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Minnesota: Bottom-feeder in business innovation?

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Minnesota is a pioneering state in online education and awash in med-tech. The Twin Cities is full of tattooed bike-pedaling tech nerds and entrepreneurs with big ideas. And the state is home the Super Bowl of business-building (The Minnesota Cup) and groups like Mojo Minnesota, a co-operative dedicated to fueling entrepreneurship.

And yet – Minnesota is near the very bottom in a ranking of states for business innovation, according to a recent ranking.

Minnesota ranks No. 46, barely ahead of Mississippi and Louisiana, but below most of the rest of the nation, including Iowa, Arkansas and Alabama, according to Fast Company magazine’s ranking of innovative states.

How is that possible?

According to the magazine, Fast Company editors crunched numbers from the Bureau of Labor Statistics' launch rate of all private-sector businesses, as well as the Kauffman Index of Entrepreneurial Activity's percentage of people who are starting new businesses and how that percentage changed over time. It also tallied the percentage of jobs contributed by those less than three years old and how that percentage changed over the past five years. To analyze the self-described startup community, the magazine incorporated the health and growth rate of Startup America members and a tally of AngelList and Fundable members.

Florida was named the No. 1 state for innovation, with Texas, Maryland, Arizona and Alaska rounding out the top 5. West Virginia was ranked last at No. 51.

This is not the first time Minnesota has been absent in this kind of list. In similar rankings like one done last year by the U.S. Chamber of Commerce, Minnesota was not among the top states for founding a new business. (Although it did pop up at No. 11 on a Governing magazine ranking of small-business friendly states.)

Perhaps Minnesota can take comfort in this: "Prominent studies that rank states’ business climates often contradict each other and should not be used to inform public policies," according to a new “Grading Places” report published by the Washington, D.C.-based Good Jobs First.

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