Friday, August 19, 2022

Minneapolis/St. Paul Ranked High for Startups:

As a lawyer who works with startups for a living, I wasn’t surprised to see that M25, an early-stage venture firm based in Chicago that invests in tech startups headquartered in the Midwest, has (again) ranked the Twin Cities #2 among its Best of the Midwest Startup Cities Rankings. I’ve known for a couple of decades that the Twin Cities is a pretty great place to start a business and this report just validates that.

The rankings are rooted in three general areas: the amount of startup activity, how supportive the area’s ecosystem is for startups, and the general business climate. The top two (Chicago at #1) have been consistent among the 59 metropolitan areas ranked since these rankings started in 2017. Pittsburgh, which had consistently been ranked third fell to fourth behind a rising Indianapolis, which really benefitted from aggressive funding availability through programs (direct investment, angel tax credit, etc.)

If you dig into the data a bit, you can see that the Twin Cities rank high for the number of startups and the number and percentage of exits, as well as for “big outcome” exits (>$50 million), Fortune 500/1000 companies, and our vibrant University ecosystem. You can see this in action by not only checking out all the interesting companies among this year’s just announced finalists in the Minnesota Cup (not to mention the whole group of Minnesota Cup Semifinalists), but all the other fostering of entrepreneurship occurring at the Carlson School of Management at the University of Minnesota and programs at other institutions like Macalester and St. Thomas.

The data also shows a large presence of investors, including venture capital investment and accelerators/incubators. The flies in the ointment for the Twin Cities include high labor costs and a bad tax climate, but these aren’t enough to overwhelm all the other positive attributes for startups in my backyard.

To my Lathrop GPM colleagues in KC, its great to see some momentum building in your startup community, with Kansas City having displaced Cleveland at #11!

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