Loading...
7.0. EDSR 07-14-2003 ITEM # 7. City of Elk River MEMORANDUM TO: Economic Development Authority (� FROM: Heidi Hall, Economic Development Assistant �l ' DATE: July 14, 2003 SUBJECT: Business Incubator Update Attachments • Incubator Summary Report, Harlan Jacobs,January 13, 2003 • Incubator Status Report,Harlan Jacobs,July 10, 2003 • State Loses Seed-Financing Champion,Profits Journal Online,July 30,2003 Issue Incubator consultant Harlan Jacobs will be present at the meeting to present the attached Incubator Status Report. For your information,Mr.Jacob's January report is also attached. Loss of Collegue The attached article is a tribute to Roger Jenson, Executive Director of the Anoka County Economic Development Partnership and President of the Anoka/Sherburne County Capital Fund. Mr.Jenson was a key partner in the success of the Elk River Incubator Program. He and Harlan Jacobs worked with staff to develop the program in 1996 and 1997. Subsequent venture capital opportunities were provided to Incubator tenants by the Anoka/Sherburne County Capital Fund. • jiv AN-14-03 06 :05 AM P. 01 •• • Elk River Incubator Program Summary Report 13 January 2003 Prepared by Genesis Business Centers, Ltd. Active Prospect for Incubator grogram: •Aview, LLC *Randy Timo's New Enterprise* (not yet named) •TransMed Corporation •Verdantes Corporation* *New Prospects since report dated 14 October 2002 Current Tenants; •KnowiedGenetica, Inc. Recent;_Graduates/Terminations: Grkc!uate Success Storicsz *Bixby Energy, Inc. •Cymbet Corporation *Solar Attic, Inc. *Vertical Publishing, Inc. JAN-14-03 06:05 AM P. 02 i Information about New Prospects: •Randy Timo was one of the co-founders of Visual Circuits Corporation, a 1996 Genesis incubator graduate. Visual Circuits does over $10 million in annual revenues in the field of video compression algorithms and delivery systems. Randy is working in the field of computer games and is currently working out of the basement of his home in Ramsey, Minnesota. (Visual Circuits started in the home of Dan Sullivan, the other co-founder of Visual Circuits.) Randy left Visual Circuits about 4 months ago and is considering the Elk River incubator program for the location of his new business. •Verdantes Corporation is an Edina based software company that delivers updates to large files over the internes in the `background'. An obvious application for this is the new field of what has been called 'BMW Movies', the new 8 minute advertisement done in the framework of an entertaining short movie. These are being distributed over the internes. The ability to ideliver the content (large files) over a dial-up modem is problematic if it's done on line real time. However, if it is done in the background while other information is being processed or when the computer is on but the computer user is away from the console, then the problematic aspect of a dial-up modem is eliminated. The founder of Verdantes operates out of his home. He has been working on this technology for over one year. He is self-funded to date because of the capital gains that he made when he sold his last business. Existing Prospects: Aview, LLC continues to make progress with its new sleek prototype. Several modest investments have been made to date based on the company's progress. Upon receipt of a commitment from the Anoka Sherburne County Capital Fund (pending the review process currently underway) and some level of support from the Elk River Investment Club and/or the Central MN Initiative Fund, the company should be ready to enter the incubator program in the late spring or early summer of 2003. i JAN-14-03 06 :05 AM P. 03 • TransMed Corporation must complete certain tasks before it will be possible � for the company to raise funding from the investment community here in the twin cities. Once the company has completed these tasks, then a new CEO and a Bridge Loan financing will begin. At a certain level of funding, the company will be seeking to move out of the owner's garage/basement in Elk Ri ver. Current Companies: KnowledGenetica continues to make products in respect of its call center software and systems. It was recently informed of a $50 thousand loan approval from the Central Minnesota Initiative Foundation. Several investors are also close to making an investment. Those investments along with the investments already made by the Anoka Sherburne County Capital Fund and the Elk River Investment Club will become part of the one for one match required by that loan program. Ak Recent Graduates/Terminations: Bixby Energy has left the incubator facility as was previously reported. Also, Vertical Publishing has left on an interim basis to be nearer its customer base in the St. Paul area. Solar Attic has moved back into the founder's garage. Bixby Energy has raised over $600 thousand in its recent offering; according to the CEO and the CFO, the company's product line has been well received. It is hoped and it is likely that the company will move back into Elk River proper in the next few years; in the interim, it is helping the general level of the economy in Elk River by virtue of its location in Rogers. Solar Attic and Vertical Publishing each continue to eek out modest sales revenues. Vertical Publishing is confident that it will continue in business and eventually become a significant employer in Elk River. The present CEO indicated that he would have pulled the plug on the company at the end of December if he did not have strong convictions that success is achievable. 