Last month we wrote about the history of local startups that were formed during a recession and went on to success, including local unicorn Jamf. The conversation quickly turned to what that means for founders and investors. 

Starting Up in a Downturn

The idea is that while many startups are beat down by strong headwinds, those that are resilient and adapt to stay aloft are better-positioned to take off post-recession. The local, successful startups that have come out of downturns offer compelling evidence to support this idea proposed by Rob Weber. 

Lee Schafer delved into the topic in his Star Tribune article, “Can a downturn actually be the right time to start a business?” and spoke with Scott Burns, CEO of Structural and former CEO of GovDelivery.

Managing Partner Rob Weber’s own previous company, NativeX, was a startup success that came out of a recession.

Scott agrees that it’s probably true that “what doesn’t kill you makes you stronger”, but he doesn’t think that it’s better to start in a recession. Specifically, he laments the opportunities lost that he didn’t pursue when they presented themselves. 

“When CEO of GovDelivery during trying times, he said, ‘we were so beat up we lost our ability to move fast when the opportunities did arrive.’”

Investing During a Downturn

Few people would disagree with Scott that running a startup during a recession is a difficult position. Being a startup founder is incredibly tough even in easy times. But if founders can run lean and stay agile, they might come out of the pressure cooker with a proven, capital-efficient business.

In the Midwest, capital efficiency is already a necessity for startups. We have 10% of US venture-backed startups, but only 5% of funding. For investors, this can mean attractive returns on investments. Specifically, a 5.17x median MOIC (Multiple on Invested Capital).

There is opportunity to be found in a recession. The next GovDelivery, NativeX, and Jamf could be out there right now.

The trick is to keep yourself willing and able to move on those opportunities when they arrive.

Events

Here are some interesting upcoming events. They are all virtual.

Portfolio News

Allergy Amulet is new to the Great North Labs portfolio! Allergy Amulet is a fast & portable food allergen & ingredient sensor. The wearable device is paired with test strips, and is the world’s smallest & fastest consumer food allergen sensor. Read more at Crunchbase.

“Indeed acquires recruiting process automation platform ZapInfo”. Jobs site Indeed has acquired ZapInfo!

“Misty the robot graces Fierce AI Week in engineering”. Misty demonstrated it’s use as a temperature screening assistant for COVID-19.

“PrintWithMe Announces National Partnership With RangeWater Real Estate”. PrinWithMe has partnered with a manager of 50,000+ multifamily housing units.

“Pitchly completes $2.5 million investment round”. Pitchly has completed a $2.5M capital raise.

Job Board

Dispatch is hiring a Business Development Representative, Data Engineer, and Quality Assurance Engineer in Bloomington, MN; a remote Ruby Developer. They are also hiring Territory Sales Managers in Albuquerque,NM; Denver, CO; Phoenix, AZ; Portland, OR; Salt Lake City, UT; Seattle, WA; and Tucson, AZ. 

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 Director on the East Coast; AR/AP Specialist, Inside Sales Executive in Chicago, IL; Customer Service Representative, Marketing Director, and a Fall 2020 Strategy Intern (MBA) for Remote work.

Parallax is hiring a Growth/Experienced Business Development Representative in Minneapolis, MN; Experienced Product Designer, and Head of Customer Success & Product Ownership in Edina, MN. 

Branch is hiring a Data Platform Manager, Senior Backend Engineer, Senior Software Engineer, Customer Success Manager, Customer Support Rep, 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.

Clinician Nexus is hiring for Customer Support I in Minneapolis, MN. 

NoiseAware is hiring a COO, VP of Global Sales & Account Management, Embedded Developer, QA Technician (independent contractor), Account Manager, and a Customer Advocate in Dallas, TX.

Great North Labs portfolio companies Dispatch and 2ndKitchen have claimed titles in American Inno’s 2019 Tech Madness competition. The annual competition is a tech startup, voting-based version of March Madness. And yes, it’s better than the actual thing, because if the NCAA tournament worked the same way, Duke would have won and everyone would be happy, right?

Well, maybe it’s not a perfect metaphor, but it’s all in good fun.

With over 6,000 votes cast, Dispatch took the title at Minne Inno, beating out Sezzle in the finals. Sezzle has been on fire recently, but they cooled in the contest with the scrappy last-mile delivery squad.

To make it to the title game, Dispatch had to dispatch another Great North Labs company in their Final Four matchup, Structural. It was solid basketball by both teams but after a grueling four quarters, costly injuries, and some questionable calls, it all came down to Dispatch getting more votes.

