Minnesota may be the great frozen North, but it’s also a hotbed at the intersection of business and technology.
Our state ranks No. 5 in the country for the net number of technology businesses created last year, according to the 2019 Cyberstates report from the Computer Technology Industry Association (CompTIA). With an economic impact of more than $31 billion, tech businesses are responsible for about 9.3 percent of Minnesota’s total economy. Though the state has been known for medtech, current innovation here is wide-ranging, from apps that enable on-demand industrial deliveries and make reselling apparel more efficient, to sustainable agriculture analysis.
(Interpretations of what constitutes a “tech” business vary, but CompTIA defines it as “the sectors involved in the making, creating, enabling, integrating, or supporting of technology, whether as a product or a service.”)
As we head into a new decade, innovation will continue to build on many of the same trends we saw in 2019, predicts Jeff Tollefson, president and CEO of the Minnesota High Tech Association. “This includes AI and machine learning, leading to enhanced systems that can learn from data, identify patterns, and make decisions with minimal human intervention, as well as the promise of high-speed 5G networks and the more immersive digital experiences that come with expanded virtual and augmented reality technologies.”
Twin Cities Business rounded up 20 of the innovators and innovations leading Minnesota into the 2020s. While this is just the tip of the iceberg, the people and products showcased here, representing both startups and large corporations across a broad range of industries and technology sectors, made waves in 2019. We expect to feel their ripple effects well into 2020 and beyond.
Pioneering a resale marketplace and online community that connects parents with apparel brands
“We used to stand out as some of the only women in the room at tech events. I believe that as a startup community, we are trying to repaint our ecosystem to be more diverse and inclusive. We’re growing as a community.”
—Mary Fallon, co-founder and chief creative officer, Kidizen
The resale clothing business is booming, thanks to increased attention to climate change (shout-out to crusader Greta Thunberg), a fast fashion backlash, and millennials who prefer to buy less and reuse more. Dori Graff and Mary Fallon were ahead of the trend five years ago when they launched Kidizen, an online resale marketplace for kids’ apparel (and women’s, too). “For the first time, we’re able to weave in the sustainablity message, which has always been core to our mission, because it’s starting to resonate with consumers,” says Fallon, Kidizen’s chief creative officer.
With backgrounds in marketing, Fallon and CEO Graff have always had big plans for Kidizen. They’ve raised more than $6 million to date from angel investors and venture funds, but, as women in tech living in the Midwest and working in a consumer business, it hasn’t been easy, they say. “There was less of an appetite for the unknown risks that came with a business like ours in a region that was established in medtech [fund]raises,” Fallon says. “We’re now starting to see more acquisitions come from large retailers themselves, as they seek to embrace emerging technologies and new business models in order to evolve. I believe if Minnesota-based retailers follow suit, it will open more doors for local startups and increase the likelihood of their success.”
In 2019, Plae Shoes became the first brand to set up shop on Kidizen, choosing the platform over Nordstrom Rack and T.J. Maxx to sell its overstock. Upscale apparel brands See Kai Run and Art & Eden are recent additions. While Graff and Fallon pursue more partnerships, they continue to focus on their 625,000 registered users, adding features that allow the co-listing of Kidizen items on Facebook Marketplace and that connect users, the most active of whom call themselves “Momizens.”
“Commerce brings them in, but the community keeps them coming back,” Fallon says. She and Graff anticipate turning a profit this year. “We know we can really make a difference with this company,” Graff says. “2020 is our year.”
A process for building neurons faster
Anatomi Corp. founders Vincent Truong and Patrick Walsh were working as staff researchers at University of Minnesota stem cell labs when they discovered a shortcut for producing human neurons. Using adult cells, the two found a way to produce neurons in as little as seven days, a process that typically takes a month. Truong and Walsh took their idea to the U of M’s Venture Center, an accelerator that helps researchers commercialize their discoveries. In May, Anatomi spun off as a separate business. The founders branded their neuron-making technology as the Chrono platform; they say the technology has great potential for the treatment of neurodegenerative diseases like Alzheimer’s and Parkinson’s, whose causes have bedeviled scientists for years. For instance, researchers could use Chrono to replicate neurons from Alzheimer’s patients, which would help them better understand how the disease progresses on an individualized basis. In May, the company landed a $100,000 regenerative medicine grant from the state to bring the Chrono platform to market; Anatomi hopes to raise more from private investors.
