While there are vaccines on the horizon and a potential further stimulus package, possibly in time for the holiday season, we still have a ways to go until economic recovery. Startups will be key to that recovery.
Which Startups Will Succeed?
Have you ever wondered if your app idea was worth pursuing, if a startup was worth working for, or if your buddy’s startup was worth investing in? Of course you have. While enterprise SaaS startups have reliable benchmarks to compare against, early-stage consumer app startups are harder to evaluate.
This is a problem for these startups, because it affects their ability to raise money. It’s also a problem for Midwest investors, who miss out on huge successes like Groupon and Grubhub.
MN Entrepreneur Gift Guide
As of 2010 census data, roughly 49% of the private sector worked for a small business, and 2 out of 3 new jobs were created by a small business. If you didn’t find all of your gifts on Black Friday, Small Business Saturday, or Cyber Monday, check out our 2020 Minnesota Entrepreneur Gift Buying Guide and buy from a small business.
It includes ideas for a variety of products from local companies from camel milk skincare products to Boozy Jerky, and from Askov Finlayson’s Climate Positive Parka to the James Beard-winning “Sioux Chef’s Indigenous Kitchen” (in case you’re still celebrating Native American Heritage Month).
Local Early-Stage Startup News
LaunchMN celebrated it’s one-year anniversary, and released a First-Year Progress Report.
Our latest Lean Startup School (with Red Wing Ignite, ILT Studios, and LaunchMN) pitch night ended with 2 winners:
- 1st Place: Scobium – They have a new eco-friendly synthetic leather material for the textiles industry, manufactured using bacterial cellulose.
- 2nd Place: TalentSignal – They are a pre-launch startup researching a new business model to help guide students through the development skills needed to land a job in their chosen field by matchmaking them to successful practitioners who serve as mentors.
gBETAGreaterMN St. Cloud Director Precious Drew was just named to Minne Inno’s 2020 Under 25! (Boozy Jerky mentioned above is an alumnus!)
Startup Investment Incentive
If you’re thinking of investing but need some incentive, here is how investors (including investors in VC funds and angel investors) can get a 100% exclusion on their gains from those startup investments.
Events
Here is a mix of upcoming events, for investors, founders, and/or ecosystem supporters. All events listed are virtual.
- Dec. 1-3rd, Rise of the Rest Virtual Tour: Equity Edition. Black-founded startups based off the coasts compete for $2M in funding. Days 1 + 2 feature town halls: “Building Inclusive Startup Ecosystems” and “Entrepreneurship and HBCUs”. Day 3 is the Pitch Competition Finals.
- Dec. 2-4th, Web Summit From the folks who produce Collision, this is the annual European version.
- Dec. 2-4th, Powering Inclusion Annual Summit. This is the Center for Economic Inclusion’s Annual Event. Virtual this year, “The Summit is for leaders at every stage of the journey of building racially inclusive organizations, communities, and economies”.
- Dec. 3-10th, Food | Ag | Ideas Week. Put on by MN-based Grow North, this annual event focuses on ideas to innovate our food system.
- Dec. 3rd, 2020 Chicago Tech Day. Sort of a “State of the City” event for Chicago tech, with Mayor Lightfoot and various tech community leaders.
- Dec. 11th, Walleye Tank Ice Fishing Edition. Startups, pitch your healthcare innovation. Deadline to apply is Dec. 1st.
- Dec. 13-19th, Curiosity Week with Emerging Digital Academy. Based in Fargo, ND, this new tech community gathering wil feature 30+ events.
- January, TBD, Lean Startup School events with ILT Studios:
- Lean Startup Program West Central. Upcoming January cohort application deadline is Dec. 16th.
- Developing Your Lean Startup. Applications now open for the upcoming January cohort with Red Wing Ignite.
Portfolio News
USA Softball Announces Partnership Agreement with TeamGenius. TeamGenius has a new partnership to serve as the athlete evaluation system for USA Softball.
Inno on Fire: The 30 companies and people shaping Wisconsin’s tech scene. Allergy Amulet was named to the list of impactful tech startups.
