Entrepreneurial Ecosystem · Enterprise Software Financial Services Food Healthcare/Medical...

Entrepreneurial Ecosystem

2016 – TEMPERATURE CHECK

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2E N T R E P R E N E U R I A L E C O SYST E M T E M P E R AT U R E C H E C K - 2 0 1 6

FORMER FOUNDER

SERVICE PROVIDER

COMMUNITY BUILDER

STUDY & SYNTHESIS CONDUCTED BY:

ReedRobinson

@ I N D E E D I TS R E E D R E E D @ B E TA . M N

3

Elements of the Study

Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N

P H AS E I Summer 2016

1-Hour In-Person Interviews

13 Participants

P H AS E I I Fall 2016

19-Question Online Survey Targeting Local Founders

222 Responses

R E S U LTS I N F O R M E D

E N T R E P R E N E U R I A L E C O SYST E M T E M P E R AT U R E C H E C K - 2 0 1 6

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Purpose of the Study


T E M P E R AT U R E C H E C K

D E F I N E ST R E N GT H S & W E A K N E S S E S

P R I O R I T I Z E E F F O RTS


5

CARSON KIPFER

JOY LINDSAY

THOMPSON ADERINKOMI

DAN MALLIN

PAUL HINES

CASEY HELBLING

KYLE ROLFING

RYAN BROSHAR

DANIELLE STEER

MELISSA KJOLSING

MARK MOE

DAVID AMOR

PAMELA YORK

Interviews Conducted with these Founders, Investors & Community Builders

Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N E N T R E P R E N E U R I A L E C O SYST E M T E M P E R AT U R E C H E C K - 2 0 1 6


TA L E N T

C O R P O R AT E C O M M U N I T Y

M O M E N T U M

A F F O R DA B I L I T Y

D I V E R S I T Y

R I S K- AV E R S I O N

E A R LY- STAG E I N V E ST I N G

N O H U B

6

Main Themes Informed the Survey

Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N

7

Survey Details


1 9 Q U E ST I O N S Measuring company profile,

confidence, ecosystem strengths and weaknesses

2 2 2 R E S P O N S E S

From various participants, eventually narrowed down

to insights from 107 founders

D I ST R I B U T E D W I T H H E L P F R O M :


8

Data Filtered to “Founders”


F O U N D E R D E F I N I T I O N

•Business type: C Corps. LLCs, Partnerships, B Corps, S Corps and Sole Proprietorships

•Business age: Less than 5 years in operation

•Ownership structure: Own at least a portion of the business

•Goal: Intentions of a liquidity event, or do not yet know

•Located in: The Greater Minneapolis-St. Paul Metro Area

2 2 2 TOTA L R E S P O N S E S 1 0 7

F O U N D E R S

Data based on this population


Founder Profile

20 to 29

30 to 39

40 to 49

50 to 59

60+ 4

17

23

41

22

AG E O F F O U N D E R

Less than 1

At least 1

At least 2

At least 3

At least 4 15

15

29

23

25

AG E O F B U S I N E S S

Minority

Equal

Majority 69

26

12

OW N E R S H I P ST R U C T U R E

Arts/Entertainment

Consulting

Consumer Web

Education

Enterprise Software

Financial Services

Food

Healthcare/Medical

Internet of things

Real Estate/Construction

Retail/Consumer Products

Sports/Recreation

Transportation 1

5

11

2

3

32

9

3

13

3

11

8

6

I N D U ST RY

C Corp.

LLC

Partnership

B Corp.

S Corp.

Sole Proprietorship 2

7

1

2

57

38

B U S I N E S S T Y P E

Asian/Pacific Islander

African American

Hispanic

Multiple ethnicities

Prefer not to answer

White/Caucasian 86

3

2

2

7

7

E T H N I C I T Y

Female

Male 78

29

G E N D E R

9Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N E N T R E P R E N E U R I A L E C O SYST E M T E M P E R AT U R E C H E C K - 2 0 1 6

mailto:[email protected]

How are we doing?TEMPERATURE CHECK

TEMPERATURE CHECK

How are we doing?Question: The ecosystem that my business exists within ________.

