Features

Most Likely to Succeed in 2017

By Morgan Mercer
11-22-2016

Welcome to our first annual people’s choice awards for the Startup or New Business Launch Most Likely to Succeed in 2017. This project arises out of the convergence of three phenomena. First, there is a visceral sense that something is afoot in Minnesota in terms of the energy and excitement of startups. The Lutefisk Corridor may not eclipse Silicon Valley, but perhaps we can give it a run for its money. Second, there is also a feeling that the experts don’t know everything, so why not give the crowd a chance to determine the best of the best? Finally, we all want to know what’s going to happen next, so again, let crowd prognostication rule!
 

Advertising & Marketing
Data
Education
Food & Beverage
Health
Products & Technology
Professional Services
Retail
Software
Most Likely to be Acquired
Most Likely to be Disruptive
Startup Investors Pipe In

Advertising & Marketing

Winner

PubPass
Saint Paul
How often can you nab a pint of beer for $1? With PubPass, you get 25 chances. Buy one of the small, passport-style books for $25, and then get a free pint of beer at 25 different pubs. You’ve got all year to do it, too. The 2016 lineup brought back favorites like Red Stag and Brit’s Pub, and added newcomers like Flat Earth, Indeed Brewing and Tin Whiskers. Each year PubPass cycles 5-10 new locations into its lineup from the waiting list.

Since making its Twin Cities debut in 2014, PubPass expanded to Milwaukee and Denver. Next it has set its sights on beer-loving cities like Portland, Tampa and St. Louis. One last bonus: $1 from each PubPass is donated to FINNEGANS Community Fund to reduce hunger in local communities. Just another reason to feel good about all the drinking you’ll be doing.

Honorable Mentions

DAYTA Marketing
Waite Park
Four months after starting an internship running social media management for an orthopedic clinic, Luke Riordan started his own company. He was still in college. Since launching in 2011, the social marketing company has grown to a team of 22 millennials and digital natives who bring in more than $1.2 million in revenue each year building social media strategies for businesses.

Humdinger & Sons
Minneapolis
Founders Nicolas Will and Andrew Berg built careers at big agencies in San Francisco and New York working with iconic brands like Nike, Google and American Express, but they decided to return home and set up shop. They built an intentionally small and nimble agency that seeks out ambitious startups or tech companies and launches them into success through well-produced videos and animation.

Data

Winner

ApriHealth
Rochester
Every year clinics collect massive amounts of data. But without the tools in place to analyze that data, electronic medical records are little more than a heap of untapped information. ApriHealth brings health care providers out of the dark by using an analytics platform that allows them to see previously undiscovered insights. By aggregating large, disparate health care data sets, ApriHealth helps clinics improve care, minimize costs and prevent wasteful practices. The first tool ApriHealth launched evaluated the necessity of blood transfusions — half of the time patients receive transfusions they don’t actually need. This not only wastes donated blood, but adds up when it comes to heath care costs. Since then ApriHealth has expanded to include tools that apply its analytic lens to other over-utilized health care services. On average it saves a 350-bed hospital more than $1 million.

Honorable Mentions

Centriam
Minneapolis
Smart business decisions should be easy. That’s why a team of data scientists came together to help companies make sense of the terabytes of data they collect. This data intelligence company helps business owners connect the dots between purchase data, demographics and location data to uncover how their customers interact with products, brands and CRM efforts. Centriam makes your data work for you.

Sentera
Minneapolis
With more than 25 million acres of images under its belt, Sentera has logged more than 20,000 hours in the air with its unmanned aircraft systems to capture enough photographs to cover the state of Virginia. Sentera turns drones into practical tools for farmers with its high performing camera sensors and data management software. Its team of engineers has more than 200 years of collective experience in the field and now works with clients in agriculture, inspection and public safety to increase crop yields, reduce accidents and drive more intelligent decision-making.