2ndKitchen Releases New 2021 Multifamily Amenities Guide. 2ndKitchen has a new report out with research and survey data on the importance of amenities in Multifamily properties.
Job Board
Great North Labs is hiring VC Analyst interns for summer of 2021. The application closes this week!
Dispatch is hiring a Territory Sales Manager, Business Development Representative, and Ruby Developer for Remote work.
FactoryFix is hiring a Team Lead – Full Stack Developer, Full Stack Developer, and Infrastructure Developer- DevOps in Madison, WI; and a Sales Development Representative in Chicago, IL, Indianapolis, IN, or Madison, WI.
PrintWithMe is hiring a Regional Sales Directors for East Coast, South Central, and South East regions; Director, Demand GenerationOperations Lead, and MBA Strategy Intern in Chicago, IL.
Parallax is hiring an Experienced Product Designer in Edina, MN.
Branch is hiring a Senior Software Engineer and Android Engineer for remote work, and an Account Executive, Mid-Market, and Channel Sales Manager in Minneapolis, MN.
Inhabitr is hiring a Chief Growth Officer/Head of B2C Growth, and a Sales and Customer Experience Associate in Chicago, IL.
Clinician Nexus is hiring a Customer Success Manager in Minneapolis, MN.
NoiseAware is hiring a VP of Marketing, a QA Technician (independent contractor), Account Manager, and a Customer Advocate in Dallas, TX.
PartySlate is hiring a Senior Growth Marketing Manager in Chicago, IL.
It’s a wrap for Twin Cities Startup Week (TCSW), Minnesota’s largest annual startup event. How big is it? In 2019 the event attracted 17,000 people to over 200 sessions. This year, the event stretched nearly a month as it went virtual for the first time.
Startup Competition Winners
One of two big competitions during TCSW is the MN Startup Awards, a joint venture between Tech.MN and TCSW. The winners this year included Canomiks (Emerging Startup), Maddy Kennedy (Impact Award), BetterYou (Operational Excellence) SayKid (Voyager Award), Black Tech Talent (The Inclusive Evolution Award), and Target Accelerators Team (Corporate Champion).
Great North Labs sponsored the 10K Lakes Award for Greater Minnesota for the second year in a row, which recognizes work supporting startups in Greater MN. MN Cup took home the award this year!
We are proud to support MN Cup through our Founders Pledge, where Rob Weber also judges the High Tech division, and are pleased with the recognition of their success. MN Cup wound up their own competition on Sept. 23rd, with top honors going to BlueCube Bio.
The other big competition of TCSW is the BETA Showcase, which routinely attracts 800+ attendees. This year featured 21 startups, including 7 startups from Greater MN. The winner of the coveted Golden iPod was Bibliate, a Minneapolis-based provider of academic research summaries.
gBETA Greater MN-St. Cloud
The accelerator program gBETA Greater MN-St. Cloud has announced its fall class. The class includes startups from around the state. Sproutary is from Kimball, Shrpa is from Rochester, LegalMaps is from Edina, and Live.Give.Save is from Red Wing.
This class has some accomplishments under its belt already, as Shrpa took home 2 dedicated awards form MN Cup this year, and Live.Give.Save is the winner of last year’s inaugural 10K Lakes Award.
$2M Pitch Competition for Black founders
Revolution’s Rise of the Rest (ROTR) is partnering with Opportunity Hub, 100 Black Angels & Allies, and Morgan Stanley’s Multicultural Innovation Lab to fund Black-founders via the “Rise of the Rest Virtual Tour: Equity Edition”. $2M in investments will go to the top 3 companies.
Please share this event with your network! It’s a great opportunity for Black founders in the Upper Midwest to connect with investors and resources, and to have a chance at a big check! Great North Labs has partnered with ROTR to help connect capital with Black founders, and Rob Weber be taking pitch meetings during the event.
Great North Labs + Vikings Football = $$ for Minnestar
For every point the Vikings score this season, we are matching up to $5 in donations to Minnestar! Give as little as 10 cents per point, and know that it will be matched, benefitting one of Minnesota’s top startup support organizations.
