University of Minnesota, DEED launch $34.5M Minnesota Venture Capital Programs

The University of Minnesota is partnering with the State of Minnesota to inject $34.5 million into Minnesota’s early-stage, venture-backed businesses — a key step toward maintaining Minnesota’s position as one of the best states nationally for growing new businesses.

The University-operated programs officially launch today, focusing particularly on investments in life sciences, agriculture/food tech, climate tech, advanced manufacturing, software, and technology.

Last month, University officials joined Governor Tim Walz and Minnesota Department of Employment and Economic Development (DEED) Commissioner Steve Grove to announce nearly $100 million in new funding to support small businesses thanks to the federal American Rescue Plan Act.

“At the University, our mission is about serving all Minnesotans. We are honored to combine our broad and deep expertise in investing and our efforts to spark new businesses and growth via our nation-leading Technology Commercialization team and growing Corporate Engagement Center,” said Myron Frans, senior vice president for finance and operations at the University. “These programs provide us with a once-in-a-lifetime opportunity to invest in our long-term future by supporting Minnesota startups and helping them grow.”

The partnership is a win-win for Minnesota, leveraging the strengths of both the University and state government. The University agreed to partner with the state to facilitate the programs because state law prohibits state government agencies from making fund-level commitments or direct equity investments; but the University is not bound by those restrictions. Businesses may access this support through the Minnesota State Small Business Credit Initiative’s (SSBCI) Direct Investment and Multi-Fund Venture Capital Programs, which will include investment opportunities with fund managers or businesses that are majority-owned by socially and economically disadvantaged individuals.

The University is uniquely positioned to conduct due diligence on venture capital funds and help connect the programs’ expected $34.5 million federal investment to potential venture capital funds or direct equity investments in seed or early-stage startups. The University will also develop the application process, stand up an office, and facilitate a selection process that ensures fair and open access to Minnesota businesses.

“This new infusion of capital will help our whole Minnesota startup ecosystem move many new early stage ideas forward,” said Russ Straate, who leads the University’s Venture Center which has helped spin out more than 200 startups based on University of Minnesota inventions. “We’re pleased the independent selection process will allow U of M and other startups we worked with through DEED’s Launch Minnesota and Angel Tax Credit programs to be eligible for these much needed resources. All early stage companies in Minnesota should consider these new funding opportunities.”

The programs are expected to:

• work directly with venture capital fund managers to reach Minnesota’s developing markets in need of capital investment;
• broaden opportunities for direct investment in early-stage startups that need access to capital to meet their goals;
• leverage the University’s expertise with investing in high-growth early-stage companies; and
• be transparent and fair, while adhering to all federal guidelines so that Minnesota may fully utilize the total amount of capital available through the programs.

“The venture capital funding that Minnesota has secured is critical for entrepreneurs across the state,” said DEED Commissioner Steve Grove. “Make no mistake: Minnesota is a state of innovation and this funding will accelerate the development of the next crop of game-changing businesses in our market. We appreciate the University of Minnesota’s continued leadership and partnership in this critical area — we’re fortunate to have such a forward-thinking institution in our state.”

Minnesota consistently ranks as one of the best states in the U.S. for business. Minnesota’s diverse economy is home to everything from agriculture and manufacturing to finance, medical devices and retail. This impressive array of organizations includes startups and spin-offs, as well as industry leaders and 16 Fortune 500 companies — more per capita than any of the 30 largest metros in the U.S.

For more information, visit the University’s SSBCI Venture Capital Programs website, Treasury’s SSCBI page or DEED’s Small Business Hub.