The Minnesota Department of Employment and Economic Development (DEED) and the University of Minnesota will partner to bring more startups to the state.
DEED has earmarked $34.5 million — $10 million of which is already on the ground — to be administered and distributed by the United States.
“We’re seeing more and more new businesses start up in a really disrupted economy, and government needs to play a role,” said DEED Commissioner Steve Grove. We need to help accelerate this growth and opportunity as these companies create the next jobs for Minnesota’s economy.
The money will be channeled through two programs – one to invest directly in startups and the other to invest in Minnesota-based venture capital firms or venture capital firms with a presence in the state that invest in Minnesota companies.
Minnesota law prohibits state agencies from directly investing equity in or pledging money to venture funds. The state administration uses the university’s knowledge and network to distribute the funding, which is part of the state’s $97 million plan to support small businesses through the state’s Small Business Credit Program.
University officials spend weeks or even months reviewing applications submitted through the portal. After the review process, any startup selected for funding can expect checks of $1 million or less. Checks to venture funds can be bigger.
The investments will target early-stage companies that focus on life sciences, agriculture and food technology, climate technology, advanced manufacturing and software.
Three years ago, when DEED created Launch Minnesota, an initiative dedicated to supporting the state’s startups, entrepreneurs told officials more money was needed for early-stage founders, Neal Mulgaard said, and a venture capital fund with Government support can be the solution. , Executive Director of Launch Minnesota.
“It is exciting to see this reality,” Molgaard said.
According to officials, the partnership allows early-stage companies to grow.
Minnesota companies raised $1.23 billion in venture capital in the first nine months of 2022, according to investment tracking firm PitchBook. That’s just shy of the $1.24 billion Minnesota companies raised in 2019, but only half of the record-breaking $2.6 billion in 2021.
While there were about 200 investment deals in venture-backed companies in Minnesota last year, the majority of those investment dollars went to companies that raised $25 million or more.
“These programs provide us with a once-in-a-lifetime opportunity to invest in our long-term future by supporting Minnesota startups and helping them grow,” said Myron France, US Senior Vice President of Finance and Operations.
Startups and CFOs interested in receiving funding from this program can apply immediately using the website z.umn.edu/venture-capital.