Co-founder of Structura
Startup guru mobilizing St.Paul’s tech community
Not all of the cool startups are in Minneapolis’ North Loop. St. Paul is carving out its own reputation for tech companies, and Scott Burns has a lot to do with it. Burns co-founded St. Paul-based GovDelivery in 2001 and served as its CEO. GovDelivery built a platform for government agencies to digitally improve communications with the public. In 2016, the company sold for $153 million.
Burns then co-founded and started working full time for the operation in October 2017. Structural’s technology helps companies find the right people in their organizations for critical roles or key projects. Some compare it to an “internal LinkedIn” for companies. Burns prefers to call it an “all-in-one people directory built around data-rich profiles of individuals.”
Investors and customers are taking notice. “We’ve raised over $7 million to date,” Burns says. “We do have tens of thousands on the platform already.”
Burns is also an investor in the Osborn370 building, which houses Structural’s offices and has emerged as a startup hub in downtown St. Paul.
“We’ve had strong innovation going on in St. Paul since I’ve been there. It’s always been there, but we’ve helped coalesce more in downtown St. Paul. We did try to follow the playbook from other successful innovation hubs,” says Burns of the philosophy behind Osborn370.
As if he didn’t have enough to do, Burns is also an advisor, investor, or board member for more than 15 emerging companies. He sees it as a way of giving back and paying it forward for other aspiring entrepreneurs. “I’ve made several direct investments in companies,” Burns says. “I did it because a lot of people invested in my company when I was building GovDelivery.”
Grocery tool that makes online food content shoppable
Given the popularity of online recipes and cooking sites, General Mills alums Eugene Burd (left) and Jim Lesch (right) were craving an efficient way to order ingredients online. In 2017, they created Basketful, a proprietary search engine that makes food content shoppable. The tool plugs a “buy” button into food websites so consumers can swiftly purchase the necessary ingredients when they come across an appealing recipe or article. On the back end, Basketful uses machine learning to match product content with local distribution, inventory, and pricing information. Basketful can show users which nearby stores have all the goods. It also checks for sales and can send recipes to phones. Since launching, Minneapolis-based Basketful has connected with more than 50 U.S. grocery chains and recently became a Pinterest preferred shopping partner, making it the social media giant’s go-to source for grocery shopping. Basketful will debut a grocery list app early this year and plans to continue innovating around simplification of grocery shopping. Company founders say consumers today demand convenience and personalization.
Founder/CEO of Proozy
Modernizing overstock liquidation for brand-name merchandise
Minnesota’s fastest-growing independent retailer is not at the mall or in the North Loop; it’s based in an industrial park in Eagan. Proozy is a daily deals website that has amassed more than 300,000 users without any advertising. Its founder, Jeremy Segal, may just be one of the most under-the-radar CEOs of a company that racked up nearly $40 million in revenue in 2019 and expects to double that in 2020. Proozy now has more than 100 employees, and Segal has built the company entirely on his own, with no outside investors.
A Twin Cities native, Segal got into the overstock business when he was just 16. It started out personal: He wanted better golf equipment than he could afford and went looking for bargains. He quickly realized he had a knack for brokering deals with manufacturers and retailers and could pass those bargains on to customers.
But Segal sees Proozy as a tech company, not a retailer. “We don’t function like a retailer. We’re using data to make decisions and optimizing with tech.” Proozy taps into user analytics to deliver customized deals to individual shoppers. With lower overhead than larger competitors like Nordstrom’s HauteLook and established relationships with big brands, Proozy guarantees the lowest price on everything it sells.
