Barely any venture capital makes it to greater Minnesota. Meet the folks trying to change that.

ST. CLOUD — Brothers Rob and Ryan Weber know firsthand that innovation can happen anywhere.

For them, it started in their dorm rooms at St. Cloud State University more than two decades ago when they founded a company that creates native advertising technology for mobile gaming.

And after selling that company for $25 million eight years ago, the Webers pivoted to helping other entrepreneurs fund ideas through their venture capital fund, Great North Ventures, which has a number of partners from central Minnesota.

The firm was recently part of a $1 million seed round investment into Brainerd-based company HLRBO — a deal that is among the largest venture capital investments made to a company in central Minnesota in the past decade. And the brothers are hoping this is only the beginning for more investment in the region.

“If you think venture capital, it tends to go to the bigger cities and metros,” Rob Weber said. “It’s not equitable.”

Venture capital is an important funding tool for startups with high-growth trajectories — that are often deemed too risky for banks — and that want to grow faster than the reinvestment of profit allows.

But over the past decade, less than 4% of venture capital in the state was invested in companies outside the Twin Cities, and just crumbs — less than 0.1% — made it to the St. Cloud area, according to the venture capital database Pitchbook.

From 2014-2023, about 1,450 venture capital deals were made in the Twin Cities, compared to about 60 in the Fargo/Moorhead area, 50 in Rochester, 22 in Duluth and just 14 in the St. Cloud area.

The metro, of course, has a higher population density than outstate Minnesota. But even with the data broken down on a per capita basis, the total investment in the past decade would be equivalent to about $3,660 per person in the Twin Cities and just $43 per person in St. Cloud.

But great ideas happen anywhere and everywhere. HLRBO, or Hunting Land Rentals By Owner, is an online platform for leasing hunting land started seven years ago by East Gull Lake resident Heath Schubert and two of his friends.

“It was my brother’s idea, actually. He’s a hunter and he lost touch with some of the people he knew that owned property he could hunt on,” said Schubert, the company’s chief executive. “He didn’t have a place to go anymore and thought, ‘It’d be nice if you could just go online and figure this out instead of trying to go find somebody.’”

HLRBO now has 88,000 users from across the country. But there are millions of hunters nationwide, so there’s only room to grow, Schubert said. He plans to use the seed money to create a mobile app, increase marketing and hire field representatives who can recruit landowners and review properties.

“Imagine if VRBO was started in St. Cloud or Brainerd,” Weber said of the Austin, Texas-based vacation rental marketplace. “It’s very important to the community to get these kind of high-growth businesses growing. I think that’s really important to the long-term vitality of the region.”

Weber said he also serves on boards with other venture capitalists, including those in Chicago and San Francisco — and he’s hoping those connections will bring more investments to the region, too.

“It’s not that they don’t want to invest in greater Minnesota, they just aren’t intentionally looking there,” he said. “There’s no reason there can’t be more. There’s plenty of talent. There’s plenty of people. There’s plenty of capital.”

Another individual working to bring startup funding to greater Minnesota is Brian Huch, a Missouri native who wound up living in Bemidji a few years ago after a July hailstorm totaled his RV during a cross-country road trip. He started attending weekly entrepreneur meetups as a way to survive the long, snowy winter and learned the region was ripe for startups.

So two years ago, he founded the area’s first angel investing group — Headwaters Angel Network — which has about two dozen local investors looking to fund early stage businesses in Bemidji and central Minnesota.

“Before our wonderful public markets and crypto and bonds existed, this was the original way that anyone invested: They invested in their community. They invested in people around them,” Huch said. “And in the age of the internet economy, there’s really no reason why many, many companies can’t be headquartered in a rural place.”

A state agency is also helping lead efforts to accelerate the growth of startups in outstate Minnesota. Five years ago, the Department of Employment and Economic Development created the Launch Minnesota initiative to encourage greater investment in companies outside the Twin Cities, as well as in companies founded by women, veterans or people of color.

“That was something we needed to do for Minnesota to be competitive globally and nationally,” said Neela Mollgaard, DEED’s executive director of small business development and innovation.

Launch Minnesota provides grants, loans and tax credits to angel investors. In the past four years, Launch Minnesota has allocated more than $8 million to startups across the state. And for every dollar invested by the agency, grantees have on average raised $20 in additional funds from other investors.

“The rate of return for our investment is significant,” Mollgaard said. “Innovation grants are helping create that seed funding for businesses to continue to grow their business, test it in the marketplace and help incentivize other investors.”

Launch Minnesota has networks in six regions to help foster an ecosystem for startups by increasing connectivity and access to capital.

“This type of work takes time,” Mollgaard said. “But innovation is not limited to just the coasts of the United States and it’s not limited to just the Twin Cities or metropolitan areas. Innovation happens everywhere.”