Minnesota has a lot of Fortune 500 companies, but where’s the next generation of big ideas?

Before a crowd of business, political and academic leaders — and with the Guthrie Theater’s “Midsummer Night’s Dream” set as a backdrop — the CEO of Greater MSP laid out the vision for the Twin Cities economy to come.

“A headquarters economy, a 21st-century one, with thriving legacy companies joined by the headquarters of new companies and new fast-growing industries,” Peter Frosch said from the stage this month. “Despite the setting, this is not a dream.”

But making that vision a reality will take new partnerships. And money.

The Twin Cities boasts the most Fortune 500 companies per capita among U.S. metro areas, but it’s been years since Minnesota raised a new one from scratch.

That’s a problem the business community can’t afford to ignore, said Mary Grove, managing partner of Minneapolis-based Bread & Butter Ventures.

“There is urgency,” she said. “We need to move fast and build more density and get more funding flowing through the state.”

On Tuesday, Bread & Butter announced it has closed on a $40 million fund, harnessing what it calls the “Minnesota home-field advantage” in health care, food technology and software. The early stage investment firm expects to seed a few dozen startups nationally and drew backing from Allina Health, the Shakopee Mdewakanton Sioux Community, Bernick’s and others.

It comes at a time when venture capital is increasingly scarce. The number of venture capital firms investing in U.S. businesses has dropped by 25% in the past few years, according to PitchBook, which reported a similar decline in the number of investors backing venture capital funds.

A majority of those still writing checks for startups are based on the coasts and investing much of their money there.

“There’s so much untapped potential here,” said Grove, whose spouse is CEO and publisher of the Minnesota Star Tribune.

Bread & Butter, along with Groove Capital and angel investors, backed St. Paul-based YourPath Health when the addiction recovery software provider launched more than three years ago. Since then, CEO Jordan Hansen has looked outside the state for additional investments.

“We’re incredibly grateful for the local ecosystem,” he said. “But across the market and especially here, there’s a lack of growth equity.”

YourPath also benefited from the UnitedHealthcare accelerator program, which has since shut down.

“Historically Minnesota has had a corporate commitment to the community in a meaningful way,” Hansen said. “And I get the sense sometimes it’s not a priority, and it should be, and it could be.”

Bread & Butter Ventures is trying to build more of the “connective tissue” between big businesses and startups, Grove said. In 2021, it launched the Innovation Circle, which brings together many of the state’s largest enterprises, including 3M, Cargill, C.H. Robinson, Ecolab, General Mills, Hennepin Healthcare, Mayo Clinic, Securian Financial, Target, U.S. Bank and more.

“It’s been really exciting to see these leading companies who are very open not just to talking with startups but piloting and trying out early technology,” Grove said. “We have to work with the incumbent infrastructure ... and from the bottom up, we can scale solutions.”

Still, it will likely take outside money coming into the state to build another Fortune 500 company here. And even then, there is the chance a promising young company gets acquired before it sets down roots.

“Part of what we have to navigate are the expectations,” Hansen said. “Coastal venture capitalists aren’t looking for small wins but huge wins. Local venture capital firms are calibrated slightly differently.”

That means pitching solutions to widespread problems and not just asking for help boosting the local economy, said Matt Lewis, director of partnerships at Greater MSP.

“You’re not going to get that capital to invest in projects based in Minnesota just by saying, ‘From the goodness of your heart, wouldn’t you?‘” Lewis said. “Those decisions are being made by professionals who consider risk profiles and want to see a top return.”

That’s why Greater MSP is focusing on a few key issues the region is uniquely positioned to address, like decarbonizing air travel, medtech breakthroughs and sustainable protein.

“Most places don’t have a compelling case for having the potential to innovate in those areas,” Lewis said. “We’re going to move further in this direction, being more intentional and explicit about our region and state’s thesis.”

Lewis points out Minnesotans already put money toward venture capital via pension funds, foundations and other investments. Bringing that money back home can realize the dream of a stronger headquarters economy.