Minnesota companies attracted a record $1.86 billion in venture capital in 2020, up from $1.27 billion in 2019, in a year that also set a national record for investments in young growth companies, according to PitchBook and the National Venture Capital Association.

"The startup ecosystem played a critical role in the technology, services and health care support the country has relied on" since the coronavirus rolled through the country, the head of the venture association, Bobby Franklin, said in a statement.

He added there's plenty more money available for entrepreneurs with ideas. "VC investors are starting the year … with ample dry powder to put to work," Franklin said.

Minnesota companies receive less than 1.5% of the nation's venture capital, which lands mostly in East Coast and California health care and tech hubs.

"Last year Minnesota ranked 12th among states, a level achieved only once [in 2009] over the past 25 years," Jeff Tollefson, chief executive of MnTech, the trade group for Minnesota tech firms, said in an e-mail.

"In 2015, Minnesota was ranked 19th," he said. "The trend is positive. Keep in mind that California, New York and Massachusetts accounted for 74% of all VC funding and the Top 10 states drew 89% of funding in 2020."

Minnesota recipients ranged from health insurer Bright Health, which attracted $500 million last year, to EmpowerU, a small online mental health site for high school students led by a former business owner and high school counselor. EmpowerU raked in $1 million.

Bright Health is a specialty health insurer that was started by several UnitedHealth Group executives. It has raised a whopping $1.5 billion in venture funds since 2016 from the likes of Tiger Global Management, Blackstone, Baltimore-based T. Rowe Price, NEA and Bessemer Venture Partners.

Bright Health is led by Mike Mikan, a former UnitedHealth Group executive and venture capitalist, and has expanded both organically and with acquisitions to build a "digitally integrated health care company."

Bright Health covers people who buy coverage under the Affordable Care Act (ACA) as well as selling Medicare Advantage plans, in which seniors opt to receive government benefits via privately managed care companies.

Bright Health manages cost with IT-gathered data and limiting provider networks to make a buck off these government-based programs.

Firms such as Bright Health often eventually sell shares to the public, or are eventually sold to huge insurance consolidators, such as UnitedHealth Group.

On the other end of the spectrum is Katie Dorn, a 1980s-vintage banker and successful entrepreneur who followed her heart to a 25-year career as a high school counselor. With her partners she has raised $1 million for EmpowerU.

They have spent years, until recently with no pay, developing an online counseling service with 35 high schools.

It now services more than 1,000 students. The timing worked out when the pandemic forced many kids to be cut off from school and friends.

"EmpowerU delivers support at a fraction of the cost of therapy," Dorn said recently. "As a licensed school counselor and therapist, I know how desperate educators are for cost-effective tools."

The company last year attracted $1 million in equity from Capita3, a Twin Cities venture boutique that focuses on female-led firms, Minnesota-based Great North Labs and education-finance firm ECMC.

Education Week reported last year that 66% of high school principals are searching for effective solutions to battle escalating levels of student anxiety, avoidance and depression.

EmpowerU offers 12 weeks of daily skill-building lessons and one-on-one counseling that averages about $350 per student.

"There's a place for therapists," Dorn said. "We just help schools reach more students every day with an online program that works for most."

Owatonna-based Revol Greens, which raised $204 million last year, uses hydroponics to produce indoor-grown vegetables raised close to local consumers.

Revol and others feed rising demand for produce grown in climate-controlled environments that doesn't need to spend days on the road from California or Mexico.

Revol plans to build a third greenhouse in Texas, its third expansion since 2018. Revol said it will be the largest greenhouse in the world, 20 acres with room to triple in size.

Revol Greens is also converting a 16-acre tomato and green pepper greenhouse to one for baby lettuces in Tehachapi, Calif.

It previously expanded its original greenhouse in Owatonna from 2 to 10 acres. Revol has plans for two more greenhouses in the next three years.

There are several methods for growing vegetables indoors, including hydroponics and aeroponics.

Revol Greens uses a closed-loop hydroponics system. Rainwater and snowmelt from its greenhouse roof are captured then stored in an enclosed, on-site holding pond. Workers test the water daily and treat it with a chemical-free UV sterilization process.

Revol Green's founders also started Bushel Boy, grower of greenhouse-bred tomatoes.

"High-tech greenhouses give us the ability to return to regional food systems with farms that produce our food near our communities," said CEO David Chen of Equilibrium, a VC investor in Revol.

Meanwhile, Arctic Wolf, an expanding IT-security firm that operates from Eden Prairie and Silicon Valley, raised $200 million in the fourth quarter of 2020.

That came after a $60 million round for Arctic Wolf in March.

Neal St. Anthony • 612-673-7144

Patrick Kennedy • 612-673-7926