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Outstate MN: Innovation in Northeast Minnesota

This article is the third in a series written in partnership with Great North Ventures. Read more about innovation in other Minnesota regions: Northwest and Central.

In addition to an abundance of natural resources, a flourishing university system, and affordable housing, the northeast region of Minnesota is home to small business development organizations working to help entrepreneurs spread across the rural region. 

Now, with Innovate 218, they’re finally all working together on a common goal: to help entrepreneurs find what they need.

Regional Innovation

From Grand Rapids to Duluth, Northeast Minnesota is well known as including a region called the Iron Range, where historically mining and other natural resources championed the local industries. 

Neela Mollgaard

“They have many of  the elements there — thriving higher education, broadband, local champions, and strong corporate innovators,” Neela Mollgaard, Executive Director of Launch Minnesota, said. The last region to join Launch MN’s 8 hub and 80 program partner initiatives across the state, the area holds a lot of promise for innovation.

“It’s been great to see these organizations across Minnesota come together. They’ve all been serving entrepreneurs for years, and now are purposefully working together to start and scale new ventures ” Mollgaard said. “They are building on their local strengths while leveraging statewide resources and best practices.”

The main innovative areas remain in the natural resources sphere, according to Tim White, Business Development and Intellectual Property Manager at University of Minnesota Duluth / Natural Resources Research Institute.

“Northeast Minnesota has amazing natural resources available. We are charged with considering responsible use of those resources,” White said, mentioning the minerals, forests, and freshwater that are in abundance.

These resources are what he hones in on in his position, which is focused on commercialization opportunities for university research and innovations. Some notable innovations include the utilization of biome materials, such as biochar: timber waste materials that use a carbon-negative technology to pull carbon out of the air and permanently sequester it.

Tim White

“This waste can be processed in a way that keeps carbon from going into the atmosphere, and then it has a useful life being used to treat water,” White said, adding that this industry currently has a lot of interest.

Working with both large and small organizations, he said that he wishes there was more of a startup interest in the space. “There aren’t as many entrepreneurs jumping at the chance to be involved in these endeavors, but we need them. These are important solutions,” he said. “We feel that startups are a critical piece.”

Building a Cohesive Pathway

Finding these startups and providing them with a one-stop shop for resources is what Innovate 218 is all about.

These organizations in the region already existed — small business development, universities — but it’s bringing us together so we’re a more holistic, cohesive resource for entrepreneurs,” White said. “Together we’re stronger.”

An entrepreneur himself having started six companies, White admitted that it previously was confusing to access resources. Now, with funding from Launch Minnesota to create Innovate 218, it’s much more approachable and gives access to services in one place, he said. 

“It’s been a great catalyst for bringing these groups together,” White added. “It’s not necessarily that we’re creating much ‘new,’ but organizing it in a way that makes it more accessible.”

Tamara Lowney

“We’re full-on in the launch phase,” Tamara Lowney, President of the Itasca Economic Development Corporation (IEDC), said of the region’s efforts to build a platform for entrepreneurs where they can get the resources they need.  

After working with Launch Minnesota and ILT Academy to bring funding and programming to the area, Lowney, along with entities such as the Northland Small Business Development Center (NSBDC), have been pulling together the brand of Innovate 218, an entrepreneurial support organization for the Northeast region of Minnesota.

Traditional industries like timber are prevalent in the area, Lowney said, and they’re turning more and more tech heavy. “They need tech to stay current and bring a workforce in. Within those industries, there are a lot of innovators,” she said.

But the tricky part can be bringing them out of the woods. “I think the hardest part in rural [areas] is finding those [creative] people. But they’re everywhere,” she said.

Betsy Olivanti of NSBDC had similar sentiments. “There are a lot of creative folks and a lot of interesting things going on, [but] they don’t know how to get from idea to creation,” she said. 

In her work — which she comes to with an engineering background, ISO certification, and lean certification — she’s noticed that folks tend to think of themselves as “inventors” instead of “entrepreneurs.”