Scale: 1 – couldn’t be worse to 10 – couldn’t possibly be any better

Our founders landed on a mean value of 6.2, which is similar to the sentiment expressed by our interviewees – 5.8

1 2 3 4 5 6 7 8 9 1 0

Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N 11

C O U L D N ’ T P O S S I B LY B E A N Y B E T T E R

C O U L D N ’ T B E WO R S E

3

6

1314

13

31

18

8

1

M E A N :6 . 2



E N T R E P R E N E U R I A L E C O SYST E M T E M P E R AT U R E C H E C K - 2 0 1 6 12

Female

Male

Untitled 1 0.0

6.1

6.5

G E N D E R


African American

Hispanic



White/Caucasian

Untitled 1 0.0

6.3

6.3

5.0

6.5

7.0

5.0

E T H N I C I T Y

20 to 29

30 to 39

40 to 49

50 to 59

60+

Untitled 1 0.0

6.8

6.1

6.4

6.4

5.7


Less than 1

At least 1

At least 2

At least 3

At least 4

Untitled 1 0.0

6.6

6.7

6.2

6.0

5.9


Arts/Entertainment

Consulting

Consumer Web

Education

Enterprise Software

Financial Services

Food

Healthcare/Medical

Internet of Things



Sport/Recreation

Transportation

Untitled 1 0.0

2.0

7.2

6.4

6.0

8.0

6.3

5.7

5.7

6.0

5.7

6.0

6.9

6.0

I N D U ST RY

How are we doing?



7.37.1

TEMPERATURE CHECK

I WouldRecommendStarting aBusinessHereQuestion - I would __________a close friend or colleague to starta business in the same ecosystemthat my business exists within.

Scale: 1 – Strongly discourage to 10 – Completely encourage

7.213Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N E N T R E P R E N E U R I A L E C O SYST E M T E M P E R AT U R E C H E C K - 2 0 1 6


14

Female

Male

Untitled 1 0.0

6.9

7.5

G E N D E R


African American

Hispanic



White/Caucasian

Untitled 1 0.0

7.3

6.0

6.0

6.0

7.7

5.4

E T H N I C I T Y

20 to 29

30 to 39

40 to 49

50 to 59

60+

Untitled 1 0.0

7.0

7.6

7.3

7.4

5.9


Less than 1

At least 1

At least 2

At least 3

At least 4

Untitled 1 0.0

6.9

6.7

7.1

7.4

7.2


Arts/Entertainment

Consulting

Consumer Web

Education

Enterprise Software

Financial Services

Food

Healthcare/Medical

Internet of Things



Sport/Recreation

Transportation

Untitled 1 0.0

8.0

7.2

7.1

5.0

6.0

7.8

7.3

4.7

6.6

6.0

7.1

7.0

7.3

I N D U ST RY

I Would Recommend Starting a Business Here



WHO AM I?

Yes!I would recommend that others start a business here.

“Here, you can TAP INTO A NETWORK

QUICKLY. I could introduce them to a few

people, and they would have access to 80%

of the people that the startup would need to

talk to find success.”

“Our ecosystem is BIG ENOUGH TO DO

SOMETHING INTERESTING, but SMALL

ENOUGH TO NAVIGATE.”

“PEOPLE ARE WILLING TO HELP and offer

their time. We have good service providers,

good talent and the WORK ETHIC is second

to none.”

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TEMPERATURE CHECK



WHO AM I?

I would recommend that others start a business here, but…

“If the COMPANY WAS MORE MATURE (like at a Series B or C in their fundraising)

then yes, this is a good place to come toget acquired.”

“For FIRST TIME FOUNDERS , outsideof healthcare, whose company requires

SEED CAPITAL to make it, I would say ‘NO.”