The campaign started on September 1st (when the Vikes were 0-0) and continues until the day after the Super Bowl, because hey, you have to believe! This campaign is through local startup ScoreSide, which connects sports with philanthropy.
It’s important to support the organizations that support our startups. Times are challenging. While we believe there’s a shortage of early-stage capital in the region, we also think that right now is a great time to build a startup.
Events
Here is a mix of upcoming events, for investors, founders, and/or ecosystem supporters. All events are virtual unless otherwise noted.
- Oct. 1st, Flyover Tech Fest. Based in Iowa, this is a Midwest-centric event for tech startups seeking support, development, and funding.
- Oct. 8th, 2020 TedX St. Cloud. This year is focused on personal transformation.
- Oct. 20th + 22nd Innovation Expo Rapid City, SD, and Sioux Falls, ND. These are hybrid events, with in-person and virtual options.
- Oct. 23rd, LaunchMN Friday Forums: Angel Tax Credit Program. All about the tax credit for MN angel investors.
- Nov. 3-4th, 2020 Enterprise Rising. Casey Allen’s annual event for enterprise SAAS startups.
- Nov. 9-11th, Wisconsin Early Stage Symposium. Speakers, panels, and networking plus opportunities to connect investors and founders.
Portfolio News
River’s Edge participates in new robotic technology pilot program for screening COVID-19. Misty the robot is being used to screen hospital employees for COVID-19.
PrintWithMe Announces National Partnership With Trammell Crow Residential. PrintWithMe has inked a deal with one of the nation’s largest developers of multifamily apartments.
Job Board
Dispatch is hiring a Business Development Representative and Manager, Account Management in Bloomington, MN; a Ruby Developer and Senior Ruby Developer for Remote work. Also Territory Sales Managers in Arlington, VA, Baltimore, MD, and Washington D.C.
FactoryFix is hiring a Team Lead – Full Stack Developer, Full Stack Developer, and Infrastructure Developer- DevOps in Madison, WI; and a Sales Development Representative in Chicago, IL, Indianapolis, IN, or Madison, WI.
PrintWithMe ishiring Regional Sales Directors on the East Coast and in Texas; AR/AP Specialist and Operations Lead in Chicago, IL; VS/SVP of Operations, Marketing Director, Part-Time Customer Service Representative, Inside Sales Executive and a Fall 2020 Strategy Intern (MBA) for Remote work.
Parallax is hiring an Experienced Product Designer in Edina, MN.
Branch is hiring a Data Platform Manager, Senior Software Engineer, Customer Success Manager, Customer Support Rep, Enterprise Support Specialist, and Fraud Agent in Minneapolis, MN.
Inhabitr is hiring a Chief Growth Officer/Head of B2C Growth, and a Sales and Customer Experience Associate in Chicago, IL.
NoiseAware is hiring a VP of Global Sales & Customer Experience, Embedded Developer, QA Technician (independent contractor), Account Manager, and a Customer Advocate in Dallas, TX.
On March 19, 2020, a bill proposing the New Business Preservation Act was submitted to the Senate that seeks to drive economic activity, innovation, and job growth in the wake of the COVID-19 pandemic and the economic downturn. The New Business Preservation Act will provide equity funding for new businesses, with larger allocations directed to areas lacking in capital including the Midwest.
While the bill was important even earlier, the events of recent weeks add urgency. Dollar for dollar, it represents possibly the most effective grassroots economic stimulus for the mid-to-long term (2-10 years). Even for the immediate months ahead, it can stem job losses among venture-based businesses.
As an early-stage venture fund based in the Midwest, Great North Labs believes this legislation will drive startup activity and value creation in the undercapitalized regions of our country. Entrepreneurship is a proven, capital-efficient way to build economic value and transform regions, and adding capital to our under-capitalized region will bolster existing entrepreneurial ventures and encourage new ones.
Our support of this legislation is apolitical. As investors, we see the success of this approach every day. Around the world, venture capitalists who pick talent, invest in portfolio companies, and work with their ecosystem (including government) enable grassroots wealth creation. Better than any stimulus or wealth transfer mechanism, the most powerful and durable antidote to economic inequality is new value creation. It is not the CCC or WPA creating jobs for the sake of paying people, or the government distributing wealth, this is grassroots economic growth driven by venture capital. It is not a one-time distribution. It does not depend on daily oscillations of the stock market which cannot possibly reflect true changes in economic value. Rather, it drives true economic value creation through innovation.
