Steve Grove: It’s time for Minnesota to invest in innovation

When it comes to growing the economy, the old adage is true: You get what you pay for.

For years, Minnesota has invested hundreds of millions of dollars in supporting targeted industries in the state — in 2019 alone we’re set to spend over $600 million in grants, tax credits, and other programs to support agriculture, manufacturing, mining, and forestry. These investments are important to grow and build businesses in these industries.

But what are we spending to grow our startup sector, which has the greatest potential to bring new jobs and build the next big companies of the future?

At present, the answer is close to zero.

That’s why Gov. Tim Walz’s Budget for One Minnesota includes targeted investments to build and grow the state’s startup ecosystem and innovation sector. As commissioner for the Department of Employment and Economic Development, I believe these investments are critical for our state to recapture the leadership we once held in the innovation sector.

The truth is, we were once a state that led the nation in technology. We were home to the super-computer revolution and drew some of the top engineering talent in the country.

But today’s innovation ecosystem in Minnesota lags behind the national leaders. Why is that? We’ve spoken with historians, entrepreneurs, and venture capitalists across the state, and what we hear is that is that today’s startup landscape in Minnesota often suffers from risk aversion, a lack of educational opportunities, and a disparate ecosystem for growth.

While we’re lucky to have such a preponderance of Fortune 500s in the state, strong technology talent isn’t as incentivized to start their own businesses when safer career options exist. That’s a problem if we want to grow the businesses of the future in our state.

With those factors in mind, here are the investments the governor’s budget lays out:

 

First, we propose creating an initiative called the Minnesota Innovation Collaborative, an umbrella program to support the startup ecosystem in the state.

It includes incentives to encourage people to take the risk to start something new, like health insurance subsidies that make it easier to leave your full-time job to become an entrepreneur. It includes statewide educational initiatives to teach would-be startup founders how to build a business, pitch a venture capitalist, or grow a technology team. And it includes the development of an office within state government but based in the startup community that will run outreach efforts and a research initiative to study the future of work in our state.

The idea is to signal to the community and the country that Minnesota is open for business and ready to welcome and grow more startups.

 

Second, we need to bring back the Angel Tax Credit, a program Minnesota pioneered eight years ago but that lapsed during the last session.

This credit led to $421 million in venture capital investment, and in its most recent year over half that money came from investors outside of Minnesota.

Twenty-nine states have since adopted a similar programs, so we’re already losing the attention of investors who are looking elsewhere for tax advantages. We need to bring the Angel Tax Credit back — and make it easier for underserved populations and startups in Greater Minnesota to take advantage of the program, which we’ve done by including new stipulations that make investments in those communities even easier.  Add additional support and training resources that could be provided by the Minnesota Innovation Collaborative and our chances of success are even greater.

 

Lastly, we propose making the investment needed to finally get broadband internet access to the entire state.

You simply can’t participate in the innovation sector — or almost any sector of the economy today, for that matter — without high speed access to internet. The governor’s proposal to bring back broadband grants to reach that last mile of service in Minnesota will make us a model state where you don’t have to move to a metro area to participate in the 21st century economy.

These initiatives to grow Minnesota’s startup and innovation sector are important not just for people who work in these fields. Research from the University of California, Berkeley shows that for every new job created in the innovation sector, five additional jobs are created around it.

Talk about a return on investment.

Some might argue that involving the state in the startup ecosystem isn’t a good use of taxpayer dollars – and that the innovators and entrepreneurs should lead the way. We couldn’t agree more – that’s why our plan is careful to ensure that state government isn’t picking winners and losers, but rather filling gaps in education and financial incentives that would never be filled by the private sector.

State governments in Massachusetts, California, and Texas have been doing that for decades — which is why their innovation sectors are so strong.

We can get there, too. Minnesota has a proud history of adapting to changes in the economy to improve our quality of life and keep us on the cutting edge. Our post-WWII growth in manufacturing transformed our state economy and put us in the top half of wages in America. Our supercomputer industry in the mid-20th century led to extraordinary growth and set the stage for the state’s medical technology industry.

Now is the time to make another inflection by investing in our startup and innovation sector. The future of our economy and labor market depend on it.

Steve Grove is commissioner of the Minnesota Department of Employment and Economic Development.

 

 

 

 


Read The Rest at Twin Cities News Feed- (opens a new tab)





Pages

Archive