For any business ecosystem to survive, the environment must be robust enough to support the mature firms, while providing the necessities that ensure future growth and development. Minnesota has a longstanding track record in healthcare and health technology that position the state as a global leader. Despite this, it is often undervalued for its sustained success leading the health tech start-up community worldwide.
This year has seen the Midwest region receive increased national attention for its thriving startup ecosystem. The health-tech community in particular, has been a hot topic. However, the majority of these publications have failed to further define the major players in the Midwest. Therefore, we investigated metrics surrounding health technology startup viability and success from 2012–2016 for each state in the Midwest. Our results show Minnesota leads the entire region when it comes to launching and succeeding as a health technology start up over the past five years.
From 2012–2016, Minnesota led all Midwest start-up ecosystems with $389.4 million dollars raised in Medical Alley. This was $98 million more than the next closest region, Illinois ($291.4 million).
Unlike the East and West Coasts, the Midwest has not historically produced a standalone state. This failure to describe the leading states within the Midwest prevents its leaders from receiving the national recognition they deserve and hinders future success in health technology innovation. If investors aren’t familiar a region, how can they invest efficiently? If entrepreneurs don’t know where the best place for success is, how do they identify where they need to be when they establish their companies? Therefore, we first described the Midwest in a state-by-state rank based on the total investment dollars raised by companies founded between 2012 and 2016 (figure 1). During this time, Minnesota led all Midwestern startup ecosystems with $389.4 million dollars raised. This was $98 million more than the next closest region, Illinois ($291.4 million). Given this, it is no wonder the term Medical Alley is synonymous with Minnesota!
Minnesota maintained its dominance of the region from 2012–2016 at $70.50 per capita. This was $47.70 more than the next closest state, Illinois ($22.8).
Presenting overall funding per state is commonplace, but it can also be misleading if the states being compared have disparities that create imbalanced comparisons. While Minnesota led the Midwest in overall funding, its comparatively larger population could potentially skew the true innovation activity when compared to other less-populous states. Using U.S. census data, we next looked at health tech investment per capita for each state (figure 2). Minnesota maintained its dominance of the region from 2012–2016 at $70.50 per capita. This was more than triple the investment raised by second place Illinois ($22.8)!
Minnesota founded more companies per million capita (5.43), which was 0.07 more than the next closest state, Wisconsin (5.36).
Leading in funding per capita helped to demonstrate that Medical Alley has been an active and successful region over the past five years. Another obvious metric to demonstrate startup success in each state is the number of companies founded. Overall, Minnesota ranked third in the region for number of health tech companies established from 2012–2016. However, as with funding, raw numbers can understate entrepreneurial activity. When we looked at the number of companies established per million capita (figure 3), Minnesota rose to the top spot in the region with 5.43 companies founded. Collectively, this shows Medical Alley has both the highest concentration of health tech entrepreneurs and the greatest success in funding in the Midwest over the past five years.
With over $519 million raised by companies through three quarters of 2017, the trend isn’t changing for Medical Alley. Factor in the dominant presence of mature global health tech leaders, it is clear there is no better place to be than Minnesota if you want to leave your mark in the healthcare and health technology community.
To dig deeper into the health technology startup and investment activity in Medical Alley, be sure to utilize the Medical Alley Interaction Network Map tool we have created.
· Crunchbase pro was utilized to identify companies within the Midwest region which included: Minnesota, Iowa, Wisconsin, North Dakota, South Dakota, Missouri, Ohio, Illinois, Indiana, Kansas, and Michigan.
· Companies were limited to those having headquarters within the identified states.
· Categorical tags were used to identify health technology companies and included: Healthcare, Medical, Medical Device, Pharmaceutical, Health Diagnostics, Biopharma, and Health Insurance.
· Companies were required to have funding rounds ≥ 1 and total funding amount > $1. Limitation parameters excluded companies which raised debt or equity funds post IPO.
· Companies listed within each region were reviewed by research staff to ensure headquarter and categorical accuracy.
· Hospital and other health systems, consulting firms, and companies whose products/services were not related to human application were excluded.
· Filters were applied to only analyze metrics reported on between the years 2012–2016.
· State population data for per capita analysis was acquired from U.S. census data for the year 2016.