This article on Outstate MN Innovation written in partnership with Great North Ventures. Read more about innovation in other Minnesota regions: Northwest.
Nestled in a somewhat ambiguous geographical location — not quite southeast, not quite south central — the Minnesota metro of Minneapolis and St. Paul are unquestionably the loudest voice in the state’s startup ecosystem. But throw on a playlist, hop on I-94, and drive north for about an hour, and your jams will inevitably be drowned out by a growing entrepreneurial timbre.
The startup action in central Minnesota might be overshadowed by its southern metro sibling now, but the growing amount of innovation in the region is setting the stage for a renaissance; an entrepreneurial belt cinched around the midsection of the state, holding it all together.
Quality of Life
Tom Spaniol, CEO of property management software company ZenLord Pro, is from St. Cloud, but his roots are far from the only thing that has kept him — and his business — in the city.
“I didn’t feel the need to leave with just how connected we all are now with the internet,” Spaniol said. “That’s one of the reasons for staying here. Two is cost of living. To be honest, I find that to be a huge factor in being able to step out of a different fulltime job and kind of go on your own as an entrepreneur.”
That flexibility — the ability to set off on your own without sinking into financial distress — is a powerful one. According to the Minnesota Department of Employment and Economic Development (DEED), the cost of living for a Minneapolis household with two full-time workers and one child is $7,148 more than the same household in Sherburne County where St. Cloud is partially located (the city straddles three counties — Sherburne, Benton, and Stearns). That’s not a bad chunk of change, especially in the early days of starting a business.
“If your expenses are low, and your own personal burn rate is low, you’re able to take those leaps of faith a lot easier than leaving a super high-paying job in an expensive place like Minneapolis or out in San Francisco,” Spaniol said. “That takes a different level of commitment to be able to start that. Where in Central Minnesota, the cost of living is low. We had that ability to start something like [ZenLord Pro] and not worry about, ‘Can I pay my rent?’”
The financial benefits of living in Central Minnesota may have kept Spaniol in the region, but it was a thirst for doing things on his own terms that led him down the entrepreneurial path. After teaching elementary school for three years, he knew he wanted something different. Despite feeling fulfilled by the student interaction and coaching, he couldn’t stay away from entrepreneurial firebrands such as Gary Vee and Tony Robbins. While consuming a steady stream of motivational content from these larger-than-life figures and becoming more and more interested in starting a business, an entrepreneurial opportunity knocked at Spaniol’s door wearing a familiar — and familial — face.
“My brother-in-law, John, is our developer, and one of my co-founders,” Spaniol said. “He was in property management for about 10 years and started to build software systems for his own property management company to make things more efficient. And the two of us then came together seeing a need to bring this nationwide.”
And so, in 2018, the seeds of ZenLord Pro were planted. And they’ve been growing in Central Minnesota since. Now, with version 2.0 of the platform releasing soon, the full-service property management system — which allows managers to customize lease agreements, collect rent, market properties, and a lot more — is fully prepped to make even more of a nationwide splash. ZenLord Pro has raised several hundred thousand dollars to date, originally led by Great North Ventures in 2018.
Cost of living isn’t the only thing that keeps Central Minnesota growing as an innovation hub. Leslie Dingman, Business Development Director for Greater St. Cloud Development Corporation (GSDC), notes natural beauty, an increasing number of cultural opportunities, and proximity to the metro as arrows in the region’s quality-of-life quiver.
“If someone perceives that we don’t have enough cultural entertainment or some of those cool big city things, we’re less than 60 minutes away,” she said. “We sometimes think that we are losing people to the cities because we are so close, but we have a lot of young families moving back because we’re so close.”
Dingman, who began her career with the GSDC as a Business Development Associate in 2013, has worked with various community builders to increase the region’s visibility and drum up its reputation for having exactly what entrepreneurs need. The campaign, called “St. Cloud Shines,” not only highlights the natural beauty of the area (the gorgeous homepage featuring the Mississippi River snaking through the city is there for a reason), but also the resources available to budding thinkers, doers, and innovators.
“It’s not just talking about one thing,” Dingman said. “It’s really shining the light on our whole region to help attract not only businesses, but talent. We can provide the technical assistance or resources to our businesses in terms of the primary sector as well as now with this [startup] ecosystem. It’s also the quality-of-life aspects that we need to be showcasing and putting out there, and that’s where our marketing campaign as well as our talent initiatives are really key factors in the work that we do.”
Building an Ecosystem
For most of his life, Joe Sullivan, Director of gBETA Greater MN St. Cloud, has been a part of greater Minnesota. From Marshall to Alexandria to his time at Saint John’s University (SJU) in Collegeville, Sullivan’s DNA intertwines with the out-metro regions that continue to evolve into centers of innovation.
After graduating in 2020 and finding that the corporate scene wasn’t for him, Sullivan (who participated in the Entrepreneur Scholars program through SJU, working on marketing for a company that would eventually become Pikup) joined the gBETA team.
