Mairs & Power, a venerable investment advisory firm for more than nine decades, has earned a place in Minnesota’s venture capital ecosystem.
Mairs & Power Venture Capital was launched in 2022 by general partner John Bergstrom, who has a long history in the venture capital business. Scott Burns, a founder of GovDelivery and Structural, joined the initiative as a general partner in August 2023.
Bergstrom and Burns, assisted by two younger staffers, have been busy evaluating a steady stream of entrepreneurs seeking early-stage investments.
Mairs & Power raised $19 million to invest in its initial portfolio of startup companies.
“The first fund has made investments in 13 companies which include virtual sleep clinic Gem Health, school transit logistics firm 4Mativ, and 11 others across the Upper Midwest,” Burns said. “We are optimistic about the future. We will continue actively investing in new companies and moving forward with our VC strategy in 2025.”
In a recent interview with Twin Cities Business, Burns explained how Mairs & Power has approached its work as a new player in the venture capital world.
“The types of deals we’re trying to do are tech and tech-enabled businesses that are transforming markets and industries,” Burns said.
Halo, based out of the Chicago area, is also among the 13 companies that attracted a Mairs & Power investment. He noted that Halo creates a “marketplace of professors” who can bid on research opportunities.
In May, the U.S. National Science Foundation announced a pilot project to support partnerships between industry and researchers at emerging research institutions. It stated the pilot would be led by Halo, which it defined as “an artificial intelligence-powered technology platform that helps corporate research and development teams more efficiently connect with scientific partners and bring innovations to market faster.”
For the 13 companies that received Mairs & Power investments, Burns said the average initial amount was around $1 million per company. Some of these startups also received a second investment from the $19 million fund. “We’ll continue to do some follow-on investments with them,” Burns said.
In the early phase of Mairs & Power VC work, Burns said the firm set out to answer the following question: “Can we find enough opportunities that are capital efficient, meet our definition of tech and tech-enabled, are located in the Upper Midwest, and obviously looking for funding?”
The answer was an easy yes. “We’ve been seeing just a tremendous amount of businesses,” Burns said. “The number of business starts in the Upper Midwest is very high. The types of businesses that are applying technology to industry are common here, and there’s not a lot of venture capital chasing them. So all those things line up. We’ve been seeing between 80 and 100 deals per deal we do.”
Of course, Mairs & Power does extensive due diligence on the candidates for investment. There are many promising companies being developed. “It’s a competition for where we want to put the capital based on what looks the best,” he said.
Nine of the 13 businesses funded are based in Minnesota, and all are from the Upper Midwest. “I really like the fact that we’re seeing so many businesses being started by true industry experts, and those businesses tend to be right in between our startup community and our big company community,” Burns said.
Mairs & Power Venture Capital staff identify potential deals through a variety of approaches. Burns noted that he and Bergstrom have “deep and rich” networks, so they’ve conveyed to service providers, industry experts, and finance professionals what they want for startup investment targets.
On behalf of the firm, Austin Uline, a principal, and Elise Riniker, an associate, “are out proactively looking for companies all the time,” Burns said.
“Our brand has been growing, so some people are coming to us,” he said. “But I would say the best deals are the ones we find, not the ones that find us. We’re happy to screen people who come to us but getting out there and just doing the hard work of making sure we’re getting to [startups] even before they need money has been a lot of fun.”
The companies in the Mairs & Power Venture Capital portfolio have regular contact with Burns and Bergstrom.
“It’s exciting to have a portfolio of 13 companies,” Burns said. “We work hard to provide very meaningful support to them. I would say I talk to two to five of the companies per day.”
Burns and Bergstrom consciously allocate a good chunk of their time to assist the companies, with Burns providing operations advice and Bergstrom offering guidance on finance and governance issues.
“We’ve helped recruit a chief technology officer, we’ve helped redesign sales efforts, and we’ve helped one of the companies transform its growth plan and messaging,” Burns said. “Both of us have been part of world class, globally successful businesses that were based out of here, and so we just bring that ambition to the companies.”
Rob Mairs, who succeeded Mark Henneman as the Mairs & Power CEO in October, recalled that it was Henneman who pitched the board of directors a few years ago to get into the venture capital business.
“It was risky,” Mairs said, “but it has proven to be tremendous for so many reasons.” He noted that several Mairs’ clients and other staff are excited about the move into venture capital.
“There are great synergies between Scott and John and their reputation in the private markets and ours in the public markets,” Mairs said.
Henneman is remaining with Mairs & Power as chairman through 2026. “[Venture capital] is one of the areas that he’s going to stay involved and is passionate about,” Mairs said. “He’s in those meetings with Scott and John when they’re approving and considering investments.”
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