Welcome back to the Great North Labs newsletter!
With so many great startups getting acquired or going IPO lately, one wonders: What do founders do when they score these big windfalls?
How Do Founders Spend Their Cash?
Rob Weber was curious, so he asked other successful founders from the region about their post-exit strategies. Do they do the kind of flashy things coastal entrepreneurs do? You know, like buy an island or a 100-foot yacht or something?
From Lamborghinis to Hamm’s beer signs, traveling the world to giving back to their local entrepreneurial communities, these founders have quite the stories.
Read the full article in BuiltIn Chicago,
How University of St. Thomas Raises Up Startup Entrepreneurship
The University of St. Thomas (UST) has ~10,000 students, with over 34,000 business school alumni around the world. Recently, UST announced the end of their full-time MBA offering. At first glance, that may seem like a blow to the future of entrepreneurial development at the university. We dug into the details to get a better of picture of what’s going on at the university to support innovation, startups, and entrepreneurs.
Our Senior Analyst, Mike Schulte (JD/MBA ’17), shared his experience and insights into the university including these highlights:
- The Aristotle Fund provides real investing experience to students
- Servant Leadership creates ethical behavior in entrepreneurs
- The Schulze School of Entrepreneurship pays students to work at early-stage startups
- gBeta St. Thomas program supports alumni founders
- Mentor Externships give you a dose of the day-to-day reality, before you’re committed to it
- Students gain real consulting experience with real clients
Here is a mix of upcoming events for investors, founders, and/or ecosystem supporters. All events listed are virtual unless otherwise noted.
- Mar. 10th, Minnesota Ventures: Science and Deep Tech Early Investment Opportunities. Limited-access event by UMN Technology Commercialization Venture Center.
- Mar. 17th, Wisconsin Tech Summit. “The goal of the Wisconsin Tech Summit is to bring together major companies and emerging firms in a setting that allows them to meet and explore likely business relationships around technology needs and innovation.”
- Mar. 23-25th, midwest.tech. “One-on-one meetings for Midwest-based or Midwest-linked startup founders, VCs, angel investors, incubators, and accelerators – focused on Pre-Seed, Seed, and Series A stages”.
- Apr. 27-28th, InvestMidwest Venture Capital Forum. “InvestMidwest highlights startups in the Midwest region with the most promise for success that are currently seeking Series A or B funding of $1M to $20M.”
Flywheel is new to the Great North Labs portfolio! Flywheel is the leading research data platform that provides the tools needed for data import, automated curation, image processing, machine learning workflows, and secure collaboration. By leveraging cloud scalability and automating research workflows, Flywheel helps organizations scale research data and analysis, improve scientific collaboration and accelerate discoveries.
Allergy Amulet launched their product! “The world’s smallest & fastest consumer food allergen sensor” quickly sold out. Sign up on the Allergy Amulet website to receive info on future release dates.
“Flywheel raises $15 mn co-led by Beringea and 8VC”. Flywheel’s series-B round included Great North Labs as well as well-known global VCs.
“Venture capitalists invested a record $1.9B in Minnesota in 2020”. The $1.9B in VC included EmpowerU’s recent raise, along with Bright Health, Arctic Wolf, and Revol Greens.
The University of St. Thomas (UST) is the largest private university in Minnesota with ~10,000 students. The business school, the Opus College of Business, is #2 in the state for undergraduate business education. The Schulze School of Entrepreneurship, named for Best Buy founder Richard Schulze, is #1 in the state and nationally ranked. Digital transformation and education trends are driving big changes at the university in how entrepreneurs are educated and how startups are supported.
This year the university announced the end of its full-time MBA program, and a focus on part-time and online MBAs, citing the changing demand for graduate business education. The decline is part of a local and national trend trend, as Minneapolis-St. Paul MBA program applications are down 20% in the past five years, and as top ten business schools even see double digit declines.
We’re not here to argue for or against an MBA, but to call attention to the fact that the perception of the degree is shifting, and UST is shifting with demand.
