Despite an era of surprising economic progress and an ever-encouraging job market, Minnesota faces an uncertain future. As the economy shifts away from traditional industry into the information age, experts warn that Minnesota is falling behind in the technology race and, as a result, the local economy will suffer. To maintain our competitiveness will require not only more local investment in risky technology projects, but transforming the laid-back attitude characteristic of Minnesota into a competitive fighting spirit.
The Twin Cities was once called a ‘silicon prairie,’ but those days are gone, according to Tom Mason, publisher and editor of Twin Cities Business Monthly. Minneapolis and St. Paul plummeted from a prominent place in the nation’s high-tech economy to a fading blip on the radar over the last 20 years. Some key technology companies, such as Control Data and Cray Research, disappeared, as did many wealthy private investors. In the past, the Twin Cities hosted a number of wealthy individuals who invested in high-tech startups. Today, few such people remain, many having left for the coasts and greener silicon prairies.
Increasing numbers of local venture capitalists are funding out-of-state projects, said David Kidwell, dean of the Carlson School of Management. According to the Star Tribune, “Minnesota’s share of the nation’s venture capital investment has fallen by half since 1995.” At the same time, competing regions such as Seattle and Denver attract two to three times more investment funding than Minnesota.
Unfortunately, these trends could be self-perpetuating. As Minnesota falls behind in the technology race, fewer investors will be interested in funding local projects, turning, instead, to booming entrepreneurial areas like Silicon Valley. Some entrepreneurs say Minnesota lacks a competitive spirit and that many local investors only fund projects that have already proven successful elsewhere. This spirit, however, won’t work in a technology-oriented economy. While Minnesota investors sit safely aside, others continue to foster breakthrough projects. When technology changes so rapidly, any time spent watching from the sidelines is a lost opportunity.
Kidwell emphasized the necessity of investing in high-tech projects — specifically the University’s technology departments — to push Minnesota forward in the emerging economy. In fact, the University plays a key role in propelling Minnesota into the new economy. Other research institutions, such as MIT and Stanford, are centerpieces of high-tech economies, serving as the birthplace for significant advances. The University of Minnesota serves a role no less important.
In the new information-dominated economy, no advantage is gained from fertile soil or a favorable growing season. Rather, success goes to the entrepreneurs and risk takers, especially those backed by wealthy investors. In the emerging economy, the most fertile ground exists under the shadow of research institutions such as the University. Funding the University’s technology projects should be the first priority of local business leaders. Right now, major advances are underway that will sell products and change lives, spurring on economic development. For Minnesota, the time to stand aside and watch has long passed.