RAEDI aims to grow region's startup scene with $1 million investment fund
Rochester Area Economic Development, Inc. is set to launch a $1 million angel investment fund in the first quarter of 2017.
Relying solely on local money, the organization has raised about 90 percent of the funds needed to get started. The goal is to invest mainly in southeast Minnesota-based startup companies.
While angel investors, mostly from the Twin Cities, do actively seek out Rochester-based companies, it marks the first time a group of local investors have been pooled together on an initiative of this size, said Xavier Frigola, director of the Mayo Clinic Business Accelerator.
"Imagine that some of the companies here in the area that are today small, but are making it through the rounds of financing, ever becomes a good success and becomes a 100-person company," said Frigola. "Well, that's a win that was relatively cheap in terms of financing and help that we gave them to land into Rochester."
The for-profit investment fund is in part a result of an entrepreneurial push than began to take shape about five years ago. It was at that time that both Mayo Clinic and the City of Rochester began to recognize that in order for the clinic to be competitive on a national level, it would have to be more supportive of entrepreneurship.
"Before that, if you were a Mayo scientist or physician, and you had an idea that could be a startup, you could not become an entrepreneur ... and they realized that in other competing large medical centers, that was allowed," Frigola said in an interview with Med City Beat.
He added, "So when they were recruiting top-notch people, and those top-notch people probably have different employment options, it was hindering their recruitment opportunities."
Now, there are about two dozen startups in the business accelerator; not to mention entrepreneurial activity happening elsewhere in the city in places like Collider, a coworking space in the newly-renovated Conley-Maass-Downs building.
"We have at least 100 ideas flourishing," said Frigola. "And some of them will make it to the next round and become a real company and start hiring people, and some won't. But none of that was here before."
Frigola added that it is critical that growth in the startup ecosystem — particularly in the fields of life sciences and technology — runs parallel with large investments being made by Mayo Clinic.
"If you combine that together with the power that Mayo and Discovery Square can have to bring more established, larger type of businesses, I think that one does not exclude the other."
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