At Great North Labs, we don’t prioritize pedigrees. Whatever your background, what is important is whether or not you can execute. Whether you’re working from theory or practice, it comes down to the product and your delivery of it.
Elon Musk weighed in on MBAs with the Wall Street Journal recently, saying, “I think there might be too many MBAs running companies. There’s the MBA-ization of America, which I think is, maybe not that great.”
So that begs the question: outside of the MBA program, how is UST supporting innovation? What is UST doing to get students “onto the factory floor” and spending time with customers?
How University of St. Thomas Raises Up Startup Entrepreneurship
For answers, we turned to Great North Labs own Mike Schulte, JD/MBA ’17. Mike has experience with the Opus College, the School of Law, and the Schulze School, as well as the university’s other programs and initiatives. He is not only keyed in to the school’s programs, but speaks as an investor and startup ecosystem supporter through Great North Labs, and can speak to how his educational experience has helped his career in venture capital.
The Aristotle Fund provides real investing experience to students. The fund is a 100% student-managed investment fund, and is the ultimate in experiential learning. Gerald Rauenhorst, the founder of a construction company that became The Opus Group, (and UST Trustee from 1966 to 2012), provided the initial $5M for the fund. The gift was kept anonymous for the first 17 years, until 2016. Rauenhorst stipulated that there be no faculty oversight in the investment decisions. Consequently, though it is run as a class, every student manager is invested in the Fund’s performance to the point where it is a full-time job.
Official mentors include accomplished portfolio managers at top local investment firms. One attends the class every week to give feedback on pitches, and they pull no punches. Mike has acted as an unofficial mentor for the class, and continues to make connections through his former classmates.
“This was the best educational experience I ever had, and I could easily find 20 other people to tell you the exact same thing. When we get together we still talk about spending hours in front of the Bloomberg terminal scouring analyst reports and how it has shaped our careers,” said Mike. “I would not be able to do what I do at Great North Labs if it weren’t for the Aristotle Fund. That is why I recommend these students for positions.”
Servant Leadership creates ethical behavior in entrepreneurs. Servant Leadership is prioritized as part of the UST mission, with both the law school and the business school focusing a lot on self development. They bring in examples from industry to exhibit how this looks in practice, which include Pat Ryan of Ryan Companies US Inc., Dennis Monroe of Monroe Moxness Berg PA, and Alan Page, former Minnesota Supreme Court justice and NFL Hall-of-Famer. They challenge their students to adopt these same principles.
UST talks a lot about Servant Leadership as a foundation of their mission, and it is visible in everything they do. Laura Dunham, Associate Dean of the Schulze School of Entrepreneurship, was recently featured in the Stanford Innovation Lab podcast episode “Teaching Ethical Entrepreneurship”. The podcast focuses on elevating applied ethics in the field of entrepreneurship.
“I have students reaching out to me all the time to ask for career advice, and I never say no. I helped one student with an internship at a law firm I worked for. I’ve written letters of recommendation on behalf of students. This is what servant leadership looks like,” said Mike. “I really believe that faculty choose UST for the culture and that is why they punch above their weight class in that regard.”
At Great North Labs, we also believe in the principles of servant leadership. We support and give back to the communities we belong to, including organizations making a difference in the startup ecosystem. In addition to cash and time, we donate equity through our Founders Pledge so that when Great North Labs has a win, we all benefit.
The Schulze School of Entrepreneurship pays students to work at early-stage startups. St. Thomas is arguably the most aggressive university in Minnesota at placing their students in early-stage growth companies. This sets them up to learn the skills required to execute and operate a successful startup business. These internships provide the “factory floor” experience that isn’t found in the classroom.