Primarily known for activewear, Proozy is now broadening its assortment to lifestyle apparel for the whole family. Segal’s “Proozy 3.0” includes a new website and app, plus the launch of a subscription box with more surprise deals. A Proozy private label line is in the works based on what the company knows to be its most popular products and in-demand styles. Segal is now considering a second location, perhaps on the West Coast for faster deliveries to that part of the country. And as the company grows nationally, he’s also looking for deeper connections at home. “Overall, I think tech startups and businesses in the $10 [million] to $25 million range have a great opportunity to scale in the Twin Cities, but once you get to $75 [million] to $100 million, it’s a different story. It’s time to rethink that.”
General Mills’ Regenerative Agriculture Self-Assessment Tool V2.0
An online tool for tracking sustainable practices on farms
General Mills isn’t just talking about sustainability. The Golden Valley-based packaged foods giant is investing in tech that promotes regenerative agriculture, which the company defines as farming that both protects and intentionally enhances natural resources and farming communities, utilizing practices such as minimized tilling, soil coverage, crop diversity, cover crops, maintaining year-round living roots, and livestock integration. In March 2018, General Mills launched its open-source online Regenerative Agriculture Self-Assessment Tool for farmers to assess their practices. In 2019, the company announced its commitment to advance regenerative agriculture practices on 1 million acres of farmland by 2030; they also launched version 2.0 of the tool, which is interactive and helps farmers gauge how their practices align. “Looking at the implementation of practices is a proxy for impact,” says Christina Skonberg, senior sustainability analyst with General Mills’ natural and organic operating unit. The new tool also gives General Mills access to data from around the world, which Skonberg says she hopes to share in an aggregated form to help people better understand the landscape of regenerative agriculture. The company currently has data from 26,000 acres of farmland within the company’s supply chain and 22,000 acres beyond that.
A biotechnology and clinical diagnostic company
Minneapolis-based Bio-Techne Corp. might be the largest company in Minnesota that no one pays much attention to. The publicly traded firm posted sales of $714 million for its fiscal 2019—up 11 percent from 2018 and on track to crack $1 billion in revenue in a few years. From fiscal 2013 to fiscal 2019, Bio-Techne acquired 15 companies, a major reason for its growth.
Its core business has long been producing proteins (biological molecules used by life science researchers). But in 2018, the company acquired Massachusetts-based Exosome Diagnostics Inc., a move that expanded Bio-Techne’s footprint in diagnostics. It already appears to be paying off: In June, the U.S. Food and Drug Administration granted breakthrough device designation to Bio-Techne’s ExoDx Prostate IntelliScore (EPI) test, a risk assessment tool to help doctors and patients determine if a prostate biopsy is needed. The non-invasive test uses a urine sample for a liquid biopsy. The designation is meant to accelerate regulatory review, a signal that it could be game-changing technology. Another sure signal of the company’s growth: In October, Bio-Techne announced plans to spend $40 million to $50 million on a new production facility in St. Paul to support the company’s expanding cell and gene therapy portfolio.
Customer-to-employee communications platform
Minneapolis-based software company Kipsu was inspired by a messy bathroom at a Twins game. Looking for a way to easily alert staff of the issue, co-founder Joseph Rueter came up with the idea for Kipsu’s software, which enables customers to text feedback to hospitality business staff. Kipsu had an auspicious start in 2010 with Mall of America as its first client and has since grown to 2,600 clients and about 60,000 users across 41 countries. It recently established an office in the U.K. and launched in Japan in December. Also on the horizon: growing its presence in the higher education and mass transit spaces, and entering into health care. This year, Kipsu expects to add 25 employees to its team of 65. Approaching $10 million in revenue, despite having raised only about $1.5 million externally over the past decade, CEO Chris Smith says the company is positioned to keep growing.
Founder of Parallax
Using tech to manage workflow
After years at the helm of digital consulting firm The Nerdery, Tom O’Neill is poised to leave another mark on Minnesota’s tech scene. In November 2018, he formally launched Parallax, a startup aimed at helping digital consultancies prepare for the cyclical nature of creative work. “It can feel like a roller coaster,” O’Neill says. “Sometimes there’s too much work, then there’s not enough.” The Parallax platform is designed to help companies better forecast growth and manage their resources accordingly. In O’Neill’s view, it all boils down to an issue of strategy and resource planning. “The best-in-class companies I’ve seen have found a way to align their aspirations for growth with the aspirations of individuals,” he says. “When it comes down to it, it’s a pretty simple problem. It’s all about resource planning.”