Betsy Olivanti

“My work at Innovate 218 is to marry those two things. You are an entrepreneur as well — [it’s] bringing the two sides together,” Olivanti said.

Olivanti and Lowney are both working to bring entrepreneurs out through multiple initiatives: entrepreneur meetups, pop-up coworking spaces at a local coffee shop in Virginia, MN called “jellies,” and events like the Itasca Summit. Innovation was one of the key tracks at this economic development summit, which was held in Grand Rapids October 19 and 20. It brought together state and regional leaders working to inspire and support more innovation and startup entrepreneurship in the region.

One of the organizations participating in the Itasca Summit was the Blandin Foundation, which is a highly influential organization in the region on many fronts, and is a major contributor and supporter of the Itasca Business Development Corporation.

Left to Right: Ryan Weber, Great North Ventures; Beth Fynbo, Busy Baby; Nick Tietz of ILT Academy on a panel at the recent Itasca Summit in Grand Rapids.

The Iron Range Makerspace is also a great entrepreneurial space for makers in the region. With manufacturing equipment such as 3D printers, it can help innovators take their projects to the next level, said Olivanti. 

The IEDC also just got a grant to create an incubator and coworking space called The Forge in Grand Rapids, Minnesota, for which construction started on a few weeks ago.

“We have all these new funding streams and new opportunities. We need the entrepreneurs to tell us what they need,” Lowney said. “It’s the beginning of a real transition for us here.”

Founder Experiences

Seeing a lack of investment and innovation in the space is what motivated the friends behind Grand Rapids-headquartered NextGem to solve a problem they noticed in the trading card industry.

“We thought there was a clear problem, and thought maybe it was something we could solve,” said Scott Wright, co-founder of the platform that helps you to quickly digitize your card collection so you can share it using their app with other collectors more efficiently. 

The NextGem team, left to right: James DonFrancesco, Dave Anderson, Scott Wright and Jason Martin

As it is, card collectors have to carry around boxes to card shows and page through their collections, search on platforms such as eBay for small percentages of available cards, and use platforms like Instagram to connect with the community. 

Now, with NextGem, they can put their cards “in the palm of their hands,” discover a vast inventory of cards, and connect with others in the space.

“We want to bring that inventory to life, and be where the cards live before they go to market,” Wright said, of the platform that currently has 1,000+ users waiting to download the app. 

The community aspect is what differentiates NextGem in the space. “We’re really leaning into the social aspects… the trading card industry and hobby is a social thing,” Wright said, mentioning that his team of four was recently in Las Vegas for a convention, talking with collectors about the app.

NextGem is a Great North Ventures incubated startup, one of the first in a program whose founders benefited from training provided by ILT Academy. With a few hundred thousand dollars of initial capital, in addition to guidance provided by Great North Ventures, NextGem was able to take their new idea for a startup and iterate on it until they were ready to pitch outside investors with a beta version of the product complete. 

“In August, after just 10 months working on the project,” said Great North Managing Partner Ryan Weber, “we had demonstrated enough to excite new investors to invest more than a million dollars of outside funding.” The investors included the leading fantasy-sports analyst at ESPN and the third employee at Uber, he added.

“They’ve been so helpful in getting us started,” Wright said of the partnership with Great North Ventures. Guidance with the little things — logistics, paperwork, legal — is just as valuable as the people, expertise, networking, and advice, he said.

“We’re now hiring a lead mobile product designer and a lead software engineer with a preference that they relocate to Itasca County,” Wright added. A site called Thrive Up North calls out the advantages of living and working in this beautiful area of the state.

Another example of innovation in the area is the story of Luke Heine, founder of the nonprofit Fair Opportunity Project and recently-sold platform Swipehouse.

Luke Heine

“The cool thing about being an entrepreneur around here is that people are really open and supportive,” the Cloquet, Minnesota native said. His first endeavor was starting the nation’s largest ultimate frisbee tournament when he was in high school.

Since then, he has attended Harvard, started the Fair Opportunity Project — a nonprofit working with more than 63,000 educators to assist rural communities in sharing information about higher education opportunities — and he has participated in Y Combinator, the storied accelerator in Silicon Valley where behemoths like Airbnb and Reddit got their start. 

