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U of M, in partnership with DEED, invests $2.5M in venture capital funds | University of Minnesota

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October 18-20, 2023 / Tucson, AZ
The annual summit for research institution gap fund and accelerator programs, including proof of concept programs, startup accelerators, and university venture funds

The Story

The University of Minnesota today announced investments totaling $2.5 million across multiple Minnesota venture capital funds that will ultimately benefit start-up companies in the state.

This is the first in a series of significant investments stemming from a partnership announced last November with the Minnesota Department of Employment and Economic Development (DEED) to inject $34.5 million into Minnesota’s early-stage, venture-backed businesses. The program offers access to capital for start-ups that need those resources while, at the same time, leveraging the University’s expertise with investing in high-growth early-stage companies.

These $2.5 million are the first of multiple waves of investments designed to explore new and different opportunities for investment in early-stage startups.

The University of Minnesota has made the following commitments on behalf of the University’s State Small Business Credit Initiative’s (SSBCI) Multi-Fund Venture Capital Programs:

  • Brown Ventures Group Fund I: A venture capital fund focused on pre-seed and seed-stage emerging technologies by Black, Latino & Indigenous entrepreneurs.
  • Tundra Ventures Fund I: A venture capital fund targeting early-stage investments in diverse entrepreneurs located in underinvested geographic markets.
  • Groove Capital Fund II:  A venture capital fund focused on pre-seed and seed-stage financing across multiple industries.

“The U of M has long been one of the state’s leading incubators for technology and business development. We know firsthand how start-ups and early-stage businesses help power Minnesota’s economic success and the investments we are announcing today will further strengthen this important segment of our economy,” said Jeff Ettinger, U of M interim president. “We are proud to partner with the State of Minnesota on these critical programs to facilitate access to capital for early-stage Minnesota startups.”

“We are delighted with the initial launch of the SSBCI venture program,” said Myron Frans, senior vice president for finance and operations. “We are pleased to announce investment commitments in venture funds that advance the broad diversity of innovation and entrepreneurial spirit across Minnesota. We are looking forward to announcing another round of investments in the months ahead.”

The federal American Rescue Plan Act provided Minnesota with nearly $100 million in new funding to support small businesses, but state law prohibits state government agencies from making fund-level commitments or direct equity investments. The University agreed to partner with the state to invest approximately $34.5 million in these areas because the University does not have the same legal restrictions as the state. Additionally, the University is an ideal partner for such a program because of its unique experience conducting due diligence on venture capital funds and investing in venture capital funds, direct equity investments in seed or early-stage startups.

“This venture capital funding is critical for entrepreneurs across the state,” said DEED Commissioner Matt Varilek. “With a concerted focus on equity, this funding will accelerate the development of a new group of game-changing businesses in our market.”

The funding provided through the SSBCI venture programs will focus on fund managers or businesses that are majority-owned by socially and economically disadvantaged individuals. Areas of priority include life sciences, agriculture/food tech, climate tech, advanced manufacturing, software, and technology.

Minnesota consistently ranks as one of the best states in the U.S. for business. The state’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.

 

Full story: U of M, in partnership with DEED, invests $2.5M in venture capital funds | University of Minnesota

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