That view seems to be gaining ground, if the company’s early investments are any indication. In December, Parallax closed on a $3.2 million fundraising round, led by Rally Ventures, a VC firm with offices in Minnesota and California. Twin Cities investors Great North Labs and Matchstick Ventures also contributed. Serial entrepreneur Phil Soran was a major inspiration during the formation of Parallax. Soran, who sold data-storage company Compellent to Dell for just under $1 billion nearly two decades ago, introduced O’Neill to the concept of “customer advisory councils,” groups of potential customers that provide feedback while a product is in development.
As he builds Parallax, O’Neill is leveraging some of the lessons from his tenure at The Nerdery, which he joined as a software engineer in 2004. In his view, the company was successful not because of the frequently cited perks like beers in the office; The Nerdery grew because it provided a place for like-minded folks to continue learning and developing as individuals, something he aims to bring to other companies through the Parallax platform.
Marketing and customer engagement platform for finance services
Fintech firm Total Expert Inc. sells software aimed at “humanizing” the banking experience. It may seem counterintuitive, but founder and CEO Joe Welu asserts that technology actually helps banks and credit union leaders craft more meaningful sales messages. For instance, Total Expert’s marketing operating platform uses data analytics and artificial intelligence to help sales teams better anticipate their customers’ needs. That means customers only get pitches for products that are relevant to them, Welu says. Total Expert has come a long way since it was founded in 2012, operating out of the basement of a Chanhassen real estate firm. After netting some initial capital through Minnesota’s angel tax credit program, the company raised $52 million in Series C funding in 2019—one of the largest raises in Minnesota last year. Total Expert has also expanded from a two-man team of programmers hired off Craigslist to more than 200 employees, with plans to continue building its workforce in 2020 and expand its services to wealth managers and insurance companies.
Founder of Sezzle
Empowering the next generation of online consumer payment tools
Charlie Youakim remembers the hassles of paying for parking the old-fashioned way on the University of Minnesota campus. While he was working toward his MBA in 2009, the school still relied on a cash-based parking system. “You had to bring dollar bills, roll them up, put them in an envelope, write your license plate on a piece of paper, and shove it into a box,” Youakim recalls. “I thought, how does this still exist in 2009?” The experience is a big reason he ventured out as a tech entrepreneur.
A mechanical engineer by training, Youakim has always had a penchant for tinkering with things and making them better—a trait that’s guided him throughout his endeavors in tech. In 2010, he teamed up with a cousin in North Carolina to launch the Passport parking app, which enables users to pay for parking spots on their smartphones. The app has since been adopted by several municipalities in North America, including St. Paul, Boston, Chicago, and Toronto.
After the success of Passport, Youakim tried his hand at another payment platform in January 2016: Sezzle, a platform that allows users to buy items online and divide payments over six weeks. He says the company is “financially empowering the next generation,” especially for those who may be wary of traditional approaches to credit-building. Sezzle doesn’t affect credit scores, but Youakim hopes to add a credit-building alternative for users in 2020.
While the buy-now, pay-later trend hasn’t quite taken off in the U.S., it’s growing quickly in other parts of the world, including South America, the United Kingdom, and Australia. Last summer, Sezzle went public in Australia. Despite the lack of traction in the U.S., investors here are taking notice. In December, Sezzle more than tripled its lending power with a $100 million debt issuance from a group of U.S. lenders. Youakim says the buy-now, pay-later platform is a “trend worth watching.” He notes that Sezzle accounts for more than 15 percent of the payment volume for the retailers it works with. Now, Youakim has his sights set on expanding the Sezzle platform to large-scale retailers like Target and Walmart. “Consumers are showing you how they want to pay.”.
Sezzle wouldn’t be where it is without Minnesota’s angel tax credit program, which helped the startup secure some of its early funding. Youakim is “super happy” to see the program reinstituted after it was taken offline for a year.
