Given Rochester’s reputation, it’s only natural that health care is seen as the cornerstone of its economy. And certainly, Mayo Clinic is the region’s biggest driver. But John Wade, executive director of Rochester Area Economic Development Inc. (RAEDI), wants to get the word out that there’s more to Rochester than medical excellence.
For one thing, the region is “one of the largest in the state in terms of concentration of manufacturing businesses,” Wade says. A notable example is Crenlo, which builds specialized operator cabs for construction and other off-highway vehicles. Agriculture, food processing, and other agriculture-related companies also are “very important to this region,” he notes. And while IBM’s presence in Rochester isn’t as large as it once was, “it still has a very important function” within the company, including work on cloud computing, AI services, and mainframe support. What’s more, there are “a number of other technology ‘name brands’ doing business here,” Wade adds. These include Google, which in 2021 opened an office in Rochester as part of its strategic partnership with Mayo Clinic.
Getting businesses outside of the Rochester Metropolitan Statistical Area to see the region’s economic variety and opportunity is one of the many tasks that Wade’s organization performs. RAEDI is a public-private partnership (most of its funding comes from the private sector) that partners with other organizations and with government agencies to advance economic opportunity in the region.
The Mayo Clinic Business Accelerator has been the starting place for more than 60 new businesses since its 2013 founding.
To help new businesses get off the ground, RAEDI operates an economic development center that helps them develop business plans and find financing, along with other guidance. The center also houses the U.S. Small Business Administration’s development center and offices for other economic development-oriented organizations. “We’ve created a one-stop shop for business development,” Wade says.
RAEDI has worked with numerous up-and-comers including Rion (which develops skincare and hair restoration products) and Vyriad (which is producing anti-cancer virus technologies that originated at Mayo). “We also do a lot of midsize, mid-level business development,” Wade says. RAEDI helps innovative companies, both startup and established, with site selection, business modeling, and access to funding.
One of those money sources is the Southeast Minnesota Capital Fund, a private-equity fund RAEDI launched in 2017. Now co-managed by former Mayo Clinic financial executives David Herbert and Harry Hoffman, the fund offers seed and early-stage investment to innovative Minnesota companies. RAEDI also oversees the Mayo Clinic Business Accelerator, which provides space and support for entrepreneurs. Since its founding in 2013, the accelerator has been the starting place for more than 60 new businesses.
RAEDI and its partners aren’t focused solely on homegrown companies. It also works to attract businesses from the outside that could benefit from a Rochester headquarters address. Wade cites as selling points the region’s “well-educated and dedicated workforce” and an extensive education and workforce training system that includes the University of Minnesota Rochester, which opened in 2006. He also notes that the region’s “robust transportation infrastructure,” which includes not only Rochester International Airport but also rail and interstate highways, provides access to broader markets in Minnesota, across the country, and internationally.
To be sure, Mayo Clinic and DMC are continuing to drive most of the innovation and economic growth in the Rochester region. What DMC EDA executive director Patrick Seeb calls “a signature piece of our work” is “to build out the innovation capacity in Rochester to leverage the insights and intellectual property that is emerging out of Mayo Clinic and parlay that into new discoveries, new technologies, and new companies that can commercialize, manufacture, and distribute those technologies.” Those efforts have been centered on DMC’s Discovery Square subdistrict in central Rochester. Two buildings in the subdistrict, One and Two Discovery Square, are home to organizations, established companies, and innovative startups developing new products and services in the life sciences. (Rion is one the startups located here.)
“What we have done is brought together a number of key partners to create an environment where all people have the opportunity to develop, grow, and prosper.”
—John Wade, executive director of Rochester Area Economic Development Inc.
All that said, Rochester community leaders know that there are plenty of other local sources of innovation and economic growth that can be further developed. As Wade notes, “we made a commitment a couple of years ago to harness the shared energy of a number of different organizations” representing the region’s Black, Latino, and Muslim communities “that have interest in economic opportunity for all people.” These organizations include the Black Entrepreneurship Team and the African Development Hub.
Much of what RAEDI provides BIPOC entrepreneurs involves “basic business services,” such as helping them develop business plans and improve their credit scores to facilitate borrowing. It also has partnered with the Federal Deposit Insurance Corporation (FDIC) to provide additional resources to the financial industry to encourage increased lending to minority businesses.
