The state of technology in Minnesota

Updated: May 6, 2012 - 6:31 PM

As the cloud and mobile devices guide personal activities, our technology cluster is finding opportunities.

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Redbrick Health founders drew larger venture capital financing this year.

Photo: Jerry Holt, Star Tribune

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Did you know that 46 percent of adult Americans now have a smartphone, according to Pew Research?

And, Flurry Mobile Analytics estimates that 45 percent of our media consumption time is spent interacting with our phones and the Web.

Business has also moved to the Web in a big way. Our enterprises sell differently, communicate expansively and track information robustly. Storage, security and software engineering -- long Minnesota strengths -- are being leveraged in exciting and creative new businesses, as well as large businesses.

Large companies are moving more and more to the cloud. Midsized firms are growing or merging in exciting new ways. And start-ups are morphing, growing and finding capital to realize new visions.

Of course virtually all businesses are moving to the Web, managing social media, paying attention to mobile and leveraging technology. Let me highlight a couple of Minnesota large company examples -- UnitedHealthcare's Optum is moving hundreds of its health care product and service offerings to the cloud in order to better serve customers. Dell Computer has added 500 jobs in Minnesota in just the past year. Global tech giant Thomson Reuters has major operations in Eagan. Even this newspaper has invested in a robust app and has become perhaps our state's most visited website.

We also continue to see strong tech employment at e-commerce and SaaS firms (that's "software as a service") such as Digital River and SPS Commerce.

On the emerging company front, tech investing in growth companies and start-ups doubled in 2011 over 2010 -- bolstered by the Minnesota Angel Tax Credit and a rebounding economy. The total dollars invested in Minnesota tech companies in 2011 were $126 million -- more than double the $60 million invested in 2010, according to Tech.MN, which tracks funding.

Last year saw larger venture capital financings go to health care IT players like RedBrick Health and Ability Network, as well as nanotech pioneer Cima NanoTech. We also saw $3 million to $10 million rounds raised by data, Web and commerce start-ups such as 8thBridge, OptiMine Software and Enstratus. The number of companies financed has also increased, with more than 60 firms raising money in 2011. More than half of these were funded as part of the Minnesota Angel Investment Tax Credit.

We are off to a strong start in 2012 with Minneapolis-based cloud storage upstart Code 42 Software garnering Minnesota's largest venture funding in years, raising $52 million in January.

Mergers and acquisitions have been a growth engine for tech jobs around these parts as well. The last 14 months have seen several $100-plus million acquisitions of local tech players. Palo Alto-based cloud and security mega-player VMware acquired New Brighton-based Shavlik Technologies; SAP subsidiary SuccessFactors purchased Jobs2web; Amcom Software is also under new ownership; and Dell Computer bought Compellent for close to $1 billion -- all in 2011. Key stat here: In all of these acquisitions the buyers have been adding jobs in Minnesota, leveraging our talent and knowledge to build here.

Minnesota has also become a very active gathering place for tech-savvy programmers, developers, entrepreneurs, investors, seekers and executives. There are dozens of tech forums, social media forums, interactive media forums, creativity forums, accelerators and meetups taking place almost daily. Some recent examples: MHTA, MinneBar, The Collaborative, MIMA, Pecha Kucha, Drupal Camp, eyeo, Predictive Analytics, MinneWebCon, Andriod Camp, Mobile March, MinneWIC, MN Cup, Startup Weekend, Ignite, Minnov8, Tech.MN, The Line, Cleantech Open, TiE, Mojo, Project Skyway and Economic Gardening.

These groups, forums and blogs serve as a lubricant for our tech sector and their sheer proliferation is a strong sign of a vibrant tech-centric cluster.

One more trend: The app economy, which did not exist four years ago, is now estimated to be a $20 billion industry in the United States that employs 466,000 people. Minneapolis-St. Paul is estimated to be the 14th-largest metro area for those jobs, with large players like our Fortune 500 folks and upstarts like Red Stamp and 8thBridge building businesses on apps and commerce.

All in all, a compelling story for Minnesota's tech industry. From our halcyon days of pioneering supercomputing in the '70s with names like Control Data, Cray and Sperry; to our storage-heavy tech sector in the past couple of decades; to today's resurgent growth -- the one constant has always been our talent, engineering, creativity and technology innovation.

Here's to the next couple of decades.

ABOUT THE AUTHOR

Dan Carr is CEO of The Collaborative, a Minneapolis-based membership organization of growing companies, entrepreneurs, investors and advisers who aim to build better, more-profitable Minnesota companies. The Collaborative is hosting a tech.2012 breakfast program on May 22 featuring several of the people and entities mentioned here. For more information or to contact Carr visit www.collaborative.net.