North Dakota is no Silicon Valley, but startups still find support and success

When Peter Chamberlain's wife was accepted to UND for medical school, he wondered if he would find help launching his business.

The 25-year-old graduate of Massachusetts Institute of Technology said he was a little biased in thinking Boston was one of the best places to help entrepreneurs, and studies and news articles tend to back his claims.

But in North Dakota, he found the UND Center for Innovation. With access to grants and loans, he was able to launch his business Auto-Pilot Medical Technologies and create a product called WalkSmart, a device that connects to the wheels of medical walkers and tracks the user's movements.

"I ended up talking to one of their staff and I just got really excited about having a center that ... rivals anything that's out on the East Coast as far as a facility," he said.

In August, he became the first recipient of a Grand Forks Job Development Authority loan geared at helping startups.

North Dakota has attracted attention for its startup environment. The Ewing Marion Kauffman Foundation said in a 2016 report North Dakota had the strongest startup activity in the nation and supported more startups per capita than any other state. In July, WalletHub named North Dakota the best state to start a business, saying it had the highest average growth of of small businesses and most accessible financing.

North Dakota has a long way to go before it gets to the level of Boston or Silicon Valley, Chamberlain said, but its friendliness toward entrepreneurs could grow with the right mindset.

Small towns, big results

Minot native Nathan Smith said he saw opportunity in Walhalla, N.D., when he wanted to start his software company.

The Pembina County town of 950 is 100 miles northwest of Grand Forks, but it offered affordability with the necessary elements to start a business.

"I saw an opportunity to compete with offshore development by starting in a small town," he said. "The great thing about software development is you need an internet connection. Small cities have that."

He's developed several mobile apps in the three years he's operated On Prairie Software, including software for Scollar, a California company that invented a collar that can track pets and send information to a person's phone. The product will be featured in a Target open house store to test its popularity with customers.

The product hasn't been picked up by major outlets, Scollar CEO Lisa Tamayo said, but it has attracted attention from Amazon Exclusive, Sam's Club, other retailers and media outlets.

She's unsure why certain areas are better for startups, she said.

She said it is expensive to start a business and competitive in California.

Support from the Red River Regional Council, the Pembina County Job Development Authority and locals made On Prairie Software a reality, Smith said.

"I wouldn't be able to be a startup without those programs," he said.

Start for startups

The Start-Up Grand Forks Program that awarded Chamberlain $10,000 for his startup was approved by Grand Forks in April. It allows the Grand Forks JDA to lend up to $100,000 per year to startups.

The program was part of Mayor Mike Brown's initiative to promote entrepreneurship in Grand Forks, said Brandon Baumbach, business development and outreach manager for the Grand Forks Economic Development Corp.

Startups have been a part of Grand Forks' economy for decades, and part of boosting business in the area is supporting local entrepreneurs, he said.

"I would say Grand Forks has a long history of being supportive of entrepreneurs," he said.

He mentioned the Center of Innovation, which houses startups and provides resources to get businesses off the ground.

The economy and technology is changing, which gives Grand Forks a shot at new opportunities, Baumbach said.

"I think there is a lot of excitement here," he said. "You don't need to go to Silicon Valley to start a drone company.

Not Silicon Valley yet

The WalkSmart device that attaches to walkers can send information to a phone app or computer for relatives to track health and get alerts when there is strange activity.

Chamberlain created the wheel a year and a half ago as a fitness tool to track his grandparents' health, but it turned into a safety tool. He didn't fully start to develop it as a business until he got to Grand Forks.

No matter the support environment for startups, there still can be roadblocks to getting new ventures going.

Most startups fail within the first several years. It can be hard to get a business started if entrepreneurs don't have support from private investors, Chamberlain said. Financial aid in North Dakota on the private side isn't at the level of other states.

"I would say the government, the state and the city have done a very, very good job of trying to foster innovation by offering grants, money and loans," he said. "Unless you have a rich family or rich family friend ... it's really hard to come by, especially if you are just moving to Grand Forks, not knowing anyone in the city and not knowing anyone on this side of the state."

North Dakota ranked last in a PWC MoneyTree report when it came to annual investment amounts and the number of deals conducted by state.

North Dakotans made their money by making conservative decisions, and entrepreneurship has a different mindset, Chamberlain said. But bringing awareness to startups may get people excited about investing. He said Grand Forks is already showing support.

"I think it is emerging because people are talking about it," he said.

Start-Up Grand Forks

For more information on the Start-Up Grand Forks Program, contact Brandon Baumbach of the Grand Forks Region Economic Development Corp. at (701) 746-2724.