Minneapolis has again ranked second among the best Midwest cities for startups, according to an annual listing by an early-stage venture capital firm in Chicago.
The list, developed by Chicago-based M25 venture firm, compares the startup ecosystem of 59 cities, ranking them based on 27 factors within three categories: startup activity, access to resources and business climate.
You can see the full list here.
Minneapolis, which includes several surrounding suburbs, took second place behind Chicago for the fifth consecutive year since the list started in 2017. This year, it scored high in areas like big outcomes — the number of exits and funding rounds of at least $50 million — and startup momentum, which measures the change in startups since the list started.
The score for startup momentum is an "encouraging sign for Minneapolis that will be likely continuing to grow and do well for the tech economy,” Victor Gutwein, founder of M25, said in an interview.
M25, which focuses on early-stage technology companies in the Midwest, has made a total of nine investments in Minnesota startups since 2015, he said.
Minneapolis also scored high for the number of venture capital firms as well as the number and quality of its accelerators and incubators. The analysis highlighted significant funding raised by several Minneapolis-based startups, including When I Work, which has raised $200 million, as well as Arctic Wolf, Suma Brands and Branch.
Minneapolis scored low on tax climate and labor costs, the data set showed. High labor costs mean it can be more expensive to scale in the market, Gutwein added.
But the Minneapolis startup ecosystem is impressive, Gutwein says, due to the diverse set of industries that have garnered success stories.
“A lot of people try to pigeonhole Minneapolis into maybe a few different industries but … we've seen a lot of success across categories,” he said.
Here are the top 20 Midwest cities for startups, according to M25:
1. Chicago
2. Minneapolis
3. Indianapolis
4. Pittsburgh, Penn.
5. St. Louis
6. Columbus, Ohio
7. Detroit
8. Ann Arbor, Mich.
9. Madison, Wis.
10. Cincinnati
11. Kansas City, Mo.
12. Cleveland
13. Louisville, Ky.
14. Milwaukee
15. Bloomington, Ind.
16. Lafayette, Ind.
17. Lexington, Ky. (tie)
17. Omaha, Neb. (tie)
19. Akron, Ohio
20. South Bend, Ind.