“There are CERTAIN PEOPLE who can walk into this community and do well– young, white, men who are confident and

outgoing, and who already speak the

language and know the culture. People who

don’t fit that mold require more effort.”

“This is NOT THE BEST PLACE to start some

businesses - pure consumer plays (like a social

network) require large populations to bring

something to life. We don’t have that here.”

“I think that WOULD DEPEND on the

business. There are areas of saturation

(nationally) – knowledge bases, mentoring,

funds, connections, etc. – that follow

verticals, which is the next generationof how regions are likely to develop.”

“It would DEPEND ON THE TYPE of company.If it was a software company, then maybe,

but Silicon Valley makes more sense. If it

was a med-tech company, this place makes

more sense.”

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TEMPERATURE CHECK



TEMPERATURE CHECK

This is a GreatPlace to Start a __________ Business

Question - My entrepreneurial ecosystem is a great place to start this type of company - _______(Select all that apply)

Healthcare/Medical


Agriculture

Food

Enterprise Software

Sports/Recreation

Education

Internet of Things

Consumer Web

Arts/Entertainment

Financial Services


Energy

Transportation

None of the above

Other 1

5

5

8

10

11

12

14

21

23

25

32

33

34

38

76

17Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N E N T R E P R E N E U R I A L E C O SYST E M T E M P E R AT U R E C H E C K - 2 0 1 6


TEMPERATURE CHECK

Q U E ST I O N S ? 18

My Startup Ecosystem is ____ .

18Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N

TEMPERATURE CHECK

Conservative

Dynamic

Evolving

Small

EnthusiasticLean

Trying

YoungNew

LackingTechy

Risk-averse

Virtual

ImprovingCompetitive

Entrepreneurial

Valued

NetworkedGritty Efficient Connected

Transforming

Augmented

SupportiveEmerging

EngagedAvailable

Creative

AspirationalSatisfactoryWell-supported

Focused

Adequate

StrongGrowing

Improving

Purposeful

RobustSmart

PowerhouseDevelopingTalented

Vibrant

Diverse

Successful

TransformativeOptimistic

Amazing Accessible

Helpful

Impactful

StressedLimited

Inconsistent

Meh Under-supportedChallenging

Handicapped

Difficult

Regulated

DisjointedSuboptimal

Siloed

Fragile

Obsolete

Constrained

HeterogenousNascent

ImcompleteAncient Fluid


Why are we a 6and not a 0?

WHAT IS WORKING

WHAT IS WORKING

Question - The top three strengths of the ecosystem that my business exists within are _________.(Pick three)

Affordability

Events highlighting local startups

Momentum

An appreciation for work-like balance

An abundance of quality mentors

A central hub, where startups work together

An abundance of startup talent

Quality educational resources

Access to corporate resources

Quality media coverage

Quality incentives from local government

The right attitude towards risk

Equal opportunity for all founders

An abundance of later-stage investors

An abundance of early-stage investors

Other

None of the above

Numerous large exits from local startups 1

4

4

6

7

9

11

12

12

14

15

17

18

28

28

34

35

52

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TopStrengths



WHAT IS WORKING

Quality of LifeWorking in a startup is stressful. Thankfully, we have the foundations in place to alleviate a portion of these pressures in the form of a functioning infrastructure, affordable housing and office space and positive peer pressure that embodies a healthy work-like balance.

The Twin Cities is an attractive place to live; it’s possible to have a good life here.”

We have phenomenal parks

and recreation options all year long, which I don’t equate to

the success of a startup, but it’s

a nice relief from the pressure.”

We have good amenities and

we’re generally keeping up with

technologies that other cities

enjoy – Uber, Lyft, etc., which

are fundamental things that are

required to be a startup hub.”

W E H AV E T H E B AS I C S

When you’re a startup, you’re living in squalor, but our

squalors are better here.”