Education

Winner

Esqyr
Minneapolis
These days, more young professionals than ever need to get a license before starting their career. As student debt skyrockets to its highest level — $1.2 trillion — the rising costs of these licensure tests threaten to add to an already large burden. But this innovative test prep company tackles those issues two ways. First, Esqyr offers a la carte study tools to students preparing for the bar exam at an affordable rate. Esqyr’s cheapest tool costs less than $20 and gives students access to 60 NCBE-licensed bar exam questions. Second, it’s the only test prep company with a social mission at its core. Under Minnesota’s recently enacted public benefit corporation law, Esqyr donates 20% of its profits to alleviate student debt, and 15% of its profits to organizations working to reform higher education.

Honorale Mentions

The Big Know
Minneapolis
By turning brands into teachers, The Big Know is building a community of curious minds through its digital education platform. It’s the latest startup to come from digital design and marketing company, GoKart Labs. Since 2015, The Big Know has partnered with organizations like UnitedHealthcare, AARP and Cambria to launch courses that average more than 10,000 enrollments each. Recent additions to its lineup include a cooking course from local foodie, Andrew Zimmern, and a course on longevity from New York Times best-selling author, Dan Buettner.

FastBridge Learning
Minneapolis
Over a decade ago this tech start up began as a research project at the University of Minnesota. Now, more than 5 million school administrations around the country have adopted this next generation assessment into the classroom. The Formative Assessment for School Teachers, or FAST, measures reading, math and behavioral learning. With it, teachers can assess students quickly, easily and often so they can tailor their approach in the classroom to best meet the needs of individual students.

Homi
Minneapolis
Job hunting as a recent college graduate is tough when you’re cold-calling and sending out emails and resumes to strangers. Philip Xiao, the 22-year-old founder of Homi, wanted to make that process better by connecting students with alumni to build the relationships that lead to jobs. Through his networking app, students can create profiles and ask alumni questions. Alumni in turn can reconnect with groups they belonged to in college and hire students ready to work.

Food & Beverage

Winner

WholeMe
Minneapolis
When doctors diagnosed her husband with Type 1 diabetes, Mary Kosier drastically changed the couple’s diet, cutting out grains, gluten and dairy. She began sharing experimental cereal and bar recipes with friends, eventually teaming up with CrossFit pal and former Bachelor Farmer pastry chef, Krista Steinback. Together the duo started cranking out tasty snacking alternatives free of grains, gluten, white sugar and preservatives. The pair currently sells three variations of WholeMe clusters — Almond Coconut, Lemon Berry Chia and Cinnamon Banana Chip — at gyms, co-ops and grocery stores like Whole Foods and Lunds.  Mary and Krista recently raised WholeMe’s first round of capital funding since the company got its start with a successful $44,000 Kickstarter campaign in 2014. With the new funding, WholeMe plans to expand its footprint beyond the Midwest and develop its line of products to include fresh offerings that taste as good as the ingredient list looks.

Honorable Mentions

Bizzy Coffee
Saint Paul
Between corporate jobs and training for a 24-hour endurance race, Andrew Healy and Alex French had no time to feel tired. The pair wanted a healthier alternative to powering their days with traditional coffee and energy drinks, so they developed a patented process to create an organic and shelf stable cold brew coffee concentrate using a blend of fair trade beans. Within six weeks it became the top sold and rated product in its market on Amazon.

RED Food
Saint Paul
As the demand for locally sourced ingredients grows, a group of college students used technology to bridge the gap from the farm to the table. Through its online marketplace, RED Food connects local farmers selling produce or meat, with the chefs who want to buy it. In 2016 the company quadrupled its number of chefs and partnered with 40 new farmers to build a network that continues to aggregate small farm supplies together to meet commercial restaurant demands.

