Posts Tagged minnesota
Minnesota scene
A few Twin Cities startups are alive and kicking, so says an article in Monday’s StarTribune. And not just the usual med-tech ventures one expects in Minnesota, such as Apnex; the companies featured in the story were web/mobile firms incubated in Y Combinator: FanChatter and Socialbrowse.
While I’m skeptical about the long-term viability of any company that rests upon social interaction, Facebook included, I applaud the efforts of FanChatter and SocialBrowse to get something going in the Minnesota startup scene. Sure, there are some others worth mentioning. A quick Crunchbase search for companies in the Minneapolis area pops up a few familiar names, like GasBuddy and TinyUrl, but that pales in comparison to the wealth of startups in Silicon Valley.
I spent the past few years living in Palo Alto, and I have witnessed first-hand how pervasive entrepeneurship can become in a culture. Out in Silicon Valley, it’s a badge of honor to be working at a startup. Out in Silicon Valley, everybody seems to know at least a few VCs. Out in Silicon Valley, there’s an extensive support structure for entrepreneurs and their fledgling companies. Minnesota has a ways to go.
In Minnesota, it seems that most residents don’t even have a clear understanding of the word “startup.” They smile and nod, because they’re Minnesota Nice, but the concept evades them. I’d like to see that change.
Part of the trouble is that the Twin Cities are often thought of as a med-tech innovation center. Other subjects might get short shrift. I have a background in medical devices, but I’m not qualified (yet) to lead such a venture, so I prefer to focus on smaller IT-type ideas, even those small enough to be bootstrapped.
Here are some resources and entrepreneurial resources that might be of use to Minnesota startups:
- VCs: Split Rock Partners, Rain Source Capital, the yet-to-be-launched Altavail Partners, others listed at the MVCA
- Competitions/Demo Days: MinneDemo, Minnesota Cup
- Companies: Crunchbase listings
- Organizations: Minnesota High Tech Association, getSTEM
If anybody is interested in a Minnesota HN-type meetup, let me know. Also, feel free to pass along any information to add to the list.
The Setup
And with the stroke of a pen, Nesota LLC was born. Why an LLC? Why Minnesota? Why the name?
I had long performed entrepreneurial activities outside of a formal business structure. Consulting, BonnevilleClub.com, somewhat sketchy “independent contractor” gigs, and so on. According to the law, such activity is treated as a sole proprietorship, which is to say that the business and my person were legally indistinguishable. I reported my income as self-employment, paid taxes, and went on with life. There was no liability protection, but I had little to lose, and I didn’t want to bother with the paperwork.
Times change. Nowadays, I have something to lose. Nowadays, I expect to be dealing with large sums. Nowadays, I can handle the paperwork. I needed a way to provide some separation between my business activities and my personal life.
Why an LLC? I chose to organize Nesota as an LLC for both simplicity and tax minimization. All profits (and losses) pass through to me, but I enjoy the protections of the corporate veil by maintaining the company as a separate entity; namely, I’m less afraid of losing everything should I be sued, which is a near certainty assuming I achieve success. I could have organized as a Type-S corporation, which also features pass-through finances, but I felt the LLC was easier to establish.
Why Minnesota? There were some legal reasons, such as the protection under Minnesota statute of work done while moonlighting (something not true of all states), but the most compelling factors were my existing Minnesota residency and the low cost of filing in Minnesota: $135 (at the time), and I was in. No $800 franchise tax like California. No need for a registered agent in Delaware. No need to pay even more fees to register as a foreign company in the state with the actual operations. Will the relatively high Minnesota personal income tax rate hurt? Well, sure, but I’ll file that under “problems I’d be happy to have.” It’s not like I can’t change the legal structure of the business should I encounter wild success. Doing so might result in a high one-time expense, but hey — in that scenario, I’m already wildly successful, right?
Why Nesota? Because it’s pronounceable. Well, that and the .com domain name was available. Very important. And because I wasn’t sure what the company would be doing, so I couldn’t chose a more topical name. As for the origin, I took a play from Cisco’s book and trimmed out a name from a nearby geographical feature. In Cisco’s case, the name came from San Francisco. In Nesota’s case, the origin is Minnesota. I’m actually surprised that the name was available. According to my research, there have been a few companies with similar names in the 1970s and 1980s, but none are currently active. The pronunciation is slightly ambiguous, but I say it with three syllables and a short “e”: neh-so’-tah.
From there, it was a simple matter of establishing a business address, getting an EIN from the IRS, and opening a business bank account. The foundation had been laid!
One problem remained, and it was a doozy: how to make money.
Next: The Plan.