The Summer Internship Grant program provides funding for some students while they intern at an early-stage startup. Companies interested in entrepreneurship students can inquire through the “Hire a Tommiepreneur” page on the St. Thomas website.
gBeta St. Thomas program. gBETA is a program of gener8tor, a nationally-ranked startup accelerator with programs across the US and Canada. The seven-week accelerator is for early-stage companies, and is free, requiring no fees nor equity. Great North Labs is a proud partner of gener8tor, and a supporter of gBETA Greater MN-St. Cloud.
gBETA St. Thomas is exclusively available to students and alumni of the University of St. Thomas. Companies of any stage, industry, or business model can apply to participate. The next cohort is July 13th -Sept. 3rd.
Mentor Externships give you a dose of the day-to-day reality, before you’re committed to it. The mentor-externship program at the School of Law requires at least 1 hour of “experiences” per week, where students are in the field, with mentors (usually UST alum), learning what lawyers do on a daily basis. This is completely self-directed, and students pick the fields they want to learn about.
“For me, it was actually helpful in teaching me what I didn’t want to do which, in hindsight, was incredibly valuable. When I entered law school, I liked the idea of spending my days as a litigator in the courtroom… when I dug a little deeper, I determined that it wasn’t for me,” said Mike. “In addition to the externship, there was one semester where you worked 2-3 days a week in an internship. I worked at St. Paul City Hall. I had always liked local politics, but in practice… that was not the case. Every student’s experience was unique in this program, but I have no doubt that it was far more valuable than sitting in a traditional classroom setting.”
Real consulting experience with real clients. The Applied Business Research course takes a team of 4 and assigns a client with a marketing need. The consulting team spends 6 weeks putting together a project, just like a marketing agency would do.
“My project was for Code42. Code42 was considering a new product launch and wanted to know how to market it. Our research, including secondary, IT executive interviews, mass surveys, etc., uncovered that their customers cared less about the new product and more about security concerns,” said Mike. “Today, Code42 is positioned as an enterprise security software company. While I’m sure they weren’t relying on our research independently, I do think we provided valuable insights.”
By the Numbers
St. Thomas has 34,000 business alumni worldwide. 96% of them found employment, or went on to graduate school, within 4 months of graduating. Undergraduates from the School of Entrepreneurship have gone on to raise $42.9M in subsequent funding. 71% of the companies started by undergraduate alumni in the last 10 years are still in business. gBETA St. Thomas has helped develop and support a dozen local startups, without extracting capital or equity from the founders.
Mike Schulte has seen first-hand the founders, talent, and startups that St. Thomas’s programs generate and support. He himself launched his career in venture capital thanks to the experiences he had at St. Thomas., and has been with Great North Labs for 3 years.
Mike isn’t the only UST success story with Great North Labs. Two of our portfolio startups, TeamGenius and Clinician Nexus, are led by UST alumni founders. Our portfolio of startups employs 19 University of St. Thomas alumni all together. That’s almost one alumni for every startup we invest in!
Why it Matters
Though the market for full-time MBAs is fluctuating, UST is pro-actively adjusting to emerging trends. The school is re-thinking it’s educational offerings, as it adjusts to meet demands, but is maintaining rigor and efficacy. In short, digital transformation is fueling innovation instead of fueling attrition.
While that change might not quite reach the level of “Hey, teacher! Leave the kids alone!”, it’s definitely not business as usual. The entrepreneurial support programs that have emerged across disciplines, schools, and functions are signs of this shift, and of the continued commitment of UST.
Those programs have continued to produce and support startups, founders, and talent, even as ideas of entrepreneurial education evolve. And during these challenging times, St. Thomas’s values have shined through, with the school emerging in the national scene as a leader in ethical entrepreneurship. That’s a mark of smart leadership for the largest private university in Minnesota.
Welcome to the May edition of the Great North Labs newsletter. In this time of economic change, entrepreneurial skills, advancing technology, and its new applications will drive the innovations and evolving business models necessary to spurn economic growth and prosperity on the other side of the downturn.
Great North Labs recognizes the importance of seeding investable startup opportunities, and endeavors to be a VC leader in the cultivation of robust early-stage startups in the region. That said, there are opportunities for learning necessary skills for startup entrepreneurs coming up soon, for high school students, college students, and entrepreneurs of all ages.