Health

Winner

Alchemy 365
Minneapolis
Pursue your personal legend. Feel more alive. Power toward your fitness goals. These are the mantras around which Alchemy has built a tight knit community committed to its one-of-a-kind group fitness class. Before launching the gym in 2015, Alchemy’s founders previously managed some of the top yoga studios in the city and started the Twin Cities’ largest crossfit business, Union Fitness. Inspired by this diverse background, Alchemy blends the most effective forms of yoga, strength and cardiovascular training in a series of high-energy classes.

After about a year-and-a-half in business, the company has two locations open in Minneapolis, and is planning to open a third in St. Paul. Following the advice it gives its clients, Alchemy plans to chase an ambitious goal over the next ten years: to open 200 locations around the country. That goal will start in the Twin Cities and then expanding to cities like Washington D.C. and Denver.

Honorable Mentions

Center for Collaborative Health
Edina
Founders Nicole Slavik and Macarena Corral take an integrated approach to treating mental health that combines traditional psychotherapy with alternative methods like yoga, meditation and proper nutrition. Both women specialize in the impact of traumatic experiences on mood and behavior, and collaborate with patients to identify strengths they can use to build healthier lives. Macarena is also a bilingual psychologist, conducting sessions in both English and Spanish.

OneOme
Minneapolis
Over 4 billion prescriptions are filled each year, yet only about half perform as intended. How well a drug works is dependent on a series of genetic factors that until now, doctors couldn’t see. But that changed with the OneOme RightMed pharmacogenomic test, co-developed with Mayo Clinic. Doctors can now personalize prescriptions based on genetic data curated by a team of scientists, physicians and pharmacists. These new insights reduce adverse side effects and save patients money on drugs that don’t work for them.

RetraceHealth
Minneapolis
At a year old, Thompson Aderinkomi’s son was diagnosed with pneumonia after four trips to the clinic within a few weeks. It was expensive — more than $600, plus hours spent driving and waiting. Thompson wanted to change the way people receive care, so he started RetraceHealth. His company cuts out the waiting room and brings primary care services to patients wherever they are through affordable home or video visits.

Products & Technology

Winner

Woodchuck
Minneapolis
After making its debut several years ago, Woodchuck has become a consistent name in the Minnesota-made retail world. CEO Ben VandenWymelenberg got his start making wood skins for mobile devices. Within months of incorporating, big box stores like Target and Best Buy started selling his iPhone cases. Since then Woodchuck’s collection of wood products has expanded to include journals, cufflinks, world maps and custom corporate gifts. While that kind of growth is sure to bump up the company’s bottom line, Ben has an even bigger vision in mind. For every item sold, the company will plant a tree as part of its Buy One, Plant One initiative. Ben started his company to put nature back in people’s lives. So far Woodchuck sales have put more than 386,000 new trees in the ground, and is on track to plant more than a half a million trees by 2017.

Honorable Mentions

Anser Innovation
Burnsville
Furry family members are now only one video chat away. After raising nearly $2.5 million, Anser Innovation launched PetChatz, a videophone that allows pet owners to see and talk with their pet, dispense treats or emit scents from anywhere using their devices. By 2017, sales are projected to reach $10 million. Next, Anser’s powerhouse team of co-founders and directors hopes to develop a device that helps caregivers stay connected to their dependents and dispense medication remotely.

Prime Attachments
Garfield
In just a year, Prime Attachments has made a name for itself as an up-and-coming leader in the manufacturing and fabrication of skid loader attachments. To design its attachments, the company relies on a team of professional engineers with more than 20 years of experience in the precise metal fabrication industry. The welding on each piece is done by hand, and everything is American made — from the labor to the parts.

JENTRA Door Levels
Baxter
It wasn’t uncommon for Travis Kelley to find doors that warped after being installed poorly. To fix that, Travis and his wife Jennifer created a tool composed of a series of clips, levels and spacers to revolutionize the way doors are hung. The Cheetah door installation tool helps people more precisely mount doors in half the time it traditionally takes — that means doors work better and are returned less on warranty claims.