“Senator Klobuchar’s bill is a positive step at a critical time. As we look at how to cope with the challenges presented by the coronavirus, we should not lose sight of the critical role new businesses play in creating jobs. The New Business Preservation Act will help level the playing field, by backing entrepreneurs in every state and every zip code, and lead to a more inclusive economy.”
-Steve Case, Chairman and CEO of Revolution (Revolution operates the Rise of the Rest Seed Fund focused on investing in areas outside of traditional VC hubs.)
The Bill
The bill was sponsored by Sen. Amy Klobuchar, and co-sponsored by Sen. Chris Coons, Sen. Angus King, and Sen. Tim Kaine. It seeks to create an Innovation and Startups Equity Investment Program (ISEI) within the Department of the Treasury. The Program will “allocate money to certain States to assist high-potential scalable startups access venture capital to commercialize innovations, create jobs, and accelerate economic growth, and for other purposes.”
The legislation calls for $2B to go to the ISEI, with $1.5B going to initial funding and administrative costs, and a further $500M for follow-on investments. Eighty percent of funds would go to the Midwest, Southeast, and Southwest, with distributions based on population and adjusted for VC money already present, according to Leigh Buchanan at Inc. magazine, and as exits produce returns, they will be “reinvested in the next generation of businesses, creating a sustainable funding resource.”
Feasibility of the approach
Investing in America’s startups by following VC leads into deals is a fiscally responsible approach. As the chart below of VC returns by vintage year shows, even in recessionary years, returns are at an acceptable level for U.S. Treasury purposes.
Startups headquartered in the under-capitalized areas targeted by the bill will likely outperform the national averages because they generally are more capital efficient due to nascent capital markets to support them. It’s not unreasonable to expect a 5%-15% IRR even in recessionary times. This is accomplished because VC is a long-term investment vehicle, which is the perfect counter to a short-term financial crisis.
Small business vs. startup vs. tech startup
While the article and press release talk about “small businesses” and “new businesses”, the bill deals strictly with startups. A “startup” is defined in the bill as a business entity that:
- Has existed less than 10 years
- Has the “intention or
potential to” do ALL of the following:
- significantly scale with respect to revenue and job creation
- develop innovative products or services
- deliver high returns on investment
- Is headquartered in a qualifying area
While there is no mention of the word “technology” in the bill, most people associate startups with tech for good reason. New technologies drive, catalyze, and enable innovations central to new business models, products, and entities. While using a new technology is not required for a startup to put together a winning formula (or to get funding from the ISEI), many of the most innovative and successful companies in the world relied on either new or novel uses to create their businesses.
These companies often require upfront equity investment in order to achieve the scale necessary with their new software or hardware technologies to become viable, high-growth companies. Unlike a services, manufacturing, or industrial business, technology startups rarely have the assets or the initial sales base to obtain traditional bank financing.
The capital gap
Currently, in many of the vast, regional economies outside of VC centers, private investments are reserved for real estate and other traditional vehicles. The need for liquidity in the innovation ecosystem is not met. Because of this, startups in the Midwest and other under-capitalized areas have to work with a capital efficiency not required in more capital-rich areas.
This lean approach can be productive in the early stages of a company’s life by helping to refine products and achieve product-market fit out of necessity. This efficiency is an advantage that Midwestern startups have over coastal startups when capital markets start to freeze up in an economic downturn.
However, once the opportunity for rapid growth and scaling arrive, large amounts of capital are necessary for a startup to reach its potential. Until recently, this meant relocating the operation to Silicon Valley, Boston, or New York. Along with the promising startups goes the jobs created, profits generated, and other ancillary economic benefits. This capital gap is where venture funds such as Drive Capital, Great North Labs, Hyde Park Venture Partners, Rally Ventures, and others that specifically focus on areas underserved by venture capital, work to provide the capital, guidance, and networks required to fuel growth and build long-term value.
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
