Is Minnesota Primed for Moneyball Investing?

In 2002, the Oakland A’s became famous for their data-driven approach to team building, inspiring the book and later movie, Moneyball. Their general manager, Billy Beane, took one of the lowest budgets in the league and turned it into one of the A’s best seasons at the time, ultimately tying them for the most regular season wins in Major League Baseball that season.  

He did this by focusing on players who were consistently getting on base, not the headline-grabbing home run hitters.  

So, if it worked in baseball, can it work in early-stage investing? From where I sit in Minnesota, I think it can. And I think this market might be one of the best places to try it.  

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The Traditional Venture Model

Traditional venture capital bets on big winners, the unicorns. These are outsized exits, often hundreds of millions or billions of dollars. These companies are the home run hitters every firm is chasing.

Put simply, it’s a power law business. A small number of companies (the home runs) drive the majority of the returns, often returning the entire fund and more, while most investments return nothing (the strike outs).

To make the math work, funds are intentionally built to chase outliers. Investors underwrite companies to reach hundreds of millions or billions in enterprise value, because a single 50–100x outcome can offset an entire portfolio of losses.

This model works well in ecosystems like the Bay Area or New York, where there is dense access to capital, talent, and acquirers, and where companies can more realistically pursue those massive outcomes.  

Traditional venture is not designed to win often. It is designed to win big enough, a few times, to make everything else irrelevant.

Betting on Base Hits, Not Home Runs

But what if you built the portfolio differently, not by rejecting power law dynamics entirely, but by shifting what ‘winning’ looks like? What if the goal from the beginning was just to ‘get on base’?  

When you build a portfolio around companies shooting for $15-50M exits, you don’t need a miracle to win. Exiting at $50M is simply more achievable than getting to $500M. And in my experience, those outcomes show up more often than people think, especially outside of coastal markets.  

From an LP perspective, the math can still work. A traditional fund might rely on one breakout company to return the fund while the rest underperform. But a portfolio with 5 or 6 companies returning 5-10x can achieve the same Multiple on Invested Capital (MOIC), just with a different distribution of outcomes.  

The individual wins are smaller, but they show up more often, and as a whole can drive the same fund-level results. The difference is not the end result, but the strategy it takes to get there.  

Why Minnesota?

From what I’ve seen, there are plenty of founders in Minnesota, and across the broader Midwest, who aren’t trying to build the next billion-dollar headline company (even though they might be trying to sell investors on it).  

It’s not a lack of ambition, but instead a different orientation around risk, ownership, and outcome. And part of that is practical: the cost of living in Minnesota is lower, and therefore the bar for life-changing outcomes can be too.

In markets like the Bay Area or New York, the pressure to swing for $1B outcomes is baked into the ecosystem. Here it’s different (or at least, behind closed doors).  

When you get past the surface and really understand what founders want, you hear a different story than the typical venture narrative. For many founders, walking away in five to seven years with $2–10M in their pocket would be life-changing.

And if that’s the goal, the strategy should match it.  

Most founders don’t need a $500M exit to reach their personal financial goals or get what they want out of their business. And if you’re not building toward a $500M+ outcome, you don’t need multiple institutional rounds. Raising less capital means less dilution, allowing founders to achieve their goals with a much smaller exit.  

Of course, from a fund perspective, the question isn’t just what works for founders, but whether those outcomes can still support the return profile LPs expect.  

If a fund is disciplined around valuation, structured to capture meaningful ownership, and the portfolio is built around smaller exits at a higher frequency, then the overall financial outcomes can still be equivalent to a traditional VC model.

A Different Kind of Portfolio

This isn’t to say every Minnesota founder is aiming for a $25M exit. Many are building something much bigger, where the traditional venture model is a perfect fit. But there is a real segment of the market that would consider $15-50M a strong outcome.

And from an investor’s perspective, those are exactly the companies you can build a Moneyball-style portfolio around. Not by chasing outliers, but by consistently getting on base.

The question is not whether power laws exist, they do. The question is whether, in markets like Minnesota, you can build a portfolio that relies less on a single extreme outlier and more on a higher frequency of achievable outcomes.

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Ellie Pigott is an Associate at Traction Capital, a Minneapolis-based venture capital and private equity firm focused on growing businesses across Minnesota and the surrounding region. She's active in the local startup community, mentoring students at local universities and advising early-stage founders as well as part of Minnesota’s Emerging Venture Capital network, supporting the next generation of investors and operators. She holds a degree in Entrepreneurship from the University of St. Thomas.