When seasoned innovator Nick Tietz wanted to start his next venture in Minnesota he actively looked outside the Twin Cities. “I wanted to find a spot where I could plant my next idea company in an area where there was less competition, but also in a spot where people would want something like a company that generates new ideas to exist.”
Tietz visited multiple other locations in Minnesota and the Dakotas but eventually settled on St. Cloud for his new company ILT Studios. “What we’re really committed to is systematizing innovation and entrepreneurship to help ideas succeed and help them reach their maximum growth potential.”
“It became really apparent that there’s a desire in this area for this to happen, but the challenge is how do you turn that on and how do you really get it going?”
A number of St. Cloud residents and advocates are trying to answer that question and turn the city into a true entrepreneurial hub.
Making a city or region into a startup or entrepreneurial hub is a common conversation these days throughout the country. There are conferences, websites and organizations all designed around the concept of ecosystem building and how to do it. In fact, we talk about it quite a bit in the Twin Cities.
As to why different cities or areas are trying to build up these hubs, it often comes back to some common major themes, particularly when it comes to economic development.
“From my perspective it’s vital to business health,” says Patti Gartland, the President of the Greater St. Cloud Development Corporation, or GSDC. “It’s vital to have that entrepreneurial ecosystem within your business environments, it’s really paramount to being able to sustain and grow your businesses.”
Tom Grones, the founder and current Chairman of the Board of GeoComm (a St. Cloud based provider of public safety GIS systems) agrees and joined the GSDC’s Business Startup /Entrepreneurial Ecosystem sub-group. He shares first-hand experience of how a startup can affect an area such as St. Cloud. “My company has, over the course of 25 years, redirected the lives of a lot of talent here in the community,” says Grones. “We have a lot of talent. We have three major universities here. My company, our needs were to keep that talent here. We were able to be successful in redirecting talent that would’ve otherwise bled away. We’ve provided an opportunity for local young people as well as young people who have come from out of town to the universities. We’ve helped begin careers for them here in St. Cloud, kept them here, had them grow families. It’s just part of sustaining a quality of life here that we think is exceptional.”
Just over an hour outside of Downtown Minneapolis, St. Cloud is often seen as being further away by many Twin Cities residents. The more rural location does impact the entrepreneurial scene in Central Minnesota, something Gartland recognizes. “We know we’ve lost,” she says. “We hear about it often—about business startups that get incubated in a dorm room and then end up going elsewhere. Particularly with younger people, the allure of going to a major metropolitan area is there. If we’re not being proactive in helping to connect and engage those folks while they’re here and helping make them an integral part of the fabric of our community, that risk continues to exist. It’s not just bringing the accelerator program in. That’s a piece of the equation, but we also have to have that quality of life and be able to expose people to that quality of life and get then ingrained and committed to it. They are a part of what makes this quality of life what it is.”
“I am very happy with the community engagement and support, but there’s definitely challenges, as you can imagine, trying to do startups in St. Cloud.” This sentiment comes from Ryan Weber, one of St. Cloud’s more recent major successes.
Many in the Twin Cities community are familiar with is the story of the Weber brothers. Twins Ryan and Rob grew up in Maple Grove before heading to St. Cloud to attend SCSU. While there, they began building their company NativeX (fka W3i/Freeze.com) and achieved major traction while still in school. By the time they graduated they had more than 50 employees in the St. Cloud area. While they eventually opened an office in the Twin Cities, they continued to remain a presence in St. Cloud.
In the past few years, the Webers have played a major role in driving attention (and money) to the entrepreneurial system in St. Cloud. They received national headlines with their move into the world of venture capital when they announced that their fund, Great North Labs, had raised $23.7 million. What captured national attention was in part the fund’s focus on an area often ignored by venture capitalists on the coast. All companies that Great North Labs invests in must be significantly tied to the Upper Midwest. They have also announced that 10% of the fund ($2.37M) will go to pre-seed startups with founders from under-represented groups, or startups located in under-served markets, such as St. Cloud, MN; Sioux Falls, SD; and Fargo, ND.
Another reason that the Weber’s fund garnered so much attention is that it is attempting to address one of the biggest problems with building up the entrepreneurial ecosystem in Central Minnesota: access to funding.
“What we’re missing I think is capital,” says Grones. “Venture capital, angel investment, that’s what we’re missing right now. We’re missing it systematically. We’re not on the radar of someone with money in Silicon Valley or Boston, or the North Carolina Research Triangle. We’re not on their radar right now. We need to be on their radar. They need to know that we’re a community that has a lot of good ideas, a lot of talent, and that they should pay attention to it.”
