When Steve Grove was appointed commissioner of the state’s Department of Employment and Economic Development (DEED) in January, one of his first priorities was to grow the state’s technology sector to compete with cities like Seattle, Boston and Austin.
That agenda is now taking shape with help from the Legislature. In the two-year budget approved in May, lawmakers passed a slate of proposals made by Grove and Gov. Tim Walz to foster startup businesses and build tech companies.
The Legislature re-instituted an “angel” tax credit for people who invest in startups and created “Launch Minnesota,” an initiative focused on nurturing the tech scene with grants, mentorship and collaboration with private businesses. The Legislature also agreed to spend $40 million on a grant program that helps build infrastructure for rural high-speed internet.
DEED did not get everything Grove had wanted, including more spending for broadband internet grants. But Grove, a former executive at Google, said the state is taking critical steps to support a sector that can help create jobs, attract young workers in a tight labor market and put Minnesota on the economy’s cutting edge.
They also report on where Minnesota currently stands in terms of the tech/entrepreneur map…
As a tech region, the Twin Cities is unexceptional. In a 2018 report on tech hubs by commercial real estate firm Cushman & Wakefield, Minneapolis/St. Paul ranked in the second tier of its top 25 cities and regions in the United States and Canada. The Twin Cities were below 10 other places, including Silicon Valley, San Diego, Raleigh/Durham, Seattle and Boston.
The report found the Twin Cities had the 15th highest share of tech employment and its growth in that sector was below average between 2010 and 2017. The Twin Cities also ranked low in venture capital spending, which is used to seed startups.
The report even found Minneapolis/St. Paul had $40 million less venture capital spending in late 2017 and early 2018 than it did in 2011, in a section comparing post-recession funding to current seed money. Chicago had $645 million less venture capital spending than in 2011, but every other tech hub cited by Cushman & Wakefield saw increases.
In 2018, PitchBook reported Minnesota as having the 15th most venture capital spending in the U.S., ahead of some states with similar populations like South Carolina and Wisconsin, but below others like Colorado, Maryland and Utah. “The lack of capital is a disadvantage,” Grove said. “It’s growing, but it’s not where you’d like to see it.”
In the Cushman & Wakefield report, the Twin Cities also had one of the smallest millennial populations by percentage among tech hubs. Many see a large millennial workforce as critical to a tech economy, especially as the country deals with workforce shortages.
The report did cite low rent and property values in Minnesota as positives — at least compared to other tech areas, which have seen extreme surges. And Grove said Minnesota’s tech scene has a lot going for it, including a host of big companies to learn from, startups with a high “survivability” rate and strong “civic pride” in the tech sector.