Ryan Broshar wants the Twin Cities to become the startup capital of the North
Ryan Broshar wants to light a fire under entrepreneurs looking for tech startup funding. The founder of Minneapolis-based venture capital firm Matchstick Ventures (formerly Confluence Capital) would like to put the Twin Cities on the map as the “startup capital of the North.”
Since its inception in 2013, Matchstick has invested in 15 tech startup companies locally and across the country. Among those are Elevate, a customer service survey platform for restaurants and retailers, and Docalytics, a content marketing, analytics and tracking platform.
“You start with an idea, a friend and the back of a napkin at a bar,” Broshar says of the typical startup life cycle. Then comes sweat equity and personal capital. Once a clearer plan forms, bootstrapping follows. At this stage, entrepreneurs often turn to the “three Fs” — friends, family and fools — for funding. Angel investors are also an option, if they believe in the pitch and the entrepreneur as an individual.
Matchstick tries to identify early trends in the marketplace and make investments in ventures with an eye toward the future. It looks for entrepreneurs who have developed a product and landed a few customers. The firm funds earlier than most venture capitalists do, a boon for those who struggle to find funding in the risk-averse Minnesotan market.
“Historically, it has been tough to get early-stage start-up financing for companies,” Broshar says. “However, that’s the case in a lot of markets across the country. It’s not unique [to Minnesota]. I see a lot of good signs of that changing with more people getting involved and investing in early-stage start-ups. I think the tide is turning for that.”
“There is a little bit more of a conservative mindset in Minnesota,” says Seth Levine, managing director at venture capital firm Foundry Group in Boulder, Colorado. Levine advises Broshar on topics from management structure to putting money to work. Levine says when in Minnesota, he often hears investors ask entrepreneurs where they went to high school as a form of social validation. “There’s this assumption of, ‘How close to my circles are you?’” Levine says. “I think Minneapolis needs to get away from that. It doesn’t matter.”
Minnesota is also not as geographically accessible as, say, San Francisco, where entrepreneurs can walk down the street to the next firm if they aren’t approved for funding. “It’s more dispersed [in Minnesota] but that’s why we’re in technology,” says Broshar. “Your customers and employees are international; there’s no reason why you shouldn’t be looking for your funding internationally as well.”
Broshar is no stranger to entrepreneurship. He launched his first business, University Guide, as an undergraduate at the University of Minnesota, and sold it in 2008. He also co-founded BoomBoomPrints.com, which sells customizable nursery art; is the founder of Beta.MN, an organization that supports the local start-up community; and the founder of the annual Twin Cities Startup Week, scheduled this year on September 8-13.
“There’s not a lack of good startups,” Broshar says. “There was more a lack of start-up capital, and we thought we could help fill that. We’re using Matchstick as a catalyst for this market beyond our investment. That’s also why we started Beta.MN and Twin Cities Startup Week — we’re trying to get the momentum going in the right direction.”
Levine considers Broshar’s community-focused attitude a major reason why Matchstick has a promising future. “Ten years ago, people weren’t necessarily thinking about how they could contribute first. They were thinking, ‘I need a job or a consulting gig.’ That’s not the best way to start and foster an entrepreneurial system,” Levine says.
In April, Matchstick partnered with coworking space CoCo to combine resources and give entrepreneurs a better understanding of and exposure to startup funding. Matchstick also headquarters at CoCo. “We’re trying to be very accessible; our space is right on the floor,” Broshar says. “We see a lot of synergy with CoCo members. A lot of our startups start at CoCo and they grow there, so we want to be part of that community where everything is happening. For CoCo, it makes sense as well because the members have the added benefit of unsolicited interactions day-to-day.”
Matchstick also has a Tech Partners program, through which investors interact with, mentor and advise entrepreneurs. “When we make an investment into a company, not only are we providing capital for their idea, we can also help with some of the expertise side of it through our Tech Partners,” Broshar says.
For entrepreneurs aspiring to be more appealing to investors, Levine offers this advice: focus on the “why,” not the “how.” And, more than anything, “You need to be fanatical about your product,” he says.
Broshar concurs:“If you’re a really good business, if you’re a dedicated, stubborn entrepreneur willing to fight tooth and nail for your company, and you’ve got a solid business plan, those companies are getting funded.”