With discussions on founders, investors, and innovation, State of the State 2023 was an evening of honest discourse on the Minnesota startup community.
BETA State of the State 2023 was a very Minnesotan event. Because of that, it’s only right to open this by talking about one thing—the weather. With air temperatures hovering around a “comfortable” 15 degrees at the highest and plunging to a dismal -8 degrees at the lowest (not to mention the razor-sharp wind cutting through everything) it was the perfect Minnesota winter day to hold BETA’s annual overview of the startup ecosystem. But even with the frigid temperatures, there were plenty of good startup vibes inside Theatre in the Round to keep everyone warm.
Yes, that’s a little hokey. But like I said, it was a mega Minnesotan event, and sometimes Minnesotans are hokey.
Aiming to provide an overview of the state’s current and near-future startup ecosystem health, State of the State 2023 saw more than 200 people file through the theater doors for three discussions centered around different perspectives: founders, investors, and innovators.
MN DEED Opening
Introduced by Genesys Works Twin Cities Executive Director and BETA Board Chair Allison Barmann, Steve Grove, Commissioner of the Minnesota Department of Employment and Economic Development, welcomed everyone to the event with opening remarks. Right out of the gate, Commissioner Grove underscored the importance of 2023.
“I can’t think of a time in Minnesota history where it’s been more important to take stock of where our state is at this moment as we begin what is going to be an incredibly consequential year,” Grove said.
Grove ran through some of the state’s labor stats (a “absurdly low” unemployment rate of 2.5 percent) but focused in on what he called a “long-term view” of how the Governor’s office will shape the future of the Minnesota in the current legislative session. Grove mentioned the Governor’s council of economic advisors that created a 10-year roadmap of what the state needs to do to make the next decade strong (mentioning one of those advisors and State of the State speaker Scott Burns in the process).
Forgoing to break down the entire roadmap (a task that certainly would’ve taken more than an evening of tie), Grove specifically called out a focus on small business and startup.
“One of the core theses is that small businesses and startups are going to be the most important investment we can make for this next chapter of our economy,” Grove said.
Grove ended on a request centering around attracting top talent to the state because if small business and startup are really the future of the state, we’ll need more brilliant minds to make the machine run smoothly.
“The Minnesota Nice approach can still be part of our culture,” he said. “But when you're fighting for the next generation business, as you grow here, you have to be a little aggressive too.”
State of Founders
Neela Mollgaard, Executive Director of Launch Minnesota, took the stage next. Mollgaard focused on connection in the Minnesota startup ecosystem, specifically citing SitEat founder Mu Okonkwo and Brevity CEO and co-founder Kelvin Johnson as examples of those who’ve benefited from the Launch Minnesota Network and the general helpful attitude of the community.
More than just connection, however, Mollgaard touted Launch Minnesota’s grants as bolstering forces for Minnesota startups. Launch Minnesota has awarded $6.5 million in three years with 61 percent of those startups being led by targeted founders (people of color, women, veterans individuals from Greater Minnesota).
But Mollgaard closed out her time with a call to action for non-founders in the room (and, by extension, the state).
“We need your wealth, your wisdom, or your work to really keep growing this strong ecosystem,” she said.
State of Investors
Shifting to the state of the investors, Forge North Managing Director Morris Goodwin Jr. and Tundra Ventures Managing Partner Adam Choe were the next to speak. Goodwin opened the discussion with a simple question to Choe—how do you think we're doing overall? Choe responded with a short but less-than-simple answer.
“It’s better than it was,” Choe said. “But it also could be better than it is.”
As Goodwin and Choe traded insights, the pair kept coming back to a main point—Minnesotans are too damn modest.
“There’s a $400 billion economy in Minnesota with only $2 billion of the productive resources that we produce going to venture capital,” Goodwin said.” That seems like that’s too doggone Minnesota modest.”
That focus on hyper modesty extended to founders, too. Choe observed that Minnesota founders seem to be much more modest and reserved than their coastal counterparts, saying he often needs to poke Minnesota founders for more data and ambition during pitches instead of filtering out “the fluff” from coastal founders.
“We need to tell small businesses that their company could be a billion-dollar unicorn too,” he said.
As their time wound down, Goodwin an Choe touched on angel investing in the state. It’s not a matter of not having enough potential angels, it’s a matter of those individuals not knowing they could be one.
“I’d argue that anyone who owns a cabin on a lake is a potential angel investor,” Choe said. “They just don’t know what angel investing is.”
State of Innovation
An interesting focus on failure and privilege was at the forefront of the conversation between Jeff Aguy (Founder and CEO of 2043 SBC) and Scott Burns (President of Structural). When asked how the ecosystem at large reflects Aguy’s experience, the answer was a bit surprising.
“I can't say that folks don't respect me,” Aguy said. “I can't say that people don't value my opinion and my thoughts. At the same time, I think that my experience reflects our ecosystem in that I'm at a critical juncture with my family now where we're thinking about [moving out of Minnesota]. Have I reached a level of impact that I think that I can in terms of the support that I've been given?”
Aguy centered his comments around around the fact that good vibes don’t pay the bills. Although he is a respected and well-regarded individual in the startup and innovation community, that doesn’t mean capital is an easy get.
“Most people like me, most people respect me,” he said. “But that doesn’t lead to capital. The reality of the black founder. We need to figure out how to make people feel not just liked and loved but successful.”
Aguy went on to point to statistics showing Minnesota in the upper echelon of not failing in small business and startup but also not starting that many small businesses in the first place. His advice? Fail more.
“Not staring enough businesses is terrible for innovation,” he said. “In Minnesota, we don’t fail enough.”
As the discussion ended, an audience member asked an interesting question: is it a privilege to fail? Burns answered by speaking about white privilege and the much tougher reality of an entrepreneur of color.
“There’s no question [entrepreneurs of color are] walking a higher tight rope,” Burns said. “I hope any VC or angle investor would recognize those difficulties. As a privileged white entrepreneur, it’s hard enough. The whole time it has been hard. This is where the state can step in and make a huge difference.”
Aguy then chimed in in agreement, but with another layer on top.
“Two things can be true,” he said. “It’s an absolute privilege to fail, and you still have to do that shit.”
Tell Your Story
As the event ended, BETA Executive Director Shelisa Demuth spoke on BETA’s planned impact in 2023, the future of Twin Cities Startup Week, and the importance of connection.
“Things may look a little different this year,” Demuth said. “You’ll definitely meet new people as you engage with [BETA]. Please continue to show up for founders. Show up for yourselves. Choose to connect. Dare to tell your story."