Funding slowed in 2023 after a couple solid years of sustained growth, but many Minnesota startups are still poised to weather the storm.
Startups based in Minnesota raised about $725 million in venture-backed funding last year, a 44% drop from the $1.3 billion raised in 2022, according to a Minne Inno analysis of Crunchbase data that includes pre-seed, seed, series, venture, angel and convertible note funding rounds.
While it's been a tough year for some, other startups saw massive successes. Niron Magnetics, a previous startup to watch, made Time magazine's Best Inventions of 2023 list while Ecolab Inc. and Techstars finally brought a local company on to their Farm to Fork accelerator.
Fledgling med-tech companies brought new treatments online, ecosystem boosters have built up infrastructure to help other startups achieve success, and founders have brought their sustainability efforts toward commercialization.
Here are Minne Inno's 10 startups to watch in 2024.
Carba Inc.
Minneapolis-based Carba Inc. won the MN Cup Grand Prize last year.
The startup is developing technology for permanent carbon removal, and it brought home $85,000 for winning the cup. The tech converts plant-waste carbon dioxide into a solid charcoal-like substance that can be sequestered underground for thousands of years.
Carba is scaling up its team through 2024 and launching its larger reactor, which can process up to 45 tons of biomass per day and deliver 15,000 tons of CO2e, or carbon dioxide equivalent of another greenhouse gas, annually. It hopes to close on its funding round early in the year.
The company just moved to the Waste Management sanitary landfill in Burnsville and will kick off full-scale operations in the summer.
Its goal is to remove a billion tons of carbon dioxide from the air by 2035.
Accelerated Care Solutions
Husband-and-wife duo Mike and Lori McGuire come from a long background in health care. Lori McGuire alone has served senior care facilities for at least three decades. She’s seen firsthand how burnout has impacted the industry's workforce.
The McGuires came up with an answer to that burnout: Accelerated Care Solutions creates a telehealth platform that acts as a sort of virtual nurse triage and also helps senior facilities with revenue optimization and improved workflows.
When the duo talked to the Business Journal in August, the company was on track to exceed seven figures in revenue just a few months after it launched. It had captured about 2.6% of the state’s market share by serving 30 senior care communities representing about 1,650 residents.
The startup chose to briefly stop its growth to make sure it was stabilized before it expanded further. That growth trajectory is expected to continue into 2024 as Accelerated Care Solutions gets its legs under it for the long haul.
Herself Health
St. Paul-based women’s health care provider Herself Health opened three clinics in its first full year of existence.
The startup, which launched in 2022, is focused on providing care to women over 65. It brought home $33 million across two fundraising rounds in its first full year. Those funds will help it expand its workforce, virtual care and community engagement offerings.
Herself Health's services address a variety of health and wellness issues, such as mobility, social isolation, mental health, bone health, heart health and brain health.
Its locations are in St. Paul's Highland Park neighborhood, southwest Minneapolis and Crystal. The southwest Minneapolis location at 5450 Lyndale Ave. S. opened in December, well ahead of schedule.
Last summer, Herself Health said it was eyeing potential expansion to one market beyond the Twin Cities in 2024.
“In the few months since our launch, the incredible interest from patients clearly demonstrates that this model was desperately needed,” CEO and co-founder Kristen Helton said in a statement last summer.
Francis Medical Inc.
Francis Medical Inc. is treating prostate cancer using water. The Maple Grove-based startup kicked offits Vapor 2 study, announced in July, and expects to treat 235 patients across 30 U.S. clinical sites, including Mayo Clinic, University of Minnesota and Minnesota Urology.
As 2025 approaches, the startup will submit a 510(k) to obtain FDA approval and begin marketing the technology in the U.S.
In 2027, the startup will seek more advanced regulatory approvals and could be the first prostate cancer product of its kind on the market with a PMA — or premarket approval — label.
Francis Medical's Michael Fredrick was a Business Journal CFO of the Year honoree, recognized for keeping the company financially sound through the pandemic. He helped Francis Medical raise $25 million in Series A financing and $55 million in Series B financing while growing the company's team from 12 to 33 people.
Impacks
St. Cloud-based Impacks aims to simplify school shopping. After nearly 500% growth from 2021 to 2022, the company has been focused on “critical foundation building,” according to CEO and co-founder Clare Richards.
Impacks acts as a one-stop virtual shop for parents acquiring school supplies. It has a customized portal page that lets parents bundle their purchases and finish back-to-school shopping in under a minute.
Impacks hired three full-time employees and four part-timers, set up a 10,000-square-foot warehouse, and implemented an innovative fulfilment system. In 2024, Richards said Impacks should be connected with 450 school partners, a number of district partners for purchasing bulk supplies, and further partnerships with nonprofits and for-profit organizations for school supply drives and the like.
Between donations from parents, community members and the Impacks Donation Match, the company has distributed$40,000 in donations to school partners across the Upper Midwest since launching. It’s also debuting a new activity kit in the Greater St. Cloud area.