“What we have done is brought together a number of key partners to create an environment where all people have the opportunity to develop, grow, and prosper,” Wade says. “It’s not only the right thing to do—it’s the smart thing to do. When you have a very rich, robust, and diverse economic base, you tend to do better than those that don’t.” In other words, “the diversification of Rochester both economically and socially has really benefited us.” Since 2013, 46% of the total loans and investments made by the RAEDI’s Economic Development Fund have been to businesses led by women or minorities.
“Rochester collaborates very well” on economic development, Wade says. RAEDI, DMC, the Rochester Area Foundation, and other nonprofit and private-sector organizations are partnering on projects relating to housing construction, workforce development, and employment opportunities. For instance, RAEDI works with the state Department of Employment and Economic Development (DEED) along with the Rochester office of Workforce Development Inc. to find and develop employees who are seeking more remunerative careers.
“It’s a tremendous competitive advantage for Rochester to have two very strong economic development organizations [RAEDI and DMC] that work very well together,” Wade says. If you’re a business owner or an entrepreneur, he adds, “you want to be in a place where people are spending a tremendous amount of time, energy, and effort to ensure that housing, education, workforce development, and infrastructure continue to be invested in.” Whatever sector that business operates in.
Economic Vitality Fund
In November 2023, Rochester voters approved the renewal of a half-percent sales tax that the city originally established in the 1980s for local investment, facility construction, and infrastructure projects. “We’re very excited that it passed,” says Rochester city administrator Alison Zelms. The renewed sales tax, which became effective in May, will allow Rochester to invest $205 million over 24 years in street projects, flood control, and water quality work, as well as in the new regional sports and recreation complex.
In addition, up to $50 million of that money will be used to establish an Economic Vitality Fund, which Zelms describes as a “unique use of the sales tax.” Part of this new fund will be used to promote existing business and workforce development programs. “We want to partner [with other organizations] in making those more accessible and more robust,” Zelms says. The City of Rochester, which is managing the fund, will be collaborating with the University of Minnesota Rochester and Rochester Community and Technical College “to connect with what they’re already doing and elevate their capacities and opportunities,” she adds.
For instance, the city wants to help identify the skills particularly in demand by regional employers. It also wants to help establish or build up workforce programs to stimulate more job opportunities. The renewed levy is providing opportunities for the city to “get creative” with these economic development initiatives, Zelms says.
For now, most of the Economic Vitality Fund is focusing on investments to help alleviate shortages of middle- and low-income housing, including the preservation of existing affordable residences. As Zelms (and other city leaders) note, adequate housing is also essential for the region’s economic vibrancy.
Rochester’s Equity in the Built Environment Program
Combining economic development and employment goals, Rochester’s Equity in the Built Environment program has been established to connect the region’s women of color with jobs in construction and related built-environment industries.
Rochester Mayor Kim Norton led the creation of the program, which was established in 2022. To fund it, the city is using the $1 million it was awarded through the Bloomberg Philanthropies 2021 Global Mayors Challenge. Equity in the Built Environment is providing free training and other guidance to enrollees.
The program is a win-win for both parties. While 13% of Rochester’s population identifies as women of color, there are less than 2% of women of color currently working in these industries in Rochester and elsewhere in Southeast Minnesota. And with construction booming and skilled employees hard to find, employers could certainly use the help.
Among the Ranks
Sammi Loo // Restaurateur & Food Entrepreneur
Sammi Loo is a culinary fixture in Rochester—she owns Ootori Sushi, a Parisian cafe called Mezza 9, and, as of February, a Shanghai speakeasy called 1928 Cocktails and Bites. Loo, born and raised in Ipoh, Malaysia, felt called to start her business ambitions in Rochester due to its blend of urban amenities and Midwestern charm.
“Mayo Clinic draws a lot of top experts and people from around the world to visit each year,” she says. “And Rochester fosters collaboration with businesses and government entities to support entrepreneurship, which provides resources, mentorship, and funding opportunities for startups.” In addition, the Rochester Area Chamber of Commerce “provided valuable information about the local market and connected me with other businesses.” When she’s not calling the shots in one of her kitchens, you can find her at Thursdays on First and Third, or spending time with her family on the lake this summer.
Explore the following pages to learn more about Rochester:
Rochester Rising: Employment | Twin Cities Business #Rochester #Rising #Employment #Twin #Cities #Business
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Rochester Rising: Employment | Twin Cities Business:
Given Rochester’s reputation, it’s only natural that health care is seen as the cornerstone of i…