Professional Services

Winner

Birch Tree Care
Saint Paul
Arborists aren’t simply tree trimmers, and they’re definitely not landscapers. Birch Tree Care’s arborists are ISA-certified, which means they’ve spent a few years working in the field or getting a degree in one of several plant-related fields. It also means they passed a rigorous test covering subjects like soil management, tree biology and urban forestry. Suffice it to say, arborists understand trees. So when they come to look at yours, they’re thinking about more than just which branch to cut down. They’ll be able to tell you if that crack in the trunk you dismissed is actually a sign of a deeper issue — one that could lead to the tree’s death. Birth Tree Care’s team takes a holistic approach, considering watering techniques, pest management, disease prevention and winter care. Think of it as healthcare 101 for the tall green giants in your yard.

Honorable Mentions

Twelve Consulting Group
Minneapolis
When analysts are ready to rip off the Excel Band-Aid, the consultants at Twelve are there to help. For years, founder Jill King struggled to consolidate data between Excel spreadsheets and keep her team updated with the latest version of a model. Then she found Anaplan. Now as the platform’s largest exclusive partner, Twelve shows other companies how to make better business decisions by analyzing their data quicker with Anaplan.

Transitional Moving
St. Cloud
Stacks of cardboard boxes. Extra newspaper. A roll of packing tape. You know the drill: it’s time to move. But packing gets that much harder when you’re downsizing. But Shelley Chamberlin takes over the worst parts of moving for clients — she’ll pack up the belongings in your home, help you decide what to keep and what to donate or sell, and even stage your new home for you. Talk about an easy transition.

ilos
St. Paul
While other screencasting tools are notoriously complex and confusing, it only takes two clicks to start recording a video with ilos. With its streamlined platform, ilos allows employees at companies like NBC and Canon to easily narrate and capture videos of what they see on their screen, and then host, stream, share and embed those videos across multiple platforms.

Decklan Group
Elk River
This economic development and consulting firm takes organizations and businesses under its wing to guide them through expansion, relocation and complex government processes. Just last year Decklan wrapped up economic development projects that retained or created 1,200 jobs and resulted in more than 400,000 square feet of new development and over $57 million in capital investment.

Retail

Winner

The VOICE Community
Crystal
Can you build a better world through online shopping? The VOICE thinks you can. This online marketplace is capitalizing on two things people want to do more of: shop local, and buy from socially minded brands. On its website, VOICE partners with an impressive line-up of Minnesota makers and brands, including The Copper Hen, Birchwood Café, Woodchuck and Socialable Cider Werks. For every item or gift card purchased, VOICE lets consumers donate 7% of the proceeds to the charity they pick. Customers can choose from one of ten causes VOICE selects each year, like the Wounded Warrior Project or Animal Humane Society. This new platform allows Minnesota shoppers to tap into something millions of people do every day — shop online — and give that small action new meaning at no extra cost.

Honorable Mentions

BAM Essentials
Roseville
Taking care of your skin isn’t just a way to pamper yourself. Thanks to BAM Essentials, it’s also a way support young female professionals in the Twin Cities from disadvantaged backgrounds. The company hires women to make its products, and then trains them in the work and life skills that lead to success, such as financial literacy, mindfulness and resume writing. Plus, BAM Essentials’s whole line is organic and natural. No parabens, synthetics or animal testing here.

Anywhere Apparel
Saint Paul
Sitting in the cab, Kelly Koster and Nick Hansen realized they were unprepared for what lay ahead. The clothes they packed for their two-and-a-half week journey (to five vastly different cities) weren’t going to cut it. To keep their suitcase light, the couple needed versatile, travel-ready clothing that didn’t look like workout gear. When they couldn’t find it, they made their own line, starting with a reversible coat and a jacket that transforms into a satchel.

