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With Interest – Minnesota’s Financial Services Growth Spurt

Strong financial services yield innovative new companies

By John Fuller on November 28, 2017

Minnesota Business
Minnesota / Courtesy of University of St. Thomas

The financial services sector has long been an anchor of the Minnesota economy, and the banking and asset management firms the state has are creating technology-driven enterprises that complement and serve them. More than 300 banking institutions serve Minnesota with more than 1,700 branches in 595 cities.

Minnesota ranks third among states in the number of banking institutions. Minneapolis-based U.S. Bancorp, the global financial services giant, is the fifth-largest U.S. bank, with assets of nearly $450 billion. It operates 3,091 banking offices in 25 states. Minnesota also is home

to Wayzata-based TCF Financial Corp., which operates TCF Bank. Wells Fargo also has major operations in the state, with 20,000 employees. United Healthcare, one of nation’s largest health insurers is based in Minnetonka.

inancial services, asset management and insurance companies also excel in Minnesota. Allianz Life, Galliard and Piper Jaffray have major operations in the state. Thrivent Financial, a Fortune 500 company with more than $116 billion in assets under advisement, makes its headquarters in Minneapolis.

Another Fortune 500 financial services company, Ameriprise Financial, has more than $800 billion in assets under management and administration. The Minneapolis-based company’s roots in Minnesota run deep, to 1894 when founder John Tappan pooled $5 investments from 1,000 people into an investment syndicate. Ameriprise today numbers approximately 10,000 financial advisers working from offices across the U.S. in addition to asset management capabilities that span the globe.

How Minnesota Business Keeps Creating Opportunity

Paying Dividends

The diverse financial services sector has sprouted a number of financial technology companies, nurtured by a willing group of investors supporting those firms. One of those early-stage financial technology firms is Sezzle, which has developed a payment system that allows shoppers to shop now with online retailers and pay later.

“We give shoppers the option to pay for goods and services with a simple four-payment installment plan that spans six weeks,” says Paul Paradis, chief business development officer for Sezzle, based in Minneapolis.

Paradis says the process cuts the retailers costs in half. Sezzle is currently working with more than 70 merchants. Supporting the launch of innovative companies are resources such as Gopher Angels, a group of angel investors who share screening and due diligence of investment opportunities. Gopher Angels focuses on providing financial support to entrepreneurs based in Minnesota. Entrepreneurs also receive strategic guidance, valuable connections and business support to take their companies to the next level.

“Gopher Angels is filling a void in the Minnesota startup ecosystem by providing funding to early-stage companies but also encouraging and educating new angel investors,” says Joy J. Lindsay, founder of venture firm StarTec Investments and a Gopher Angels advisory board member.

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Investor Strength

Another fast growing business in the financial technology sector is ArgosRisk, which helps companies in over 30 industries proactively monitor the financial and business health

of the third-party organizations that make their business possible. Headquartered in Edina and led by a team of industry veterans from the financial services and payments industry, ArgosRisk provides subscribers access to comprehensive, timely and accurate information available on commercial businesses. Investor support for Minnesota startup businesses is exemplified by Apruve, a business-to-business credit network that connects business buyers, their suppliers, and third-party banks to drive B2B sales through risk-free lines of credit.

“We enjoy being in Minnesota,” says Michael Noble, Apruve’s CEO. “Our dollar goes a bit further, and we had supportive angel investors who helped us get started.”

Apruve is backed by leading financial technology investors and its customers range from small distributors to public companies. One of Apruve’s initial backers was StarTec Investments, a Minneapolis private venture capital firm that focuses on early-stage tech companies in Minnesota. StarTec makes investments ranging from $50,000 to $500,000.

“I believe this is the best climate I have seen in a long time in terms of a networking structure for financial services and technology companies,” says Lindsay. “Collaboration and sharing is a great benefit to these early-stage companies.”

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