mojo startup school
TRANSCRIPT
STARTUP SCHOOL2012
What’s MOJO
• Innovation Co-operative
• Working to build and promote MN's innovation ecosystem
• Support to MN startups and high-level collaboration
• Action-oriented
Startup Ecosystems
“Boldness of enterprise is the foremost cause of America’s rapid progress, its strength and its greatness”
Alexis de Tocqueville
U.S. High Tech Economy
• Total employment of 5.75 million workers• Tech employment up 115,000 workers (2%) in first half of 2011• Average wage of $86,800 in 2010 more than 93% higher than
average private sector wage of $45,000
Hot Spots for High Tech in U.S. Forbes list in 5/2012 of 50 Metro area hot spots rated
based on employment growth in sectors most identified with high-tech (software, data processing, internet publishing and STEM) 1. Seattle 2. Washington D.C. 3. San Diego 4. Salt Lake City 5. Baltimore …. 26. Minneapolis Major players of the past: 7. Silicon Valley and 11.
Boston
Where We Stand
In a similar study to Forbes by the Atlantic Magazine, Minneapolis-Saint Paul ranked 17th in high-tech metro areas
Concentration of high-tech companies, patents per capita, and average annual patent growth
Study credited U of M tech status for the area’s high ranking
Some MN High Tech Stats
120,800 high-tech workers in 2010 (17th in US) 2,900 jobs lost between 2009 and 2010 High-tech worker earns $79,200 (20th) 7,900 high-tech establishments (17th) 2nd in electromedical equipment, 6th in computer
and peripheral equipment mfg, and 8th in electronic components mfg TechAmerica Foundation Oct. 2011
Room for Improvement in MN
Low % of regional VC $ flowing to “seed stage” or “first round” investments (MN only exceeded Nat'l average in VC financing 5 of last 15 years)
Declining share of entrepreneurs and high tech jobs (2.4% loss in 2010)
Rate of loan origination to small/mid-size businesses are 40% lower than leading regions
Modest Wage Growth (2.7% from 2000 to 2008) Innovation Contraction (48th in
entrepreneurs/capita)
What are hot spots doing well?
Presence of solid tech-oriented companies Substantial employment in R&D Flexible regulatory environment Well-educated and diverse workforce Expansion in STEM jobs Affordable cost of living Broad tech economy Marketing!
How to Improve High Tech in MN
Capital Availability Human Capital Innovative Ideas Legislative Technical Assistance
Capital Availability
More seed funding and angel investments in the early, mid, and growth stages of companies
More access to traditional banking More participation in Angel tax credit program and
use of Crowd funding when it becomes fully available
MN Angel Tax Credit
Tax incentive for investors who invest in startup businesses that are focused on high technology or new proprietary technology
In 2011, the program’s second year, 114 businesses received over $64 million in investments
Human Capital
Keep and attract talent with emphasis on STEM education (science, technology, engineering, and mathematics)
MSP area strong in talent, though achievement gap and skills gap threaten position
Innovative Ideas
Robust corporate R&D environment Technology Transfer improvement Statewide innovation clusters More tech collaboration
Start-up Companies
It is important for start-up companies to focus on a couple crucial areas in their start-up Building a Quality Team Solid Business Plan Raising Money Getting to Market Early Playing to Strengths
Compellent
Started in Eden Prairie in 2002 as a provider of enterprise storage systems by Phil Soran
Not profitable until 2008 but company skyrocketed. Purchased by Dell for $960 million in 12/2010. 300 employees in MSP at the time of merger
Revolutionary “storage center” that lowers storage costs by 50% and cuts power and cooling costs by up to 93% for mid-size enterprises
Startup Panel
Matt Kyle – Circle Biologics @matthewrkyle
Corey Thompson – Naiku @naikuinc
Parag Shah – Prodality @pshah88
Circle Biologics, Inc.• Plymouth, MN • Regenerative Medicine
• FDA marketing clearance & Issued IP
• Successful fund raising
The Financing Cycle
Methods of Financing a Startup
•Equity / issuing stock•Common stock•Preferred stock•Convertible debt
•Loans•Credit cards•Home Equity•Bridge loans•Friends/family
Investment Community
•Accredited Individual Investors (Angels)•Angel Networks•Private VC firms & Family Offices•Venture Catalysts•Specialty Funds•Corporate Venture Funds•Venture Capital Firms
Other Sources of Capital
•Contests/Prizes
•Govt. Grants/Loans
•SBIR / SBA
•Customers
•Vendors
•Distributors
•Specialty Finance
•Equipment loans
•Inventory financing
•AR financing
•Working Capital loans
•Economic Dev.
Angel vs Venture Capital Investments
2009 Angel Venture Capital
Billions Invested $17.60 $20.50 #Companies 57,225 3,133Average Investment $307,558 $5,584,376 % in Seed/Start-up Stage 35% 9.37%#Active angels/VCs 259,480 794
2010Billions Invested $20.10 $23.39 #Companies 61,900 3,612Average Investment $324,717 $6,475,637 % in Seed/Start-up Stage 31% 11.30%#Active angels/VCs 265,400
2011Billions Invested $22.50 $29.45 #Companies 66,320 3,909Average Investment $339,264 $7,533,896 % in Seed/Start-up Stage 42% 11.20%#Active angels/VCs 318,480
Center for Venture Research at University of New Hampshire, PriceWaterhouseCoopers, NVCA,, and Thomson Reuters
Community Resources
The Collaborative
University of Minnesota
• Training Entrepreneurs
• The Holmes Center
• Minnesota Cup
• Ventures Enterprise
• Tech Transfer
• Office of Tech Commercialization
• Medical Devices Center
Thank You
“A healthy economy is one driven not just by greater efficiency and productivity but also by innovation.”
Thomas Friedman, author, That Used to Be Us