Looking to be a new source of reliable Pre-Seed capital for Minnesota startups, Reed Robinson is launching a new venture-capital firm dubbed Groove Capital. In an interview with the Star Tribune, Robinson (who his departure from the role of BETA’s executive director late last year) revealed plans to make more than 20 investments in the $50,000 to $100,000 range beginning in 2021. Groove Capital will also work to establish a new network of angel investors to expand investment opportunities for startups across the state.
Robinson, who wrote a tech.mn guest series called “Mind the Gap,” has been vocal with his concerns about the dearth of early-stage investment in the Minnesota startup ecosystem, boiling down his concerns to two main points: he feels the, “area doesn’t have many formal investment groups investing at the Pre-Seed Stage,” and, “There aren’t enough angels to fill the gap.”
“The absence of high-volume, early-stage investors and a lack of a robust, active angel community throttles the growth of existing startups — that’s bad — and recent research from the Kauffman Foundation suggests it may halt other potential entrepreneurs from ever starting,” Robinson said in the Mind the Gap series.
The Minnesota startup ecosystem does contain avenues for early-stage investment in the form of established sources such as out-of-state investors (Dundee Venture Capital, QED Investors, and more) and Minnesota well-knowns such as the Minnesota Department of Employment and Economic Development and MN Cup. However, many early-stage startups seeking investment are unlikely to tap into these sources, Robinson says, because of business-related factors such as minimal traction, experience, and networking, and personal factors such as your location, gender, race, and age.
We’ve reached out to Robinson for further input on his new venture and will update this post when we hear back.