This month, Impacks is launching a large-scale campaign with Loyola University in Chicago to raise $100,000 to support 5,000 migrant students with critical supplies.
Sonex Health
Eagan-based Sonex Health uses ultrasound-guided therapies to treat orthopedic conditions that affect the extremities, like carpal tunnel and trigger finger.
Usually, those conditions are performed in a hospital or ambulatory surgery center. Sonex devices used under ultrasound guidance — meaning it's not invasive — let physicians move the procedures out of surgery centers and into cheaper office-based procedure rooms, and patients can return to their daily life much more quickly.
The company crossed a series of milestones last year: It closed on a $40 million Series B fundraise, completed enrollment of its TUTOR clinical study, it started the ROBUST clinical study, and treated over 25,000 patients with carpal tunnel syndrome.
Sonex was co-founded by former Mayo Clinic physicians Darryl Barns and Jay Smith, who launched it out of the Mayo Clinic Business Accelerator Program in 2014. Between 2021 and 2022, the company grew by about 65%.
This year, it will complete follow-up of the ROBUST clinical study and kick off the MISSION clinical registry to evaluate how effectively the ultrasound-guidance tech treats carpal tunnel syndrome.
Claros Technologies
Michelle Bellanca spent more than 20 years working for 3M Co., a manufacturer that gave rise to PFAS, a series of "forever chemicals" that don't break down in the environment. Now she’s CEO of Claros Technologies, a startup with a focus on total destruction of the forever chemicals.
Claros spun out of the University of Minnesota in 2017, and it’s now on the path toward commercialization. The Minneapolis-based startup’s technology breaks the carbon fluorine bonds of PFAS using a photochemical process, which returns the chemicals into their natural basic elements and harmless byproducts.
Many of its customers are companies named in the many PFAS lawsuits alongside Maplewood-based 3M.
Claros is deploying field systems and has competed for 3M’s money through the Minnesota Pollution Control Agency. It more than doubled in size from 2022 to 2023 and expects a continued ramp-up throughout this year.
Cadre
Luke Wendlandt successfully built up addiction-recovery program Northstar Behavioral Health, and now he's in his third year building Cadre.
The St. Paul-based mental health and wellness app offers on-demand content for people who are struggling with their mental health. During the 2022 Twin Cities Startup Week, the company won the Emerging Startup and Bootstrapper awards at the Minnesota Startup Awards.
The company is on the heels of a year of building — “learning, pivoting, iterating and gaining a clearer understanding of our customer needs,” Wendlandt wrote in an email.
Cadre plans to use 2024 to dive deeper into market segments that demand more mental health services. Wendlandt said the company has identified areas of growth for its current platform, including caregivers of all kinds, people living with disabilities, and those who are facing grief and loss.
“We are poised to impact more lives than ever in 2024, and that's what we're here to do,” Wendlandt wrote.
ILT Studios
ILT Studios helps keep the St. Cloud startup ecosystem afloat.
The startup has graduated more than 500 entrepreneurs across 27 cohorts over the past three years — 73% were from Greater Minnesota, 52% were women and 34% were people of color.
That’s what ILT does: supports "underestimated" entrepreneurs in underserved communities. Nick Tietz launched ILT Studios in November 2020.
ILT recently signed on for multiple partnerships that will likely set it on a steep upward trajectory. It has a two-year contract that was announced in December with the North Dakota Department of Commerce to support small businesses, and it partnered with Duluth-based Northspan to help develop minority-owned businesses.
ILT will be the official provider of education materials for disadvantaged entrepreneurs throughout the state of North Dakota.
Leslie Dingmann, business development director with Greater St. Cloud Development Corp., said ILT is set to educate another 500 entrepreneurs in the next two years. The startup is also considering starting a nonprofit foundation and an early-stage venture fund to support the efforts.
r.World
R.World founder Michael Martin has advised the likes of U2 and Dave Matthews Band on their sustainability effort.
His company, formerly r.Cup, offers a reusable cup system for live event venues. A venue operator sets up their account and r.World delivers the cups to the event. Attendees throw the cups into a return bin — rather than the trash — and r.World picks them up afterward. R.World’s services have been used at local venues like Target Center and First Avenue, and it’s looking to expand its reach in 2024.
The Minneapolis-based startup raised over $3.6 million in seed financing in exchange for equity from 42 investors. Funds will be used to build out its cup wash hubs in various cities, pay for inventory and grow the team.
The startup got its start at a 2017 U2 concert at U.S. Bank Stadium and has since worked with over 100 venues across 75 cities, 35 states and 12 countries, mostly by touring with artists like Bon Jovi and the Rolling Stones. The company estimates the live event industry in North America uses more than 4 billion single-use disposable cups per year.
An additional funding round could help r.World bring fully operational hubs into four to 10 other cities, including the Twin Cities, sometime this year.
