A state’s sovereign wealth fund modeled after Norway’s. A governor who sold his software company to Microsoft for $1.1 billion. These aren’t details about a coastal tech hub – they’re the building blocks of North Dakota’s emerging technology ecosystem. In a recent episode of Category Visionaries, Thread CEO Josh Riedy revealed how this unlikely state is transforming its oil wealth into startup innovation.
The Well-Kept Secret
“North Dakota is a well-kept secret that others are learning about,” Josh explains. Unlike traditional tech hubs, North Dakota’s advantage comes from an unusual source: oil money transformed into startup capital through smart policy decisions.
The Norway Model in North Dakota
What sets North Dakota apart is its approach to managing resource wealth. As Josh describes, the state has “a state sovereign wealth fund that is largely modeled after Norway’s sovereign wealth fund, having those oil dollars put to good use, moving away from a commodity driven economy.”
This strategic reinvestment of natural resource wealth into innovation represents a unique model for other resource-rich regions looking to diversify their economies.
The Doug Burgum Effect
The state’s tech credibility wasn’t built overnight. Josh points to a crucial milestone: “If you’re from the region, then you know the name Doug Burgum.” The current governor’s success story with Great Plains Software, which was acquired by Microsoft around 2000, set an important precedent. As Josh notes, it was “Microsoft’s largest acquisition… a $1 billion exit in the state of North Dakota to Microsoft of all places.”
This exit did more than just put North Dakota on the tech map – it led to continued investment in the region. “Microsoft investing a lot of time and effort in Fargo, North Dakota, that just left an indelible mark on me as an aspiring technician,” Josh shares.
The Evolution Since 2018
The ecosystem has undergone a remarkable transformation in recent years. “It is a markedly different place from where I began in 2018,” Josh observes. This change is evidenced by Thread’s position as “North Dakota’s second series A company,” suggesting a maturing startup ecosystem.
New Resources for Founders
Today’s founders in North Dakota have access to resources that didn’t exist just a few years ago. As Josh explains, “Those that have followed in my footsteps, that are founders in North Dakota today, have a vastly different environment that is hugely supportive.”
Key Advantages of Building in North Dakota
- State Support: The sovereign wealth fund provides a unique funding source for innovation
- Previous Success Stories: Microsoft’s continued presence through the Great Plains Software acquisition
- Less Competition: As one of only about 400 founders in the state, standing out is easier
- Growing Investment Interest: Notable investors like Kevin O’Leary are taking notice
The Future of North Dakota Tech
For Josh, the state’s trajectory is clear: “It’s going to be fun to watch that mature.” The combination of smart policy, previous success stories, and new support systems suggests North Dakota might be positioning itself as an unexpected but powerful player in the tech ecosystem.
Lessons for Other Emerging Tech Hubs
North Dakota’s approach offers several insights for other regions looking to build their own tech ecosystems:
- Leverage Local Assets: Whether it’s oil wealth or other resources, use existing advantages strategically
- Celebrate Success Stories: The Great Plains Software exit continues to inspire new founders
- Build Support Systems: Create an environment where founders can succeed
- Think Long-Term: Focus on sustainable ecosystem development rather than quick wins
As more regions look to develop their own tech ecosystems, North Dakota’s model of converting natural resource wealth into innovation capital offers an intriguing blueprint. While still early in its development, the state’s strategic approach to ecosystem building suggests that the next wave of tech innovation might come from unexpected places.
As Josh puts it, it’s “a great place. And there are many entrepreneurs that are getting their start in North Dakota today because it’s a very friendly environment.” For founders looking for alternatives to traditional tech hubs, North Dakota’s emerging ecosystem might be worth watching.
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