Target Corp. is on the prowl for the next great retail start-ups.
It is becoming the first partner in the Twin Cities for Techstars, a company that has developed an impressive track record in several other U.S. cities of helping tech start-ups grow into thriving firms.
Techstars will set up an office for the next three years in the headquarters of the Minneapolis-based retailer, where it will run 13-week boot camp-like programs, known as accelerators, to teach start-up companies about business, help them overcome hurdles and even provide them with investment cash.
It has run similar programs, often with help from other major companies around the country, for nearly a decade.
On Monday, it will start taking applications for the first retail accelerator at Target. Based on programs Techstars has helped elsewhere, hundreds of ambitious young companies are expected to apply.
In the process, Target hopes to find some good ideas and energize both its own company and the local technology community. "Not all of the best ideas in the world exist solely within our four walls," said Jamil Ghani, a Target executive.
The companies that are selected will move to Minneapolis and work out of Target's offices during the program. After it is over, about 50 to 70 percent of the firms that have participated in Techstars programs in other cities wind up either setting up their offices or keeping some sort of presence in that city.
"For Target to be successful here in Minneapolis, we have to build that community," said West Stringfellow, who is part of Target's first entrepreneur-in-residence program and pushed to bring Techstars to Target. "It's our responsibility to take a leadership position."
Earlier this year, Hidrate, a company formed by University of Minnesota graduates that makes a smartphone-connected water bottle, participated in a Techstars accelerator at Sprint Corp.'s headquarters in Kansas City. "These people are from Minneapolis, but they had to go to Kansas City to get that information," Stringfellow said.
Founded in Boulder, Colo., in 2006, Techstars formed as a way for investors to more closely advise start-up companies. Since then, Techstars has run about 50 accelerators and mentored more than 600 companies around the world. In addition to Sprint, its previous corporate partners have included Disney, Nike and Ford.
Participants in a Techstars accelerator get an investment of $20,000 and the possibility of an additional $100,000. The firm also assists start-ups by tapping into a network of 100 seasoned investors and entrepreneurs.
While many start-ups fail, about nine out of 10 companies who have gone through Techstars' programs are either still active or have been acquired, according to the company. "The mentor ecosystem we cultivate to provide expertise to the start-ups is what makes the difference," said Daniel Feld, Techstars' vice president of operations. "It's the magic in these programs."
One of Techstars' more recent success stories is a Boulder-based company called Sphero, which went through its Disney accelerator last year and created a toy version of the BB-8 robot that is a character in the upcoming "Star Wars" film.
For the Minneapolis-based accelerator, Target is paying an undisclosed amount to cover overhead costs and will provide the work space for about 10 staff members from Techstars as well as for the start-ups. Applications will be due in mid-March and the first cohort of start-ups will start the program in June.
Target and Techstars are seeking start-ups with a retail angle, but they have few other limits. Firms could be working on anything from back-end technology to a shopping app to something to do with clothes or food, executives said.
Target hasn't invested much in start-ups in the past, but it may invest with some of the firms that go through the Techstars accelerator, said Casey Carl, Target's chief strategy and innovation officer. "I anticipate there are a lot of investments that can be had, but we'll evaluate it when they come through the process," he said.
In 2013, Target invested in a start-up called Cosmic Cart, which was working on a universal online shopping cart. That firm even set up offices inside of Target's headquarters for a few months. Target later parted ways with Cosmic Cart, but Carl said it was a useful experience.
He said Target also aims to take advantage of its work with Techstars to improve an accelerator program it launched last year at its offices in Bangalore, India.