There is accessible and

affordable workspace.”

I T ’ S A F F O R DA B L E

“

We have a quality of life here

that is important to founders. It can be an advantage to

those that want to work in this

field at a sustainable pace.”

On top of that other benefits

like good schools and

affordable housing, nature

and work-life balance are also attracting outside talent.”

W E ST R U C K A B A L A N C E

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“ “ “

“

“

“



Startup CommunityMany have witnessed the incredible growth of the Twin Cities’ startup community. As recent as five years ago just a handful of gatherings existed that were sparsely attended; now, nearly every vertical has its own showcase events, each drawing hundreds of people.

The community tries to support each other.We regularly share resources and feelcomfortable asking for support.”

Visibility and access for

entrepreneurs is plentiful– MN Cup, Beta.mn, etc. Not

all of them know how to enter,

but once they are in, they are in for good.”

We have a lot of great

grassroots organizationsthat are helping to build abetter community – Minne*,Beta.mn, etc.”

W E ’ R E C E L E B R AT I N G O U R STA RT U P S

Area services (legal, design,

marketing, etc.) are well

capable of supporting startups.”

Services are coming online that

will help create an even better

startup workforce (Prime

Academy as an example).”

OUR SERVICES CAN SUPPORT OUR STARTUPS

“

We have a strong University

(the U of M) that continues to

produce valuable IP.”

Being able to find someone

via the SciTech experience

(through the U of M) has been

game changing for helping us

find talent.”

EDUCATION IS INVOLVED

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“

“

“

“

“

“

WHAT IS WORKING



TalentMinnesota’s workforce tops listsfor higher education and we rank second in most Fortune 500 companies per capita (with 17).

We’re one of the few major metros with a large student body adjacentto downtown. And we have a population base that volunteers its time more than most other states.

I’ve always been struck by the sheer number of incredibly talented people in the area.”

“

We have a lot of talent, and

it’s younger, which is a better

indication of our future upside.”

Our education system –MAC, St. Thomas, the U, etc.– breeds a lot of young

people who are ambitiousand talented.”

YOUNG, AND GROWING

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“

“

WHAT IS WORKING

We have a strong industry

knowledge in certain industries;

this is due to the large

corporations we have in town.”

There are so many Fortune

500 companies, with people

that are very talented, that end

up being corporate escapees.”

DEEP INDUSTRY KNOWLEDGE

“

“

We’ve also started working

well with local Fortune 500

companies that are interested

in supporting startups, without

getting in their way.”

The corporate environmentis becoming more engaged;

they are taking meaningful

steps to figure out their role,

and they have the resources

to back it up.”

SIGNS OF CORPORATE INCLUSION

“

“



MomentumClaims like “the fastest growing state for tech jobs” and “one of the top states for Millennial startups” are stacking up as national publications have begun to take notice of our resources, enthusiasm and accomplishments.

We have momentum; things are headingin the right direction. And the energy thatwe are seeing at events is incredible.”

Our startup community has

been getting a lot of national attention in the form of

investments, media,

accelerators, etc.”

The outside attention we are

getting is building and that is

very good for us.”

AWARENESS IS RISING

Historically, we’ve been known

for healthcare, but recently,

we’ve started to expand

beyond that vertical into retail

(with Techstars), Food & Ag

(with Grow North) and others.”

Companies like Microsoft, Google,

Amazon, etc. are opening offices here because they are seeing

local opportunities.”

VERTICALS ARE EXPANDING

“

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“

“

“

“

WHAT IS WORKING

We’re just getting to the endof a cycle where some startups

have exited, and theoretically

should soon be reinvesting.”

We’re on the cusp of multi-

generational success, where wewill start seeing a number of local

success stories begin to reinvest.”

REINVESTMENTS ARE ON THE HORIZON

“

“



Why are we a 6and not a 10?

WHERE WE CAN IMPROVE

TEMPERATURE CHECK

Q U E ST I O N S ? 26

The one thing we need most is ________ .

26Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N


InvestorsCapitalAttitude

TalentExits Efficiency

PartnersDiversity

NetworkMentors

Media

CustomersAccelerators Money

TimeFundingLeadership

SupportCorporations

Momentum

Stability

Resources

HubAngels

Clarity

Moderate



Question - The three weaknesses of the ecosystem that my business exists within are a lack of ________. (Pick three)

Q U E ST I O N S ?

An abundance of early-stage investors

The right attitude towards risk

Numerous large exits from local startups

A central hub, where startups work together

An abundance of later-stage investors

Access to corporate resources

Quality media coverage

Quality incentives from local government

An abundance of startup talent

An abundance of quality mentors

Affordability

Momentum

Other

Equal opportunity for all founders

Quality educational resources

An appreciation for work-like balance

None of the above

Events highlighting local startups 3

3

5

5

6

6

9

10

15

16

16

16

17

19

21

34

43

70

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GreatestWeaknesses


Generally speaking, there’s a lack of early stage funding. And some of the reporting on these activities is overstated.

We only have one or two

active Angel networks, which

is nothing compared to other

similar cities. If you don’t have

those types of networks, it’s difficult to get some types of

companies off the ground.”

We’re missing early stage

investors who are willing to take risks and not try to get Series A

terms for Seed deals.”

M I S S I N G E A R LY- STAG E , S E E D F U N D I N G

VC money has disappeared.

The ones we’ve had have

become too successful tomake small investments (inthe $5 million range), whichhas created a gap in funding.”

I wish we had more larger VC

firms – the people that want

to write $2 to $5 mil. checks.”

O U R VC S H AV E D I SA P P E A R E D

“

If we don’t get some true

exits in the next few years,no one will take us seriously.”

There is a lack of funding,

which is less about having a

lack of VCs; we are missing the multi-billion dollar exits by

past entrepreneurs that trickle

down to other startups.”

N OT S E E I N G M A J O R E X I TS

28

Funding OptionsA well known gripe among local founders... Though sometimes overstated, there is a specific lack of funding for certain startups and a very critical time in their lifecycle – early-stage or seed funding “

“

“

“

“

“

Q U E ST I O N S ? E N T R E P R E N E U R I A L E C O SYST E M T E M P E R AT U R E C H E C K - 2 0 1 6

WHERE WE CAN IMPROVE I don’t see anything that stands in the way of us being more successful. The momentum is there; it’s just a cultural thing that takes time. It’s just something that needs to play out.”

“

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CultureDamn this conservative, agrarian heritage of ours! The very same planful, pragmatic nature that has produced a rich, stable, diverse corporate culture, is the same influence throttling us from modern progress.

Prominent people in this

community are afraid of failing.

I’ve been in conversations with

some who have told me that

even if they had 100 people behind them, they would still

be reluctant to take a risk.”

We have a culture where failure

now means failure forever; some

people even feel the need to

move to restart. In other places

failure is a badge of honor.”

F E A R O F FA I LU R E

(On the supply side) people

are not ready to jump into

startups; they expect the

same level of compensation

and don’t fully appreciate the

tradeoffs of risk and reward.”

People are hesitant or unwilling

to take a big leap, both in the

form of joining a startup and in

investing in one.”

M I S U N D E R STA N D I N G T H E T R A D E O F F S

Our corporate culture is too

risk averse, they are not

willing to be the first to work with startup.”

We are conservative; the strength of our big corporations

is great, but it’s safe and that

safety can discourage

entrepreneurial risks.”

C O R P O R AT I O N S A R E S LOW TO A D O P T

“

“

“

“

“

“



We have a startup community, but there’s no central hub. The communities are segregated; there’s a lot of spokes, but no hub.”

“

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A HubThough the various startup support systems are meeting the goals of their individual charters, there lacks a central clearing house (both physically and functionally) to optimize the area’s startup activities.