“I get to work with very, very early-stage founders from all across Minnesota,” Sullivan said. “Most of the people I’m coming across are just starting to build the company or the product or it’s, ‘I have an idea and a nice PowerPoint. How can we make this happen?’”
gBETA Greater MN St. Cloud (just one of many Gener8tor accelerator programs) is a bit of a grey duck — don’t call it a goose — when it comes to the larger gBETA network in a good, and very Greater Minnesotan, way. Instead of one, two, or three major program sponsors, gBETA Greater MN St. Cloud has 18 companies that are actively invested in the growth and evolution of Central Minnesota as an entrepreneurial hub.
“There is that community pride in St. Cloud,” Sullivan said. “It’s something that I’ve really been pleasantly surprised with… people in St. Cloud are proud to say they love St. Cloud; they want to see it grow in the area around it too. It’s really a lot more personal and people feel that they really do have that ability to [make an impact]. People really do want to support those entrepreneurs in any way that they can. [The sponsors] do step up and support them. They help them with services, they help them with mentorships, connection… it’s great to see.”
That type of community pride has undoubtedly always existed in Central Minnesota, but it hasn’t always manifested in a way that helps early-stage entrepreneurs flourish. This is an evolution David Carlson, Founder and Owner of Food Dudes Delivery, knows very well.
Carlson, who grew up in the St. Cloud area and attended St. Cloud State University for accounting and business management but wasn’t driven to become an accountant, stumbled onto the restaurant delivery business. While the industry wasn’t new, it was new to the region, and Carlson saw a scalable future thanks to smartphones (which were relatively new at the time) and mapping technology.
“When I first started we had TomTom GPS and Garmin and people didn’t have a smartphone,” Carlson said. “You had to send the order via text. [Food Dudes was] very early, but that’s how I got into it. Just something that really kind of called to me, and I enjoyed the challenge of starting up your own business and working for myself.”
Instead of spreading itself too thin, Food Dudes focused on smaller, local markets first (a strategy that continues to this day). From St. Cloud, the business spread to Sioux Falls, Fargo, Bismarck, and more locations. Things have worked out well for Carlson and Food Dudes, but that doesn’t mean it was easy.
“There’s just a lot more opportunity for young entrepreneurs to start new businesses, something that really wasn’t there for me back when I started Food Dudes,” Carlson said. “In my early stages, we just had to figure out a way. If there’s a will, there’s a way, right? I learned a lot.”
Central Minnesota’s increase in entrepreneurial opportunities and resources isn’t an accident; it’s the result of years of community building by players like the Greater St. Cloud Development Corporation, gBETA Greater MN St. Cloud, and Great North Ventures.
“[Great North Ventures] has been a great asset to have,” Carlson said. “You can see the great things they’re doing in Minnesota and the Midwest.”
Leslie Dingman of GSDC agreed and remembered the daunting prospect of beginning to focus on ecosystem development in earnest.
“I think about Ryan Weber saying, ‘[Great North Ventures] is going to have a presence here.’ They wanted to start this conversation about ecosystem development. That was overwhelming to think about. We’re three or four years in, and I think we’re starting to build more intentional structure around that [conversation].”
Now, with community builders and investors such as Greater St. Cloud Development Corporation, gBETA Greater MN St. Cloud, and Great North Ventures, and developmental organizations such as St. Cloud-based ILT Academy from founder and CEO Nick Tietz, there are more opportunities for early-stage entrepreneurs in Central Minnesota than ever before.
According to Tietz, ILT Academy has virtually trained 170 entrepreneurs over the past year in its 10-week “Lean Startup Innovation” certificate program.
“We just launched our ninth cohort of 28 entrepreneurs with our partners across West Central Minnesota including Fargo,” Tietz said.
All of these players are committed to continuing that upward trend of entrepreneurial opportunities, but there’s an important question — what’s next?
“What is the next thing within our ecosystem that we need to be focusing on that’s missing that would really help continue the buildout of that entrepreneur community?” Dingman asked. “I think we’re a proven region. Do we continue on with what we have going with gBETA and ILT and trying to get more people aware through those programs or is there something else missing in the region that business startups might need on their journey?”
With proven businesses like ZenLord Pro and Food Dudes Delivery, there’s no doubt Central Minnesota is fertile ground for innovation. The region is building its own reputation for success that doesn’t necessary fit into visions of metropolitan entrepreneurship. When you can bring your work to the lake, why would it need to?
“I like building a business in St. Cloud because I like having a meeting on a pontoon,” Spaniol said. “I think that’s unique to this area. I pictured entrepreneurship being big glass windows and fancy suits, and it’s really not once you get into it. Especially when you’re meeting the right people and people that jive with how you want to work.”
Featured image courtesy of the City of St. Cloud
About Great North Ventures:
Great North Ventures is an early-stage venture fund headquartered in Minnesota. The fund’s motto is “Execution Is Our North Star,” based on a belief that great startups can be built anywhere, but, to flourish, they need teams that can execute. The fund is led and supported by founders and operators that have scaled tech businesses from the idea stage to multiple IPOs with an aim at providing both capital and guidance to early-stage startups in support of strengthening their execution from idea to scale-up.