: Episode 3, Execution is King
Molly Pyle, Center on Rural Innovation (CORI): Episode 2, Execution is King
Justin Kaufenberg, Rally Ventures: Execution is King Episode 1
Newsletter: “Podcast Launched: Execution is King!”
“Execution is King” – the Great North Ventures Podcast
Newsletter: Fund II is open for business!
Unlocking the Potential of Anonymized Commercial Real Estate (CRE) Data
Fund II is open for Business!
Mike Schulte Promoted to Venture Partner
New Name + New Venture Studio
Great North Launches Startup Studio
We Don’t Need No [full-time MBA] Education
How the University of Minnesota is Embracing Startup Culture
Top Stories of 2020, iraLogix, and LaunchMN Calls for Mentors
Building Capacity for Innovation
Seizing Opportunity in a Recession, Allergy Amulet, and Twin Cities Startup Week
Recessionary times, a record-setting IPO, and Minnesota’s Resilient Startups
Minnesota's Resilient Startups
July 4th, Equitable American Dream-ing, and Robots Diagnosing COVID
Jumpstart, the Startup School, and Branch Wins a Webby!
COVID-19 Trends, the Great North response, and our Founders Survey
Giving in the Time of Coronavirus
COVID-19 Resources for Startups, State-by-State
COVID-19, the CARES Act, and startups stepping up
New Business Preservation Act
Digital Future Boardroom, PartySlate, and The Lean Startup School
Great North Labs’s Startup Summit 2020
Great North Labs's Startup Summit 2020
World Economic Forum, NoiseAware, and the Startup School reboot
Great North Labs at the World Economic Forum 2020 in Davos
Top 5 Stories of 2019
Taking the Founders Pledge, Inhabitr, and gBETA Pitch Night
Founders Pledge: Support the Organizations that Support You
BETA Showcase, Greater MN, and Launch MN comes to St. Cloud
7 Places to Spot Us at Startup Week
The Greater MN Meetup, Parallax, and Exponential Medicine
Greater MN at the big show, Neela Mollgaard heads Launch MN, and Misty’s roadtrip.
Talking VC, tech kids, and Forge North’s Horizon
June: Great North Labs’s first fund raised!
May: Innovation Ecosystems, SingularityU Kickoff, and PrintWithMe
April: Minnebar Recap, ZenLord Pro, and Supporting Entrepreneurs
MinneBar 14 Recap
Dispatch and 2ndKitchen claim Tech Madness titles
Minnesota Innovation Collaborative
March: Minnebar, Hockey + Hustlers, and Innovation Workshops
Great North Labs at CES
Dec.-Jan.: Top Posts from 2018, pepr, Glowe, and Misty Robotics
Carried Interest: Top Posts from 2018
Oct.-Nov.: Singularity University, Exponential Tech, and the State of Innovation
July: Pitchly, ForwardFest, and Where to Invest in the Midwest
Digital Transformation Summit, July 25th in Minneapolis
June: Silicon Lakes, FactoryFix, and the Digital Transformation Summit
Putting the “Silicon” in Silicon Lakes
Digital Manufacturing and Logistics
May: Team Genius, IoT, and the Future of Everything
IoT 3.0
Healthcare Innovation
March: Exponential Tech, the “Goldilocks Zone”, and Minnebar 13
February: Team Expansion, Dispatch, and Startup School Events
Great North Labs Newsletter – December 2017
A Letter To My Younger Self
Great North Labs Newsletter
Great North Labs Featured on Tech.mn
Great North Labs Featured in St Cloud Times
Great North Labs – Featured on BizJournals.com