A production orchestration platform
Inspectorio was started by three brothers in Hong Kong but moved to Minneapolis after participating in the Target Techstars incubator program. Given that the company makes supply-chain inspection software, why not set up shop in the backyard of one of the biggest retailers in the U.S.? Minneapolis-based Target Corp. is both a customer and an investor. Inspectorio has raised $13.7 million in financing, including a $10 million Series A round in 2018. Target was the lead investor in the $3.7 million seed round and also invested in the Series A financing. Inspectorio’s headquarters are in downtown Minneapolis, but the company, led by co-founder and CEO Carlos Moncayo, has offices in China, Vietnam, and Belarus. Forbes named the company among 25 Machine Learning Startups to Watch in 2019. The improvements continue. In October, Inspectorio introduced two new devices, SmartColor and SmartTape, which can be integrated into its software-as-a-service platform to provide color reading and measurement during the inspection process, two key elements for brands, retailers, and suppliers.
An app for hourly workers to secure free pay advances and shift coverage
As headquarters to large retailers like Target and Best Buy, the Twin Cities has become an epicenter for support software like Branch, a platform that gives hourly workers advances on their paychecks at no charge. With a mission to improve financial wellness for the U.S.’s 78 million hourly workers, founder Atif Siddiqi moved his startup from California to Minneapolis in 2016 to participate in the Target Techstars retail accelerator. Then he stayed. Three years after graduating from Techstars, Branch employs more than 50 and has raised more than $10 million to continue enhancing its software. What helps Branch acquire big clients like Life Time and Border Foods: Employees can be the catalyst. Once companies see the app gaining traction with their workforces, they often sign on as a corporate client. Branch makes its money by collecting merchant fees on purchases made with the Branch debit card. Branch ended 2019 by announcing a new partnership with Delaget, a restaurant software management tool, to offer same-day pay as a recruitment and retention tool for the restaurant industry. This year, Branch chief technology officer Mitch Coopet says, “we hope to offer more ways for our users to grow their finances, eliminate unnecessary fees, and help them through financial setbacks.”
“The Twin Cities has a lot of great talent, especially around enterprise software.”
—Atif Siddiqi, founder and CEO, Branch
Abilitech Assist by Abilitech Medical
A powered orthotic medical device to assist arm movement
When it comes to medtech advancements in Minnesota, all eyes are on Abilitech Medical, which took home top honors last year at both MN Cup (the University of Minnesota Carlson School of Management’s entrepreneurship competition) and the Tekne Awards from the Minnesota High Tech Association (given to companies that demonstrate leadership and technological innovation). Their headlining product is a Class 1 powered orthotic called the Abilitech Assist, which provides support and a functional boost to the elbow and shoulder. The device makes possible basic tasks like eating and brushing teeth, which can be a struggle for people with neuromuscular disorders such as muscular dystrophy or ALS. “The patient has to provide the functional lift—about 10 percent of the energy—and our device augments it,” CEO Angie Conley says. “It makes people feel like they are in water. Their arm is so supported that it feels weightless and effortless.” The product was developed in 2016, and the company has raised $10.3 million in investments and received more than $2 million in grants. This year, Abilitech is launching a clinical study with muscular dystrophy patients at Gillette Children’s Hospital in St. Paul and the University of Minnesota’s Wellstone Muscular Dystrophy clinic.
A clinical test to help fight obesity
2019 MN Cup finalist and first-prize winner in the MEDA Million Dollar Challenge, the nation’s largest minority entrepreneurship competition.
Health problems and chronic conditions related to obesity cost $480 billion annually in the U.S., making it one of the biggest drivers of health care costs. But sometimes, prescribed treatments just don’t work because causes of obesity vary widely, depending on the individual. Enter two Mayo Clinic gastroenterologists who developed a blood test to identify the underlying cause of a person’s obesity, helping clinicians match treatment with condition. Drs. Andres Acosta (right) and Michael Camilleri (left) started Phenomix Sciences in 2018. Their blood test evaluates numerous factors, including genetics, DNA, and metabolic and hormonal profiles. Those who took the Phenomix test doubled their weight loss compared to the untested, according to Acosta, who is CEO. The company is in the process of deploying its product to 15 clinics nationwide to capture data, and it’s aiming to commercially launch at clinics by year’s end.