Meanwhile, in Chicago, 2ndKitchen was unstoppable. They pulled off upset after upset, until after 5 upsets, 2ndKitchen upset Chowly in the championship game. As the number 16 seed (seeds?!), every victory came against a higher-ranked opponent. Over 133,000 votes were cast in the tournament, which ended with the two high-powered food service startups in a duel for the ages. Other commentators may say it was the votes, but I’m going to say it was strong basketball fundamentals that carried this one for 2ndKitchen.

In all seriousness, this was a fun tournament, and a great way to showcase local startups. And while they may not be carrying a trophy around U.S. Bank stadium, we are still excited to see the traction demonstrated by our portfolio companies.

Congratulations to Dispatch, 2ndKitchen, and Structural!

Tweet @jdallke to find out how they determine seeds for the Tech Madness tournament, and tag @greatnorthlabs #boomgoesthedynamite if you do. If you’re looking for work, check out the hiring pages at these great companies: Dispatch, 2ndKitchen, and Structural.

Welcome to Silicon Lakes!

The legacy of cornfields and flyover states taints the national perception of the modern Midwest. It’s led the area to be overlooked and under-capitalized by investors who paper the coasts with venture dollars.

While the name “Silicon Prairie” attempts to characterize the tech innovation occurring in America’s heartland, it’s a broad swath including an 8-state region (the name can also refer to two other regions, one in Texas, and one in Illinois).

The upper Midwest, near the Great Lakes, has a more dense collection of innovation hubs built around legacy industrial centers including Chicago, Minneapolis, Grand Forks, Des Moines, and Madison.

As investors like Revolution’s Rise of the Rest Seed Fund are turning towards the interior, bringing much-needed capital to the area, our own Pradip Madan breaks down the common characteristics of innovation hubs the world over and evaluates the upper Midwest’s potential to become “Silicon Lakes”.

Events

July 25th, Minneapolis. Ryan Weber has been instrumental in organizing the Digital Transformation Summit for Digerati. This is an exclusive, small-crowd event for local leaders to learn and network. Speakers include Weber, Managing Partner of Great North Labs; Mark Ritchie, former MN Secretary of State; and Gene Munster, formerly of Piper Jaffray and head of Loup Ventures. Keep an eye on the site as more speakers are added, and visit the link to request an invitation!

August 16th-23rd, Madison. Forward Fest is an 8-day tech and entrepreneurship festival, the largest such event in Wisconsin. Ryan Weber will be there, so reach out if you’re in Madison and want to meet up!

August 20-22nd, Grand Forks. UAS Summit & Expo. What is UAS? Unmanned Aerial Systems: drones, their controllers and operators. This summit is in its twelfth year!

Portfolio action

FactoryFix is a new addition to the GNL portfolioIt is a labor marketplace for manufacturing businesses to find and contract skilled talent. The team is based out of Chicago and includes founder Patrick O’Rahilly, co-founder of Compass Automation.

New advisors

Great North Labs welcomed four new advisors in the past month:

Alex Ryan- Founder of Bitmatter; Co-Founder/CTO of Starting 11
Julie Novack-CEO/Co-Founder PartySlate
Jackie Schneider-CRO, Field Nation; Formerly Global Vice President of Sales at Proto Labs
Shannon Wiger-VP, Spring Hill Capital; Director of Business Development at Moss and Barnett

Job Board

FactoryFix is hiring a Business Development/Sales intern
Dispatch is hiring for sales, business development, driving and software engineering
Structural is hiring a back-end software engineer, and a customer success specialist

July Newsletter
Great North Ventures

iraLogix closes $22M + Branch expands with Uber

iraLogix Closes Series C
Great North Ventures

iraLogix closes $22M Series C

June Newsletter
Great North Ventures

Flywheel lands Gates Foundation grant

We're Hiring
Great North Ventures

Venture Capital Analyst

We're Hiring
Great North Ventures

Executive Assistant – Venture Capital Firm

Great North Ventures Raises $40M Fund II
Great North Ventures

Great North Ventures Raises $40 Million Fund II

Investment Thesis: Fund II Strategy
Great North Ventures

Investment Thesis: Fund II Strategy

Investment Thesis: Community-Driven Applications
Great North Ventures

Investment Theme: Community-Driven Applications

Fund II Theses: Solving Labor Problems
Great North Ventures

Investment Theme: Solving Labor Problems

April Newsletter
Great North Ventures

Trends in the Gig Economy + Work in the Metaverse

Minnebar14
Josef Siebert

MinneBar 14 Recap

Minnesota Innovation Collaborative
Josef Siebert

Minnesota Innovation Collaborative

engineer and various business information. Internet of things industry.
Pradip Madan

IoT 3.0

Healthcare innovation image
Great North Ventures

Healthcare Innovation