Weber agrees and believes that seeing even more financial returns would have a big impact on the community. “I think that the companies need to see more evidence of how this will benefit the community and/or their organization before they’ll really lean in, and so some of the big institutions, biggest companies in town, have not fully bought in. They need to see some return.”
Tietz believes it’s all about getting people to believe in entrepreneurship and in particular in the individual entrepreneur. “I think there are a lot of people that have invested in more traditional methods, but if we want to see these rural areas take off like a matchstick we’ve got to create more matchsticks, we’ve got to get more lights going. I’m not sure what the best analogy is here but we have to get more people investing in startup ideas, whether or not they’re going to succeed. It’s not about throwing away our money, it’s about investing it in opportunities to get entrepreneurs going, because most people that are entrepreneurial or an entrepreneur, they don’t stop when their first idea fails, they move on to the next idea, and that’s what we need to find.”
A different type of funding comes via the Initiators Fellowship from the Initiative Foundation which works to strengthen the economy and communities of Central Minnesota. The two-year fellowship provides a $30,000 annual stipend along with mentorship, programming and educational opportunities and support for the social enterprise entrepreneurs selected.
The fellowship encompasses Central, Southwest and West Central Minnesota. This year’s newly announced 2020-2021 fellows include two from Stearns County where St. Cloud is located: Hamdia Mohamed who is working on sober homes and Marc Van Herr, who is creating a rapid-response mental health care program.
While there’s lots of talk about the future, there are a number of efforts, in addition to Great North Labs, that are already active today.
Gener8tor, an accelerator program started in Wisconsin, recently announced the Fall 2019 cohort for their new gBeta Great MN St. Cloud Program. Led by Director Precious Drew, gBeta is a free 7-week accelerator for early stage companies. Uniquely in the incubator and accelerator world, this program has no less than 17 sponsors—demonstrating the community’s interest in seeing more innovation in their area. The five team’s that are part of the cohort are ZenLord Pro, Learning MN, Boozy Jerky, Enlight and Hustle.
Another Initiative Foundation program is also looking to foster and educated entrepreneurs. The Enterprise Academy Program started when the Initiative Foundation convened a group of East African community and economic development leaders to identify barriers to opportunities.
Jeff Wig, the VP of Entrepreneurship at the Initiative Foundation, shares that “access to capital was a big barrier, of course. Lack of knowledge of US business systems was another need, another barrier and then the lack of kind of business training resources opportunities.” The outcome of the group discussions was The Enterprise Academy which follows the Entrepreneur Development Model pioneered by the Neighborhood Development Center. They assist entrepreneurs with classes and specifically tailored trainings, and sometimes make business loans available as well.
There is also Nick Tietz’s previously mentioned ILT Studios. Tietz explains, “We are working to increase capacity for innovation and entrepreneurship. We have an office started in St. Cloud and we’re working on an office in either North Minneapolis or South Minneapolis. What we’re really committed to is systematizing innovation and entrepreneurship to help ideas succeed and help them reach their maximum growth potential. The 10 year vision is a thousand companies but in the next three years if we had 200 startups going in St. Cloud I think that St. Cloud would become the type of entrepreneurial and innovation hub that the city wants to see itself be. And I think we would radically change the landscape of what that community looks like if we could get that going.”
While many are focused on how to turn St. Cloud into a hub in the future, Tom Grones responded to our question on why St. Cloud should be an entrepreneurial hub with a slightly different view: “Because it already is.”
Gartland points out that the actual concept of startups isn’t new to the region. “You look at a lot of the really substantial business enterprise systems in our region that were startups, and they were grown here. The founders are the ones who tend to be most vested in the quality of life for our community. They are the ones who are part of the boards and foundations, the United Ways, who are all in about making this a great place to live, work. Because if it’s not a good place to live it’s not going to bode well for talent attraction, and that’s not going to bode well for your business.”
Ryan Weber believes that as this talent gets attracted and the community expands, it will expand quickly. “I’m very optimistic based on the fact that I see people wanting to have the conversation,” he says. “I see people leaning in. Are they there yet? Are they really ready to write the check or put in significant time? They’re getting there at different stages, but there’s enough of it here that it’s going to happen really fast.”
Nick Tietz agrees. “I think that St. Cloud is a city on the rise. For Minnesota and the world to thrive in the future, we need more innovation and better engines of growth here in the Twin Cities and Greater Minnesota. I think we need more industry coming together, to work on more ideas with more people from diverse educations, industries and cultures to create strong business solutions to real problems that need to be solved. The world doesn’t need another app, the world needs better business solutions that create good will and positively transform the fabric of our communities.”
Editor’s Note: Given the news this past year, we would be remiss not consider the point of view of the immigrant community who have made St. Cloud home and whether these entrepreneurial efforts are inclusive. We’ll be addressing it in a future issue in more detail.