Minnesota-based startups receive funding through the launch of Traction Capital's Fund II
Traction Capital, a Minnesota-based venture capital and growth equity firm, has recently launched its second investment fund, Fund II. The fund aims to scale early-stage businesses primarily in Minnesota and neighboring states, targeting Midwest companies with strong growth potential, scalable business models, and committed leadership.
Since its launch in March 2025, Fund II has raised over $30 million in subscriptions, with a target range of $40 million to $60 million. This capital will be used to invest in and acquire high-potential businesses, offering not just financial backing but also strategic guidance and a hands-on approach to help founders scale.
The fund has already invested in two local companies: Blank Metal, which specializes in helping enterprises integrate advanced AI technologies to drive real business outcomes, and PARQA, a technology consulting and implementation firm that assists staffing and recruiting firms in modernization and growth.
Traction Capital builds on the success of its first fund by continuing to invest in and acquire high-potential businesses. The firm leverages a large network of investors, with over 80% being small business owners, to provide resources and cross-industry expertise for portfolio companies.
To strengthen Fund II’s growth strategy, Traction Capital brought on Matt Meents as a Strategic Growth Partner. Meents brings experience from scaling companies to significant revenue milestones and will guide founders through growth challenges and scaling opportunities.
Fund II emphasizes combining capital with strategic support, applying frameworks like EOS® (Entrepreneurial Operating System) to create value and accelerate growth for Midwest startups ready to scale. Shane Erickson, Managing Partner at Traction Capital, stated that they don't just invest, but offer hands-on experience to help portfolio companies grow.
The first fund of Traction Capital has already invested in 13 companies and facilitated additional capital raises for five portfolio companies. Moreover, the first fund has completed two acquisitions.
Traction Capital's success is evident in the growth of its portfolio companies. Kwikly, a portfolio company, was named Minnesota's fastest-growing private company in 2024, while GoRout experienced a dramatic expansion in growth and product offerings. TroutRoutes, another portfolio company, achieved an exit through its sale.
Shane Erickson expressed his excitement about launching Fund II, stating, "We combine capital with the right strategy, expertise, and a solid framework like EOS® to achieve significant results." Traction Capital will continue to invest in and buy high-potential businesses, contributing to the growth and development of the Midwest startup ecosystem.
[1] Traction Capital Press Release, "Traction Capital Launches Fund II to Scale Midwest Startups," March 2025. [2] Traction Capital Website, "Fund II," accessed April 2025. [3] PARQA Website, "About Us," accessed April 2025.
investments in the Midwest business landscape will be facilitated by Traction Capital's Fund II, which aims to raise between $40 million to $60 million for venture capital and growth equity, focusing on acquiring scalable companies with strong leadership. The fund, which has already invested in two local companies (Blank Metal and PARQA), offers strategically informed guidance to support growth in addition to financial backing.
