University of Minnesota to manage $34.5M in state funds for startup investments
The University of Minnesota and the Minnesota Department of Employment and Economic Development will collaborate to finance more startups in the state.
DEED designated $34.5 million — $10 million of which is already on the ground — that will be managed and distributed by the U.
Steve Grove, DEED Commissioner said that there are more and more companies being started in a highly disrupted environment. The state must play a role in this. “We must… accelerate that growth and chance, because these businesses are creating the next jobs in Minnesota’s economic future.”
The money will be funneled through two programs — one for direct investment in startups and a second for investments in Minnesota-based venture capital firms or venture firms with a presence in the state that invest in Minnesota companies.
Minnesota law forbids state agencies to make direct equity investments, or to give money to venture funds. The State Small Business Credit Initiative, a $97 million state initiative to support small business through the State Small Business Credit Initiative, is using the network and knowledge of the university to distribute the funds.
Applications submitted through the portal will be reviewed by university officials for weeks, if not months. Each startup that is selected for funding will receive a check of at least $1 million after the vetting process. Venture funds may receive larger checks.
The investments will be made in early-stage companies that are specializing in life sciences, agriculture, food technology, climate technology, advanced production and software.
Launch Minnesota was founded by DEED in 2003. This initiative supports the state’s startup businesses. Three years ago, entrepreneurs informed officials that they needed more money for founders at the beginning stages of their operations. Launch Minnesota’s executive director Neela Mollagaard stated that the state could provide a venture fund to help them.
Mollgaard stated, “It’s exciting that that becomes a reality.”
Officials stated that the partnership will enable companies to grow at an early stage.
According to PitchBook, Minnesota companies raised $1.23 trillion in venture capital in the first nine months 2022. The figure is below the $1.24billion Minnesota companies raised last year, but is half that of the record-breaking $2.6billion for 2021.
Minnesota saw about 200 venture-backed company investments last year. However, most of the investment dollars went to companies with at least $25 million.
“These programs give us a once in a lifetime opportunity to invest our long-term financial future by supporting Minnesota startups, and helping them grow,” stated Myron Frans (the U’s senior vice-president for finance and operations).
Startups and fund managers interested in receiving funding from the program can apply immediately using the website z.umn.edu/venture-capital.