MOJO Startup School

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STARTUP SCHOOL 2012

Transcript of MOJO Startup School

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STARTUP SCHOOL2012

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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

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Startup Ecosystems

“Boldness of enterprise is the foremost cause of America’s rapid progress, its strength and its greatness”

Alexis de Tocqueville

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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

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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

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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

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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

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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)

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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!

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How to Improve High Tech in MN

Capital Availability Human Capital Innovative Ideas Legislative Technical Assistance

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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

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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

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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

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Innovative Ideas

Robust corporate R&D environment Technology Transfer improvement Statewide innovation clusters More tech collaboration

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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

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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

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Startup Panel

Matt Kyle – Circle Biologics @matthewrkyle

Corey Thompson – Naiku @naikuinc

Parag Shah – Prodality @pshah88

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Circle Biologics, Inc.• Plymouth, MN • Regenerative Medicine

• FDA marketing clearance & Issued IP

• Successful fund raising

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The Financing Cycle

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Methods of Financing a Startup

•Equity / issuing stock•Common stock•Preferred stock•Convertible debt

•Loans•Credit cards•Home Equity•Bridge loans•Friends/family

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Investment Community

•Accredited Individual Investors (Angels)•Angel Networks•Private VC firms & Family Offices•Venture Catalysts•Specialty Funds•Corporate Venture Funds•Venture Capital Firms

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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.

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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

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Community Resources

The Collaborative

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University of Minnesota

• Training Entrepreneurs

• The Holmes Center

• Minnesota Cup

• Ventures Enterprise

• Tech Transfer

• Office of Tech Commercialization

• Medical Devices Center

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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