WASHINGTON - Minnesota used to be a hotbed of entrepreneurship, the kind of place where Earl Bakken could go into his garage in Minneapolis with a great idea and emerge with what would become Medtronic.
That's no longer the case, the mayors of the Twin Cities admitted to a gathering at the Brookings Institution on Monday. Venture capital has dried up. Public funding cuts to the University of Minnesota have crippled innovation.
But Mayors R.T. Rybak of Minneapolis and Chris Coleman of St. Paul came to Washington to outline a plan to fix that.
It's called the Entrepreneurship Accelerator, which draws on a group of business CEOs, a regional council of mayors and a new organization that is supposed to meld 140 fragmented advocacy groups into a one-stop shop for entrepreneurs.
"We're trying to show a model of regional cooperation in a place that used to fight like the stars on the TV show 'Jersey Shore,'" Rybak said.
ADVERTISEMENT
The Twin Cities was one of three regions Brookings chose to pioneer strategies that could be applied across the country. Northeastern Ohio offered a plan for medium-sized manufacturing facilities. Seattle discussed building an economy based on energy efficiency.
In Minnesota, the mantra is creativity to commerce. The number of business start-ups was once 25 percent above the national average. That has fallen to the national average. The proportion of entrepreneurs in the regional economy has slipped from 22nd in the country to 48th, according to the Twin Cities' report.
"This is a long-term strategy," Coleman said. "We're talking about how to take a person working in a garage and getting them out and commercially viable."
These people now struggle to find what is called "follow-on capital." That's the money you need to keep a good idea afloat long after you run out of what you, your family and friends invest in you. It is a critical piece in the business development chain, Rybak and Coleman said, and one that has been missing recently.
Also missing are programs that offer entrepreneurs technical support and mentors.
This and other forms of support will come from a privately run Regional Economic Development Partnership, which was publicly unveiled last month. A Minneapolis-based business alliance called the Itasca Project revealed last fall that it was raising millions of dollars from municipalities and local companies to get the initiative going.
The work will require $20 million of private capital, philanthropic contributions and state and federal funding in a budgetary climate focused almost exclusively on cuts. Coleman said the vision is to expand to $70 million in investment "leveraging a 20-to-1 return on investment."
"This has got to transcend partisan politics," Coleman said.
ADVERTISEMENT
He met Monday with representatives from the federal departments of Labor, Housing and Urban Development, and Commerce to discuss the federal government's role.
Brookings Institution officials believe the Minnesota pilot program can show other places how to rescue entrepreneurs from "the valley of death." "That's where entrepreneurs go when they can't get money," said Brookings policy expert Mike Muro.
Minnesota will not become that place, Coleman promised.
"Funding beyond family and friends now comes from the East and West Coasts," he said. "If we can set the table in the Upper Midwest, venture capital will have a place to come."
Distributed by McClatchy-Tribune Information Services.
