Minneapolis–St. Paul (often affectionately called the Twin Cities) sits quietly in the Midwest, but underneath its modest exterior lies a vibrant and growing startup scene. For years, this community has flown under the national radar, but emerging trends suggest it’s time for local entrepreneurs, investors, and policy makers to consider the next step—how do we move from steady evolution to a true startup boom?
To answer that, let’s zoom in on the region’s assets, stumbling blocks, and ripe opportunities. Drawing from my experiences following Twin Cities innovation for years, and weaving in insights from local founders and national trends, let’s ask: Can Minneapolis–St. Paul truly accelerate its startup growth?
Table of Contents
- Current State of Startups in Minneapolis–St. Paul
- Ecosystem Strengths: What Sets the Twin Cities Apart?
- Challenges Facing Startups
- Opportunities for Growth
- Actionable Steps for Entrepreneurs
- What Does Startup Acceleration Look Like?
- Summary
- FAQs
- Sources
Current State of Startups in Minneapolis–St. Paul
The Twin Cities’ startup ecosystem has come alive in the past decade, quietly maturing beyond its established Fortune 500 anchor companies. Minneapolis–St. Paul is home to giants—Target, 3M, UnitedHealth Group, Medtronic, General Mills—that have created a highly skilled workforce and a deep bench of technological expertise. As those companies foster innovation internally, they also seed talent and ideas throughout the region.
The metro hosts dozens of incubators and accelerators, and according to Bloomberg, venture funding in tech startups is on a gradual but upward swing. Health tech and fintech are two sectors seeing pronounced growth, enhanced by proximity to major insurers and healthcare companies as well as established banks. Startups focused on agriculture technology, connected devices, and sustainability also stand out—perhaps no surprise, given Minnesota’s agricultural roots and environmental consciousness.
Entrepreneurial events such as Twin Cities Startup Week, MinneDemo, and Beta showcase, as well as the expanding coworking ecosystem (Fueled Collective, WeWork, Coco, and more), serve as connective tissue. These gatherings are essential for sparking ideas, collaboration, and mentorship—crucial factors for any healthy startup ecosystem.
Based on my own attendance and conversations at events across the city, I’ve seen firsthand how approachable and supportive the entrepreneurial community here can be. Seasoned founders readily give time, advice, and encouragement to first-timers. There’s real pride in seeing local companies succeed—whether they’re building world-changing medical devices or a quirky new food product line.
Ecosystem Strengths: What Sets the Twin Cities Apart?
- Educational Powerhouses: The University of Minnesota and several private universities crank out graduates skilled in engineering, business, computer science, healthcare, and more. That means a reliable stream of talent, much of which stays in the metro area. Many successful startups are launched by alumni or with faculty collaboration.
- Industry Crossroads: Unlike some markets where one sector dominates, the Twin Cities excel at the intersection of sectors. Digital health, ag-tech, and supply chain innovation are examples where university research, big firm resources, and entrepreneurial energy blend to solve practical problems.
- Quality of Life and Affordability: Compared to San Francisco, New York, or Boston, the cost of starting up is noticeably lower. That means startups can invest more in product and people, and less in sky-high rents. Add abundant green space, bike paths, and a vibrant arts scene, and quality of life is a powerful recruiting tool.
- Connected Community: Minneapolis–St. Paul is small enough for people to know each other, big enough to draw national attention. If you’re an entrepreneur, you can get a meeting with a VC, find an industry mentor, or connect with a potential co-founder with surprising speed and openness.
Challenges Facing Startups
No region is without growing pains, and the Twin Cities are no exception. While the foundation is strong, several challenges constrain faster growth.
1. Funding Gaps
Although the region boasts a handful of notable early-stage investors and angel networks, startups often struggle to secure adequate capital for scaling. Local investors may be more risk-averse than peers in Silicon Valley or Boston. According to the SEC, the complexities of equity fundraising can be especially daunting for first-time founders.
Many entrepreneurs report that raising money in the Midwest requires more traction, proof, and scrappiness than on either coast. As a result, some companies relocate to more capital-dense markets, taking jobs and taxes with them.
2. Visibility & National Recognition
The challenge isn’t just about getting customers—attracting top-tier talent, experienced venture capital, and media attention is much harder from 1,500 miles away from the startup meccas of the coasts. Some founders feel they start every investor or press call at square one, explaining why they chose to stay in Minnesota.
3. Diverse Representation
Despite good intentions, many Twin Cities companies and accelerators continue to grapple with limited diversity—whether by gender, ethnicity, or background. True startup vibrancy depends on broadening access to opportunity, leadership, and funding for Black, Indigenous, Latinx, and other underrepresented entrepreneurs.
4. Seasonal Challenges
It’s no secret: Minnesota winters can be tough. Some out-of-state talent is hesitant to relocate, and cabin fever can feel real. But for those who thrive here, the cold months are a chance to focus and build—every challenge is also an opportunity.
Opportunities for Growth
The challenges above are not intractable. Where obstacles loom, innovation follows. Here’s how Minneapolis–St. Paul could seize its moment:
1. Funding Innovation
Bridge funds, more active angel communities, and new early-stage VC funds could be game-changers. As local success stories like SPS Commerce, Jamf, and Bright Health create wealth, reinvesting in the next generation can kick-start a virtuous cycle.