Today is the deadline to sign up for Jumpstart’s 3-day startup intensive for students! Jumpstart is structured like a hackathon, but with the focus including product and business instead of solely on coding and building. The program starts on Friday and goes through the weekend. Sign up by midnight with your own team, or as an individual. Each team will include technical and non-technical roles.
Jumpstart is virtual, free, and includes a day of workshops, speakers, and Q&A to learn from various startup ecosystem leaders. If you know any students in high school or freshmen in college interested in a startup, check it out. We are proud sponsors of this inaugural event by Futurist Academy, and are excited to see this kind of programming becoming more prevalent and widely available in Minnesota and the Midwest.
For entrepreneurs beyond high school, the Startup School is back! This collaboration with ILT Studios, Great North Labs, E1 Ecosystem Builders, and MN DEED has gone virtual. Startup Course 01 | Customer Driven Innovation – Module 101: Opportunity Identification is June 6th! This first of three modules is aimed to take entrepreneurs from idea to investable product. The module is available in two separate 2 1/2 hour time slots, is open to anyone, and, like the entire program, is free.
“Most good ideas do not come fully formed. Even the best ideas need to be iterated, explored, and refined before they have a chance at becoming great business ideas. What most people don’t tell you is that there is a process that can be taught and practiced to sharpen an idea–taking it from good, to better, and then to great.“
Support Startup Education
Silicon North Stars is a program founded by Mary and Steve Grove that takes high-potential ninth-graders from economically underserved communities in Minnesota, and exposes them to startup training, local tech mentors, and the culture of innovation born in Silicon Valley.
Usually the program takes the students out west to visit tech companies, but this past year was the first time the program was run entirely in Minnesota! With the evolving Minnesota startup ecosystem there was no shortage of resources, people, and companies for the students to engage with.
If you’re interested in joining us in support this program and its alumni, Silicon North Stars is currently raising $10,000 via GoFundMe for their inaugural alumni scholarship program.
The summer event season is getting rolling, with many large conferences moving to a digital format.
- June 4th is the Wisconsin Entrepreneurs’ Conference. This virtual conference will include sessions focused on providing small businesses guidance on COVID-19, and will also highlight the Wisconsin Business Plan Competition winners.
- June 4-5th is Entrefest 2020. Based in Cedar Rapids, IA, this year’s conference is virtual. “EntreFEST is a two-day conference, celebrating the spirit of entrepreneurship and innovation where professionals at every level come together, share ideas, and own their success.” Great North Labs’s Mike Schulte will be speaking.
- June 23-25th is Collision. Described by Politico as “The Olympics of Tech”, this massive annual tech conference is going virtual this year. With SXSW canceled this year, this may be the top tech event of 2020 after CES. Great North Labs’s Pradip Madan and Rob Weber will be attending and available through the event app.
- June 24-25th is Fund xChange in Chicago, IL. “FUND xChange is assembling the entrepreneurs, industry leaders, and experts, in the banking and finance industry to explore the innovations in value exchange. Meet the community improving how we bank, pay, and invest.”
Branch won a Webby! First awarded in 1996, the Webby Awards are, according to the New York Times, the “Internet’s highest honor”. This year the competition garnered over 13,000 entries. Branch was 1 of 2 winners in the “Banking/Financial Services Apps” category. Congratulations to the Branch team for this international recognition!
Dispatch is hiring a Director of Sales, Product Manager, Product Owner, Quality Assurance Engineer, Senior Software Engineer, Content Creator, Business Development Rep., and Software Engineering Manager in Bloomington, MN. Territory Sales Manager positions are open for 16 states!
FactoryFix is hiring a Team Lead – Full Stack Developer, Full Stack Developer, and Infrastructure Developer- DevOps in Madison, WI; a Recruiter, and Business Development Rep in Chicago, IL.
TeamGenius is hiring a Customer Success Associate in Minneapolis, MN.