Heine and his team got into the program with Summer Playbook, a couchsurfing and connection-facilitating app for college students, which has more than 20,000 travelers using the platform. “People have gotten married from connections made on the platform,” he said of Summer Playbook’s success.

In the social consumerism division of Y Combinator, Heine created 24 different concepts under parent company Summer Playbook that failed, but the 25th was the winner: Swipehouse, a platform that uses an adaptive algorithm to matchmake TikTokers for creative collabs. 

With the platform, which now has more than 1 billion followers, Heine’s team worked with some 400 companies to get them on TikTok and caught lots of attention — so much so that they were acquired by Hamster Garage just a few months ago. 

Upon returning to his hometown, Heine wanted to do something for the community to spur innovation — so he’s putting together the region’s first hackathon to be held at Lake Superior College in April. “It’s really [going to be] a place for those interested in tech, an opportunity to build some really cool stuff,” he said. 

After spending time on both coasts, Heine has noticed some trends back in Minnesota. “There’s a lot of opportunity here and lots of industries that people on the coast don’t think about,” he said — citing the Mayo Clinic, University of Minnesota, and other booming companies in healthcare and tech. He said it begs the question why people don’t start more businesses here.

Part of this could be a confidence thing, Heine thinks. “A lot of things set Minnesota up well [for success], but what’s lacking is the belief or awareness that the startup space is for them,” he said of entrepreneurs here.

Heine’s next goal is to work with businesses in Minnesota to boost that confidence and build things here, instead of bringing them out to the coasts. “There are a lot of things about this state that make it poised well for the next century,” he said.

Meanwhile, just a bit north of Cloquet, Markus Mueller is CEO and cofounder of a startup called Fashion Brain, located in Minnesota’s fifth-largest city, Duluth.

Markus Mueller

“Duluth is the best-kept secret in Minnesota, as a place where you’d want to live and do business or start your company,” Mueller said, admitting he may have a bit of bias, having lived in Duluth for the past 11 years.

While 2020 census numbers don’t show much growth for Duluth in the past decade, Mueller pointed out a secret hidden in these numbers that only becomes obvious when you live in Duluth: The city is getting younger and more vibrant. 

“A lot of young people and young couples have moved to Duluth over the past years,” he said. “The real impact of this will be visible in 10 or 20 years and will in my opinion have a large impact on Duluth as a startup scene in general.”

FashionBrain’s business focus changed in 2020, as the pandemic proved a very tough time for a lot of businesses. But it also accelerated two developments: the value migration of all assets, and his clients’ need and readiness to accept his solution for their problems and challenges.

The company — originally titled Tryon Media — started out as a company that sold fashion photos to media clients and the fashion industry, doing this by establishing a keywording standard to “tag” photos so they became searchable assets in the company’s database. Over the years, he and his cofounder realized the real value was in the universal application of this keywording standard, as a training data set for machine learning algorithms.

“FashionBrain’s real value is the data set we own and have created, devoting more than 90,000 hours over the course of almost a decade — an asset that now assists developers of fashion A.I.s and saves them valuable time,” Mueller said.

When asked why he started his business in Duluth, Mueller said, “Why not Duluth?”

“It is a beautiful place—and modern technology allows us to do business and develop our business from anywhere in the world,” he said.

He also mentioned multiple other innovative businesses starting and growing in NE Minnesota that use the remoteness and existing infrastructure to their advantage instead of regarding it as an obstacle, including Harvest Nation: a startup that grows fresh vegetables underground in the Soudan mine in Tower, Minnesota in an aeroponic garden.

What Duluth and the region at large really needs is an established tech incubator, Mueller said. “There is so much talent and so much energy here that could be kept local if the right incubator structures were in place,” he said.

Great North Ventures

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.

Laura Beier
Laura is a writer, coffee addict, and travel enthusiast who’s passionate about sustainability, vegetarian cuisine, and innovation. You can find her at a local coffee shop, going for a hike, or planning her next adventure.