Corporates—many of which have venture arms—could ramp up their engagement, investing in local disruptive startups and providing strategic support. Government grants and nonprofit partnerships can fill the gaps for pre-seed experimentation, too.
2. Tapping Local Strengths
Startups that leverage the Twin Cities’ unique strengths—healthcare, financial services, agribusiness, logistics, advanced manufacturing—can dominate here before expanding nationally. Proximity to major buyers or pilot customers can help startups refine offerings and demonstrate traction.
Additionally, the region is a hotbed for social entrepreneurship and public-private collaboration—fertile ground for founders who want to address real-world problems, not simply chase the latest app trend.
3. Embracing Remote Work and Distributed Teams
The move to remote work during the pandemic proved that a startup’s reach is no longer limited to its geography. The Twin Cities’ lower cost of living, excellent digital infrastructure, and central time zone make it a strategic home base for distributed teams. This allows companies to attract engineers, designers, and marketers from anywhere, while rooting core culture locally.
4. Elevating Visibility
Raising the region’s profile means telling its success stories better and louder. A thriving cluster of startup media outlets—like Minne Inno, The Business Journal’s innovation coverage, and local tech podcasts—can amplify wins. National partnerships and participation in accelerators like Techstars help insert Minneapolis–St. Paul into national conversations and attract investor attention.
5. Making Inclusion Real
Efforts to expand startup access for women, LGBTQ+, and BIPOC founders are essential. Initiatives like Lunar Startups, Forge North, and Black Tech North are building bridges. With strong local philanthropic and civic culture, business leaders can set the tone by supporting inclusive spaces, funding, and mentorship opportunities.
Actionable Steps for Entrepreneurs
For founders and aspiring entrepreneurs in Minneapolis–St. Paul, the ecosystem is increasingly rich with connection points and resources. Here’s how to plug in and power up:
- Network Actively: Attend startup events such as Twin Cities Startup Week, Beta Showcase, or local meetups. These aren’t just networking mixers—they’re how co-founders, investors, and mentors find each other. Reach out to established founders for coffee (virtual or in-person). You’ll be surprised by their willingness to help.
- Leverage Local Resources: Consider applying to incubators and accelerators. Programs like gBeta, Techstars, and industry-specific labs can help refine your pitch, build your team, and introduce you to investors.
- Focus on Branding: Don’t assume your product will sell itself—craft a strong story about your company and why it matters, both locally and nationally. Engage with local startup media and nominate your company for innovation awards.
- Seek Funding Wisely: Research local venture capital funds, family offices, and angel networks. Apply for pitch competitions and grants. Online platforms like AngelList can supplement local connections. As you gain traction, don’t be shy about reaching out to national VCs—just be prepared to explain why Minnesota is your home.
- Embrace Diversity: Build a founding team from multiple backgrounds. Seek out advisors and service providers who broaden your perspective. Apply to programs designed for underrepresented founders, which often provide capital, mentoring, and community.
- Utilize Public Sector Supports: The State of Minnesota and local governments provide a range of grants, loans, and technical assistance for startups. Look into the Minnesota Investment Fund, Small Business Assistance Office, and local economic development offices for tailored guidance.
What Does Startup Acceleration Look Like?
Startup acceleration isn’t just faster growth—it’s a robust cycle of founders and employees starting new ventures, alumni funding the next wave, and students aspiring to launch companies. The Twin Cities are on the cusp of that flywheel effect. To accelerate, the region will need to double down on storytelling, invest in talent retention and attraction, deepen its funding pool, and continue opening doors for all types of founders.
Let’s put it another way: The next Twin Cities unicorn is likely being built right now, in a North Loop coworking space or in a South Minneapolis basement. The question is whether that company finds the capital, customers, national recognition, and local support to grow here—or whether it’s lured elsewhere.
Summary
Minneapolis–St. Paul possesses all the raw materials for a powerful startup ecosystem: talent, industry bridges, a cooperative spirit, and a supportive public and philanthropic culture. The region’s challenge—and opportunity—is to harness these resources for even faster, more inclusive startup growth. By tackling funding gaps, building a national profile, and doubling down on diversity and connectivity, the Twin Cities’ startup flywheel can truly accelerate. For current and future founders, the time and place to build may be right now, right here.
FAQs
- What industries are thriving in Minneapolis–St. Paul? Health tech, fintech, edtech, ag-tech, and sustainable business are all on the rise, supported by strong university research and proximity to major industry players.
- How can I find funding for my startup? Explore local VCs (Matchstick Ventures, Great North Labs, Bread & Butter Ventures), pitch competitions, angel groups, and national platforms like AngelList. Joining an accelerator is often the best way to get investor introductions and build credibility.
- Are there networking events for startups? Yes! Twin Cities Startup Week is the crown jewel, but year-round you’ll find meetups for every type of founder—tech, food/startups, social impact, and more. Engage online and offline with local Slack groups and co-working communities.
- How can I learn more about diversity and inclusion programs? Look into organizations like Forge North, Lunar Startups, Brown Venture Group, Black Tech North, and the MSP Startups Facebook group for mentorship and resources.
- Does Minnesota have government support for entrepreneurs? Yes. The Minnesota Department of Employment and Economic Development (DEED) offers grants, loans, and mentorship for everything from tech innovation to export assistance.