PrintWithMe is hiring a Regional Sales Director on the East Coast; a Software Engineer, Summer Strategy Intern (MBA), and Summer Strategy Intern (undergraduate) for Remote work.
Parallax is hiring a Customer Success Specialist, and Growth/Customer Acquisition in Minneapolis, MN.
Branch is hiring a Channel Manager in Minneapolis, MN.
NoiseAware is hiring a COO, VP of Global Sales & Account Management, Product Marketing Manager, UI/UX Designer, Account Manager, and Customer Advocate in Dallas, TX.
UPDATE: Signup here for St. Cloud or Red Wing locations! Or View Course Information.
Greater Minnesota has been underperforming in its formation of new startups. When we founded Great North Labs, we recognized this need, and committed to changing it before the region could fall further behind. We founded a Startup School to provide the educational components that we saw local entrepreneurs were missing. By partnering with Red Wing Ignite and ILT Studios, we will greatly expand our reach, capacity, and educational offering. This co-created, yet-to-be-named, Greater MN Startup School initiative will reach across the state to cultivate founders and startups in areas ready for the impact of entrepreneurial innovation.
The Necessity of Startup Entrepreneurship
From 2000-2017, 52% of companies in the Fortune 500 have either gone bankrupt, been acquired, or ceased to exist. Digital disruption is the primary catalyst of change. Adaptability is key to success. A key to any community, or organization, strengthening its adaptive intelligence is for it to master a disciplined approach to startup entrepreneurship. Disciplined startup entrepreneurship isn’t new but techniques have emerged the past 15 years that emphasize a more agile process for startup entrepreneurship that is needed in an environment with such accelerating changes.
One measure of the strength of startup entrepreneurship in a community is the number of first venture financings that it produces. The Twin Cities (Minneapolis-St. Paul) now have 1% of the countries first venture financings, but Greater Minnesota (generalized as non-urban MN, or specifically as all of Minnesota outside of the Twin Cities region) has lagged behind. Comparing the efficiency –the number of first venture financings per population– of the Twin Cities to the next largest markets in Minnesota is revealing. St. Cloud, Duluth, and Mankato have 50% or lower startup efficiency. Rochester (home of the Mayo Clinic) is a standout, and outperformed with a 200%+ startup efficiency compared to the Twin Cities.
The Need for Startup Education
My twin brother and Great North Labs Partner, Rob Weber, and I have previously angel invested in 25 startups from 2006 to 2017 while scaling our own startup with offices in Silicon Valley and Minnesota. I served for 10+ years as Chief Product Officer, and noticed an inefficiency in the startup teams resulting from a lack of disciplined startup entrepreneurship practices compared to Silicon Valley. I struggled finding Minnesota-based product managers trained in the more adaptive style of product management made popular by lean startups so we invested in developing a common process and trained our team on it.
As investors, too often we’d hear from a founder that they just need $300K to prove out their latest thesis. We’d meet teams that burned through $500K in angel funding that still couldn’t present evidence validating their thesis. This evidence we’d expect a product manager to answer at our company in their first two months of leading a new product idea with nothing more than qualitative research.
For most of the funded startup teams, they were immersed in the market and sought to solve a problem they thought they understood well. However, they usually struggled to identify the problem that’s the most impactful to solve, the minimal viable solution that solves that problems needs, and an offer that communicates the value proposition clearly and for a price the buyer will accept.
The Great North Labs Startup School
Great North Labs was formed in the fall of 2017. In addition to our early-stage venture fund, we started an initiative called the Startup School to invest in strengthening our disciplined startup education in the region. We led a group of practitioners who ran workshops on Digital Transformation, Lean Startups (most frequent), and Agile Development. The free or low-cost workshops attracted over 200 participants through the end of 2019. The workshop materials were also shared with many others and we gave lectures at a number of universities and conferences in cities across the Upper Midwest.