Software

Winner

MyBarJar
Saint Paul
Imagine this: you walk into a bar and someone already paid for your drinks. Every single one. You’ve even got an UBER ride waiting to take you home at the end of the night. All of this and the money in your pocket is still untouched. Welcome to MyBarJar. Think about it as a gift registry or GoFundMe page, but for alcohol. Whether it’s your birthday, bachelorette party or you just got a promotion, MyBarJar lets your friends add to an epic night of celebration, even if they can’t be there with you in person. With just a few clicks they can gift you a round of drinks for the evening. All you have to do is create an event, pick a participating establishment and then watch the bar credits from family and friends flow in.

Honorable Mentions

THRIVORS
Saint Paul
Through a simple app, THRIVORS empowers cancer survivors to take hold of their recovery. Unlike its competitors, this digital platform brings together all the complex needs of survivors into one space: there are exercise programs based on pain and fatigue; nutritional guidelines to build bone health and energy; access to a network of survivors and resources near you; and tools to help you measure your health and activity level over time.

Inspire.world
Minneapolis
This year, skip door-to-door fundraising and head straight to your cellphone or computer. Online shopping just became a new digital fundraising solution. First, nonprofits or schools set up a fundraising page. Then they send supporters a link to shop. Whether its sports equipment, specialty hand soap or office supplies, Inspire.world gives a percentage of each sale back to the organization, making raising money as easy as a click away.

Most Likely to be Acquired

ilos
St. Paul

The VOICE Community
Crystal

DAYTA Marketing
Waite Park

The Big Know
Minneapolis

Most Likely to be Disruptive

The VOICE Community
Crystal

ilos
St. Paul

Homi
Minneapolis

DAYTA Marketing
Waite Park

Retrace Health
Minneapolis

Bizzy Coffee
Saint Paul

Esqyr
Minneapolis
 

Startup Investors Pipe In

What does it mean to be a disruptor? What’s up with exiting? We checked in with three experts

 

Everybody seems to be an expert about startups and what it means to disrupt an industry. We decided to pick the brains of several people who are on the investor side of the startup equation. We talked with Casey Allen, a Minneapolis-based adviser, mentor and investor in 14 local tech/software companies; Patrick Meenan, a partner at Arthur Ventures, who previously worked at Piper Jaffray and Microsoft; and Daren Cotter, an angel investor, and founder & CEO at InboxDollars.

How do you define a startup?

Daren Cotter: To me, a startup has to be a business that can scale. If you start a mom-and-pop type business, you might be a business owner and some people might call that a startup. I don’t think I would consider that a startup because it won’t scale.

What does it really mean to be a disruptor?

Daren Cotter: Some people use “disruptor” as being synonymous with a startup or an entrepreneur, but I wouldn’t agree with that. To be a disruptor, the key thing is that you’re solving a real world problem for a group of customers.

The real world problem has to be sufficiently large enough. If the problem you’re solving is so large that millions of prospective customers are willing to spend a little bit of money on your product, or there’s a few customers and each are willing to spend lots and lots of money — hundreds of thousands of dollars, or even millions of dollars apiece.

Conversely, there’s a lot of startups that aren’t solving a really significant problem. They can be fine companies, but they’re not going to disrupt an industry.

Patrick Meenan: The way we look at disruption is when someone claims attention in a category and attracts customer dollars that weren’t there before. It’s not just a transfer of dollars from one customer to another, but whether they actually create a new class of customers. An example is a startup we invested in is When I Work.

When I Work creates scheduling software, but they didn’t go out and take customers from an ADP or a Kronos, which have these huge customers for scheduling. When I Work created a whole new class of customers — really small businesses that had never bought scheduling software before. They literally brought new customer dollars into the market.

Is Uber a good example?

Daren Cotter: Yes, I would consider Uber a disruptor. The real problem they were solving is that the taxi industry was extremely inconvenient for consumers. Hundreds of millions of people have decided to use their service, paying a little bit of money each, and when you aggregate all of that, it’s a multi-billion dollar company. Uber is a great example.

