Record highs for Minnesota tech investment in 2013

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When it comes to startups and emerging companies, the availability of investment capital is one core measurement of market vitality. A take on where Minnesota’s tech ecosystem stands in this context:

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Investment capital (seed, angel, venture, corporate) can be used to initiate or meet business needs such as hiring, physical infrastructure and intellectual property development. The investor anticipates that leveraged money will ultimately increase an assets overall value and also provide liquidity or repayment with a margin of positive return over a set period of time. 

In the technology industry, where speed and scale are essential, investment capital can be a critical business catalyst.

Conceptually, the theory is that more investment capital going into an area means more companies are starting, prospering, and eventually exiting.  It’s important to consider both the gross dollar amount as well as the diversity as represented by the number of investees. 

From a Minnesota perspective, understanding the level of local investment activity provides a benchmark and a pulse on where things are at over a given period of time. It tells us how we compare and contrast with other marketplaces around the country and the world (more on this to follow).

While securing investment capital may increase the probability of success, there are many examples of startups that have obtained capital investment yet unsuccessfully translated that milestone into sustainable results.  And, of course, there are many technology companies having achieved market success without the need for outside investment capital.

Raising money ≠ success, but it can be a clear indication of validity, increased capacity, and heighten long term upside.

Our definitional scope of technology here is generally limited to software, hardware, gaming, e-commerce, robotics, mobile and web-based ventures. These figures do not include undisclosed or off the record transactions, nor do they encompass publicly traded companies.  With all that said — here’s what we’re seeing for Minnesota’s technology startup ecosystem over the past four years, staring with 2013:

MN tech funding 2010-2013
Q1 2013
: 24 companies raised $28m
Q2 2013:
61 companies raised $65m
Q3 2013:
18 companies raised $31m 
Q4 2013:
12 companies raised $58m

Overall 115 companies raised $182m last year, +26% YoY. For comparison, here’s stats from the previous three years, prior to which no comprehensive reporting existed:

2012: 87 companies raised $145m
2011: 92 companies raised $126m
2010: 42 companies raised $60m

Interpret this information as you will and for what it’s worth.  For those interested in learning more about what the local market nuances are, who is making it happen, and how Minnesota stacks up against our neighboring states, join us at Midwest Capital Call on March 7th.

Comments

  • Frank Jaskulke

    Jeff, thank you for covering this.

  • dugnichols

    Awesome! Thanks for the article.

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