For the Lean Startup Workshop, we found that participants were engaged with low attrition rates and heard from them after the fact as they reported on their progress. We had the Executive Director of a significant non-profit mention using the process to discover a new innovation they were pursuing to commercialize, several tech founders launching their MVPs after researching, and many staying in touch to assist and support each-other but also in some cases joining forces on a startup.
We saw a greater gap in the smaller markets across Minnesota and throughout the Upper Midwest. However, one bright spot was in Iowa. There, the state had invested in programming similar to ours, and had expanded across the state with their Venture School initiative.
The Greater MN Startup School Initiative
We are taking the experience and lessons learned along the way from our initial Startup School, from Iowa’s Venture School, and from other startup education programs to expand our program to our new Greater MN Startup School initiative. This new Startup School will make the skills and training necessary for disciplined startup entrepreneurship more accessible to Minnesota entrepreneurs than ever before. It will also open up networks and possibilities for people across the state that were previously unavailable. Across the state, we hope to see this cultivation of startups drive innovation, economic activity, and value creation.
What: A new set of workshops designed to strengthen the skills in disciplined startup entrepreneurship and provide an applied learning environment that allows founders, and their supporters, to work from idea conception to commercialization.
Participants will learn innovation techniques for identifying, defining, sizing, validating, and commercializing venture scalable startups. There will be new online and in-class programming to help you learn with hands-on practical activities, mentorship, insights, and opportunities to network to help you build confidence in your startup thesis and master the art of gathering feedback, directly from your future customers.
When: The first class for Customer Driven Innovation will run from March-April. The first class for Business Model Foundation will follow in early summer. The first class for The Lean Startup will run from mid to late summer. Web-site registration will be open in February for the classes and we will follow up with additional details.
Where: Red Wing and St. Cloud will offer the same classes in parallel but on different days
Why: To teach participants about design innovation, the Lean Startup process and how to identify, develop, define, validate, finance and commercialize their ideas so they are more successful in developing their own startup as a new company or inside of an existing one.
Earn a certificate for completing each of the programs and strengthen your credentials for a career as a Startup Founder or Product Manager. Initially, three workshops will be offered and each will feature a program certificate for those that successful complete:
Program 1: Customer Driven Innovation – Gain fresh perspective that will expand your thinking and push you to bold new ideas through practice and discussion within the class and interactions with the instructors and classmates. You’ll come up with a number of potential ideas and pick one to develop as a concept pitch.
Program 2: Business Model Foundation – This program builds on the Customer Driven Innovation course to help you form a strong business thesis. Learn to document your initial business plan and quickly analyze it’s potential, advanced customer discovery interview methods, and skills needed to help gather better feedback and ensure you are solving the right problem.
Program 3: The Lean Startup Certificate– This program builds on the Customer Driven Innovation and the Business Model Foundation courses to leverage the creativity and collaboration within a startup team to develop and execute experiments that test your business thesis, synthesis key learnings, and to explore alternative thesis based on those learnings until you find a business thesis that meets your success criteria. This program will culminate with an idea pitch event where an investor panel will award cash prizes to the top pitches.
Building up the Region
The Twin Cities has emerged as a strong startup community in the Upper Midwest. There are parallels between Silicon Valley and the Twin Cities that we can learn from and try to replicate in Greater MN, and potentially the entire Upper Midwest region.
Silicon Valley benefited from an emphasis on experimenting with practical skills in emerging fields, a network of VCs, links with Economic Development Departments, local universities, and local LPs. Our vision is to partner with all the aforementioned entities to serve the entrepreneurs of Greater MN.
While this is our pilot year, we already have interest from a variety of organizations. There is strong demand from around the state. If your community is interested in our program, please contact us, and we can stay connected and help with preparations as we make plans for expansion.
As far as involved organizations go, we’d like to take a moment to thank LaunchMN in particular, for their financial and operational support. This new MN DEED initiative led by Neela Mollgaard has helped make this new Startup School initiative possible.
We have an opportunity now to transform our rural markets into strong startup communities, and improve their resiliency in a world that increasingly requires adaptive intelligence and innovation skills to succeed.