We’re lacking a coordinated

effort. It’s disjointed; some

may say that there are too

many groups and support

systems. We don’t need to do more; we just need to

bring everyone together.”

There are a few areas with

concentrations of startup

activity, but it’s in pockets– the North Loop, CoCo,

Northeast, etc.”

AC T I V I T I E S A N D E F F O RTS A R E S I LO E D

There’s no central authority for

entrepreneurs; people don’t

know where to start.”

People want to start

companies, but they don’t know where to start.”

F O U N D E R S D O N ’ T K N OW W H E R E TO STA RT

We lack the nurturing

infrastructure that other cities

have, like what you’d find in

Chicago’s 1871 or Milwaukee’s

Gener8tor.”

There’s no infrastructure that moves capital from investors

to early stage startups. We

have the potential, but lacka centralized place where

capital, talent & entrepreneurs

come together.”

N O N U RT U R I N G I N F R AST R U C T U R E

“

“

“

“

“

“

We’re lacking a home filled with entrepreneurs and

resources – the place where

we all come to grow.”

“



If we want more successful startups we need a broader set of people contributing to the process.”

D I V E R S I T Y I N O U R F O U N D E R S

M A J O R M E D I A C OV E R AG E

“

AVA I L A B L E P L AY E R - C OAC H E S

31

Mindthe GapStartups are tough, but can be tougher for female founders and founders of color, who have not benefited equally from recent momentum.

We’re sorely lacking consistent storytelling of the activities of our startups across all verticals. And, corporate representatives who serve as a bridge to gap the vast distance between our startup and corporate communities.

We have a serious diversity

problem – we have too many

white people and have the worst

inclusion of women in tech.”

We’re nowhere near the pointwe need to be to have solvedthe diversity issue; I can’t think ofa single venture-backed startup

that is lead by a female founder.”

We need more/better local

media covering the startup

ecosystem. This type of

coverage legitimizes startup

activities, and makes it a more

common topic of conversation.”

There are some key

gatekeepers that dictate

awareness, which is creating

challenges.”

We need experienced field-

guides, navigators and

entrepreneurial expedition

leaders to guide us.”

We need more/better programs

that set up founders with

mentors that have truly been

through the startup process.”

“

“

“

“

“

“


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What have we learned?


2

3

4

5

6

7

8

9

1

10

Affordability

Quality of Life

Community

Talent

Momentum


Funding

Culture

A Hub

The Gaps

+ –

WE ARE HERE

33

Now What? Pick Your Mission.


A HUB


34

Now What? Team Up.


35

We know this, but others may not.


Now What? Spread the Word.


Make It. MSP. – a collaboration involving 150+ companies, cities,

universities and nonprofits – is an initiative to better retain and

attract talented people in the Minneapolis-Saint Paul region.

We believe a place that supports innovative people – from

entrepreneurs and social innovators to artists and “intra-preneuers” at

large institutions – is a place that does better retaining and attracting

everyone. With that in mind, Make It. MSP. is motivated to understand

what innovators need to come, stay, and thrive in our region.

We also know that a communities such as our startup communities,

are driven by individuals – doers, founders, changemakers and

builders. That’s why we are motivated to work with partners like

Beta.MN, which builds and supports its community by focusing on

founders. This report is the beginning of an intentional effort to go

straight to the source and listen to what people think is working in

the Minneapolis-Saint Paul region, as well as what could improve.

We are committed to working together to make this an even better

place to build what’s next.

B R O U G H T TO YO U BY:

Q U E ST I O N S ? C O N TAC T R E E D R O B I N S O N | R E E D @ B E TA . M N 36E N T R E P R E N E U R I A L E C O SYST E M T E M P E R AT U R E C H E C K - 2 0 1 6

Thank you.Questions? Comments?

R E E D R O B I N S O N | @ I N D E E D I TS R E E D | R E E D @ B E TA . M N


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