Medical doctor turned tech founder creating digital solutions for the business of health care
“The only reason the fax machine still exists is because of prior authorization,” says Dr. Jeremy Friese, who spent nearly two decades at Mayo Clinic as a practicing physician. In addition to his role as a leading radiology physician, Friese, who has an MBA in administration and management from Harvard Business School, also served as the associate chair of finance and, later, the senior medical director of global business solutions at Mayo. During that time, he experienced firsthand the massive time-suck and frustration that is the prior authorization process.
Two Minnesota companies are leading the way in cardiovascular technology
There are only about 3,000 transplantable hearts available each year in the United States, but the outlook for people in late-stage heart failure is improving thanks to advancements in left ventricular assist device (LVAD) technology. Originally invented in the ’60s, an LVAD is a mechanical device that attaches to the heart and pumps blood throughout the body. Today, the race is on to create the LVAD with the best possible outcomes for recipients. And it’s all happening right here in Minnesota.
The two leaders in LVAD technology—Medtronic, which has its operational headquarters in Fridley, and Abbott Laboratories with its Plymouth cardiovascular unit—both acquired LVADs via acquisitions in the past four years, have FDA approval, and are working rapidly to improve the devices and outcomes. Medtronic’s latest model is the world’s smallest LVAD with a less invasive implantation method. Abbott recently completed the world’s largest study on heart pumps to treat advanced heart failure. Both companies are seeing encouraging results.
Biotechnology company focused on gene-editing technology for healthier agriculture
Is Roseville-based Calyxt Inc. an agriculture company or a tech company? Yes; it’s both. Incorporated in 2010, Calyxt uses proprietary and gene-editing technology to create plants and crops that will produce healthier food. And the company’s leader, CEO Jim Blome, isn't a startup kid with a crazy dream, but an experienced industry veteran.
Its first product, high oleic soybeans, produces a soybean oil with lower saturated fats. The company is also working to develop a high-fiber wheat. The company is starting to see some sales, posting $3 million from soybean meal and oil for the third quarter of 2019, but it’s just the beginning of a much bigger vision. The company aims to revolutionize plant sciences and biotechnology to “develop plant-based solutions designed to support wellness and sustainability.”
Device and app applying smart technology to walkers
Caring for elderly loved ones is challenging, especially when you can’t be by their side all the time. But Fargo-based WalkWise has created a device intended to bring peace of mind to caregivers. Attached to the wheel of a walker, the device tracks and relays activity to an app, making it possible to see from afar if the user has been idle for a long period or is, for example, making frequent bathroom trips, which could indicate a urinary tract infection. WalkWise founder and CEO Peter Chamberlain says he hopes the device will promote active and healthy living among the elderly. WalkWise launched in 2016, raised $300,000 in a pre-seed funding round, and has been gaining customers throughout the country. In 2019, WalkWise participated in the first Techstars-powered UnitedHealthcare startup accelerator program. Early this year, WalkWise plans to roll out its smart walker device to UnitedHealthcare members. Chamberlain says he also plans on expanding partnerships and working with UnitedHealthcare to ramp up WalkWise’s data collection and analysis to better understand and improve overall senior health care.
On-demand industrial courier service
If Uber and a courier had a baby, it would essentially be Dispatch, says Ryan Hanson (left), who, along with co-founder Andrew Leone (right), is on a mission to modernize industrial delivery services and save businesses time and money. The app-based service allows businesses to arrange and track courier services in real time. Formally launched in 2017, Hanson says Dispatch saw nearly 500 percent growth from 2018 to 2019. Based in the Twin Cities, Dispatch is now available in 23 markets from Washington, D.C., to Las Vegas, and expects to add another 20 to 30 this year, while continuing to grow its staff of 255. To fuel that growth, Dispatch will be looking to add to its 2018 $7.8 million Series A funding round. Says Hanson, “We just want to keep growing and providing value to our customers.”
Available on iOS and Android
by Tess Allen, Burl Gilyard, Allison Kaplan, Dan Niepow, and Amanda Ostuni