I think Dropbox is a pretty good example. The real world problem that they were solving is that users really didn’t want to keep all of their documents on one PC. To share those documents you have to essentially keep copies of those documents on every device that you’re going to use, especially as mobile became more prominent. Storing those documents in a central location in the cloud, and then sharing between your own personal devices or even amongst users is a real world problem that falls into the first bucket, sufficiently large for hundreds of millions of people.

How does a startup make a brilliant exit?

Casey Allen: The rule of thumb is that you need to be a category leader if the exit will be a good one for the founders and for the investors. Generally, an acquiring company has very little incentive to acquire the 9th or 13th best company solving a particular pain or problem.

A senior VP pushing through committee acquiring a B or C player is simply too difficult and wrought with too much down side. This lends itself well to companies that are dominating a niche. For example, Gov Delivery focused on one specific niche for almost a decade and resisted temptation to go far and wide.

Conventional wisdom may say that for a company to be successful, they must be all things to all people. One thing we can learn from Gov Delivery, which was acquired not once, but twice, is that they just really focused on what a lot of people consider just a really small niche, but it turns out it’s not that small.

Recently, Calabrio was an acquired by KKR in August for a reported $200 million, which was an excellent exit for both the company and its investors. Calabrio succeeded because it was obsessive about solving a very big but unsexy problem: call centers need to retain massive amounts of data. Something unique to Calabrio is that they did not have to raise tens of millions from investors to get such a big outcome. This is evidence that going after big, unsexy problems is indeed lucrative.

A successful outcome of a company that was 100% bootstrapped is Modern Survey, which, without taking a penny in outside capital, managed to grind it out over many years and have a successful outcome to a Fortune 50 company, Aon Hewitt, which simply could not replicate what Modern Survey has built over the years. The terms of the deal were not made public, but for a bootstrap team, just about any acquisition is a good outcome.

Are there any Minnesota startups primed for an exit?

Casey Allen: Several come to mind: RedBrick Health, MyAlerts, and Field Nation. By the way, all three of these happen to be in downtown Minneapolis, which is the table stakes these days. If you’re a tech company. You pretty much have to be in downtown or the North Loop, or it’s increasingly difficult to recruit. Code 42 still has the possibility of being acquired, although the number of acquirers is admittedly quite small. The reason for that is because it would be a fairly big purchase. There’s probably less than five tech companies that are big enough to be able to swallow Code 42 at this point.

What are the conditions under which a company would be ripe for the taking?

Patrick Meenan: There are two situations we see a lot. The very exciting scenario is a company becoming a market leader in a sector that has become suddenly very popular. I think Sport Engine was a great example — where youth sports became a very hot market. Another scenario is of very immature companies that have raised a lot of money and probably can’t go public, so they have to sell because their investors need to get liquid. People still make money there, it’s just less exciting.

Patrick Meenan: At Microsoft we were selling more than we were buying, because I joined in 2008. I think a great example there is when Microsoft bought LinkedIn. LinkedIn was a very key part of the market that they wanted to go after, and they ultimately decided they just had to go buy the market leader. Any of these big companies will do a build versus buy, and ultimately you want to be in the position where they don’t think they can ever build it and get to your traction level in any material amount of time.

Could Microsoft have created their own professional network? Sure. They just knew no matter how much effort they put into it, they could never replicate what LinkedIn has. I think with a lot of these companies it’s really the sustainable competitive advantage. If you have a sustainable competitive advantage, companies are going to find you.

Should early stage startups have plans for a successful exit?

Patrick Meenan: No. I think that’s a huge mistake. Some people do it because a lot of investors that ask, “What’s your exit strategy? How are you going to sell?” When an entrepreneur comes to pitch me for investment and they talk about their exit strategy, I tell them to move on. I didn’t want to hear about it. All I want to know is that they’re going to put their heads down and build a great business. I think if people start with the exit in mind, they often fall short of their expectations.