Why not Minnesota?

From the editor’s perspective of a geographically focused tech publication, the first question I always ask new startups should be the easiest to answer: “Where are you based?”

Yet this one simple requirement can yield a myriad of complex responses that scratch at something deeper worth exploring: why not Minnesota, definitively?

Everyone has reasons for leaving the nest, regardless of where they come from.  For many, it just naturally happens from the onset, whereas others reluctantly pack up against their own will. Some do spread their wings, only to return at a later point in time.

When the world at large can serve as a market, headquarters, remote office, offshore shop — or any combination of the above — savvy entrepreneurs will leave all options on the table and successful entrepreneurs are masters of flexibility, amongst other redeeming qualities.  The following is a closer look at three early stage startups with a desire to be in Minnesota.

Where they’ll end up is anyone’s guess.

Minnesota native Caleb Gandara had already been living in New York for six years when he considered Minnesota as a place to launch his new startup.

Incorporated in Delaware mid 2009, he organized a virtually distributed team from Minnesota (amongst other places), setup a local PO box and went to work on a vertical search engine for post-secondary education programs called TuitionCast.

“Were now at the point of considering long-term strategic decisions and really assessing what’s possible both in and out of Minnesota. Amongst those options was recently applying to Project Skyway,” he says to me from New York.

Gandara calculates that around 80% of his personal time is spent out east and 20% in Minnesota, although much of the technical development takes place from Minnesota. “There’s a strong midwest tie between education and technology, which makes sense for us to have a foot in that region while also developing media partnerships in New York.  Investors risk tolerance for consumer Internet is definitely more appealing here, but right now, I really consider the company to be based wherever I am at the moment,” he says frankly.

While Gandara may be able to maintain his nomadic lifestyle indefinitely, should the startup find traction, it will inevitably need to plant the HQ flag  and will subsequently add return to a respective community. “When the time comes and a decision needs to be made, I’ll do whatever is best for the company at that phase — but why shouldn’t we remain open for as long as possible?”

“I’ve been referred to and spoken with numerous people in the Minnesota tech community, but it’s increasingly clear that the money isn’t here for us,” he concludes.

Another startup in the air — this time between Minneapolis and Denver — is Nathan Erickson’s private aviation SaaS platform Lyfft.

“I’m loyal to Minneapolis because I’m from there, but, taking the emotion out of it…does it make sense for us to be in Minneapolis?” he posits in a telephone interview from Colorado.

Originally from Minnesota, Erickson has spent most of his adult life between Minneapolis and Denver, officially calling the Rockies home nowadays.  When his new business idea began to blossom last year, he found himself back in Minneapolis for an extended period of time for family reasons.

“Breaking into the tech community in Minnesota was a bit of a challenge.  In theory, many were willing to help and support, but when it came to early stage seed capital – it became obvious that next to nothing existed. There’s plenty of [investment]  money in Minnesota, but it’s conservative money.  For example, early stage tech in Boulder is supported much more financially and is one key reason they’re attracting so much creative talent that lead to promising new startups.”

Lyfft is an ambitious play off Erickson’s aviation background that requires not only investment capital, but a sizable pool of go to market partners and customers — an element which makes California or New York even more attractive in its earliest stages. “We originally incorporated in Minnesota, but here I am, talking to you from Colorado because that’s where it makes the most sense for us to be right now — and we’re also exploring the coasts. I do love Minnesota, but ultimately, wherever the company needs to go for success is where it will be.”

Erickson feels that if Minnesota isn’t the best place for entrepreneurs to build their startups, they should recognize and adapt swiftly. “Smart entrepreneurs will flow to where the most support and resources are for their company. Period.”

qwikmindWhen Ahmed Siddiqui walked from his IBM career after nine years to pursue the dream of making educational mobile games for kids, he didn’t anticipate such geographical challenges.

“I’ve lived in San Francisco for the past year, but I really wanted to get back to Minnesota and launch QwikMind from there.  The conundrum was that negotiations with west coast angels would drop once they realized my preference was to be in Minnesota, all the while my fundraising options from Minnesota were going nowhere,” he says while in transit between California and Minnesota.

After winning a Startup Weekend in the Bay Area this time last year, the indy game developer quickly prototyped multiple apps and eventually launched its first one 2  months ago.  Also filed as a Delaware corporation, the official mailing address remains “out west for marketing purposes,” although “the affinity is still for Minnesota,” says the soon to be newlywed.

“Where to be, live and grow has been an ongoing issue just to start…I look forward to the moment we can get over this hurdle and stay busy making and launching games. Right now, if I had to bet on where we’ll be in one year, I would reluctantly say San Francisco.  There are even well known people in the Minnesota tech community who have explicitly told me that it’s not going to happen there…yet I remain open”

It takes a village

These examples serve to illustrate the necessity of critical questioning, constructive dialogue and conscious action — from the ground up. To think that communities of all types are immune to attrition is naive, but at the end of the day — what can be done to increase the number of Minnesota ventures that start, stay, or even deliberately relocate here? Are you doing all that you can to help Minnesota be a welcoming and supportive place for startups like these? PUSH IT.

TuitionCast, Lyfft and QwikMind have come across the radar more recently and graciously shared their sensitive situations. It is worthwhile to note the existence of multiple established local startups which are more or less in the same position…minus their desire to be on the record.

Comments

  • http://twitter.com/casey__allen Casey Allen

    Firstly, very brave to Ahmed, Nathan, and Caleb to share their innermost thoughts with other entrepreneurs. Awesome guys.

    The thing I see the most and that I think is toughest is for tech entrepreneurs is to not to throw themselves into a general, all-encompassing “tech” bucket. There's lots of spaces that, quite frankly, you should be in SV for (gaming and social, for starters).

    So if you're a true founder, an absolutely obsessed fucking hustler, then the challenging question you must ask himself is: “Am I trying to force something that's just not here, or am I disrupting an ecosystem that already has strong presence here and if not here, then where?”

    If you're looking around and you don't see anything resembling competition then it will be like starting a vineyard in Iowa. If it's the latter then you'll find the mentors and investors and talent to become the player you want to become.

    Nobody expects a B2B in Las Vegas or a media play in New Orleans to crush it. It's just not there. 

    Read Nathan's last quote again.

  • http://www.mbioex.com Kevin Triemstra

    I think this is a good article since it shows hurdles in MN that many have experienced.  One caveat, however, is that the 25% MN Angel Tax Credit helped my company get going.  I have even spoken to a Silicon Valley agricultural/technology firm that is also interested in moving to Minnesota if/when it finds investors for that very same reason.  

    It won't work for all companies or all situations, but it's worth considering since investors anywhere in the world can take advantage of the credit so long as the company has 51% or more of its operations in Minnesota.

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