0 Elk River Incubator Program Status Report: 10 July 2003 There's a Shortage of Seed Capital in the Land Most of the prospects that have been identified in the past three months are holding firm in their homes/garages until it is clear that they can raise sufficient equity capital with which to grow their businesses once they would move into the incubator facility in Elk River. While not meant to complain, it must be recognized as a fact of the present economic and stock market cycles that the cupboard is bare at both the Anoka Sherburne County Capital Fund (ASCCF) and the Elk River Investment Club (ERIC). The entrepreneurial prospects understand this and some are not inclined to move-in or to seek approval for moving in until it is clear that they will receive a modicum of funding from these 0 two sources. The short run prospects for additional funding for each of these two groups is mixed. At the ASCCF, Mr. Roger Jensen, our dear friend and colleague, died suddently on the 30th of June after surgery for a brain tumor two weeks prior to his death. The ASCCF is in the process of seeking a replacement for Mr. Jensen and to continue his work of seeking new funding from the banks, utility companies, and the private investors that have expressed interest in either making a follow on investment or an initial investment. • • We have two solid new prospects for the incubator program at this time-both of which are not deterred by the lack of immediately available funding from these two sources: -Intellipatch, Inc. -Lap2, Inc. Intellipatch, Inc. has developed a pulse tracking wristwatch with a great number of additional capabilities to be deployed as funding permits. The CEO/Founder of the company is Mr. Mike Geatz. An executive summary of the company has • been forwarded to the Elk River EDA and to the ASCCF and to ERIC as well. This company only needs about$25,000 to get its molds ordered in the Far East. It is likely that they company will wish to enter the incubator program prior to the receipt of any funding commitments. Further, it is likely that the company will find one business angel quickly and then be ready for business. Lap2, Inc., is a new company founded by Mr. Rob Henningsgard who lives in Elk River. He was formerly with Cirus Controls,LLC of Brooklyn Park, Minnesota. And he also worked with Fast Technologies, a company that had offices in Elk River near the post office. • Rob intends to focus his new business on the software that will be needed to • use the technology that will shortly be made available commercially to consumers in the realm of the convergence of telephony/computers. Sprint and others will shortly be introducing mobile telephones that resemble personal digital assistants (PDAs) and possess a QWERTY keypad near the bottom of the telephone. In the future,these 'technology platforms'will remain underutilized until software is written and deployed to perform useful commercial transactions. At present, these applications cannot be disclosed in this report as they remain subject to invention disclosure documents for the patent application aprocess. Suffice it to say that there are many things that people use cellphones for in Europe that no one in the US would imagine doing such as paying for a can of cola in a machine or paying traffic tolls or parking meters by pointing a mobile phone and pressing a button or entering a code or both. Other Prospects: Among the other prospects, Verdantes remains in the field of eligible prospects but is not ready to budge from the founder's home in Edina. Its business prospects continue to grow, yet, not to the point that venture capital will be attracted. • • ManageTheFarm remains a prospect. To help the company to get funding, we have introduced the company to Mr. Brian Sorbe of Alliance-Controls, a farm animal husbandry record keeping software company from a small community near Jackson, Minnesota in southwestern Minnesota. It is possible that Alliance-Controls will get funding from a group in Canada shortly and in turn might wish to propose a merger or joint venture with ManageTheFarm. The Elk River location would be good for the combined entity or the joint venture as it would need to be within the twin cities metropolitan area. Acera Biosciences is a prospect for the establishment of its operations in . Elk River but not in the present incubator facility because it needs laboratory space and would have a large volume of water usage (that would upset the septic tank operations at the present incubator facility). We have helped to organize various meetings with Acera in order to help the company to agree to establish its operations in Elk River per se. The President of the company lives in Elk River so it has not been too hard a sell. However, his company is being courted by the Mayor of St. Paul and others that would like to draw companies like Acera(it is a licensee of the University of Minnesota)to their biotech incubator parks along the transitway between the Minneapolis and St. Paul campuses of the University of Minnesota. • TransMed a local company opeating out of the founder's garage in Elk River . remains a prospect for the incubator after it gets certain corporate transactions completed that are necessary for it to access the capital markets. We continue to monitor that situation. Respectfully submitted, Harlan T. Jacobs Genesis Business Centers, Ltd. • • O cn lia4 O 0 O .. AD c, e' .« O tC :2! S. 0 ill O p CD< ( N : ID 0 K 3 < = < CD < 0 (D co '-0 0c ONc 3 °' n, 0 °- 0000 _ o ID o 0 �' @ u. P- (D v < .-. .-« (D = (n t7► 0 = D- • .. — c° coTD 3 ry-1 .q 1 .CD n O N Q < o N 0 O * w (D .. O y 0 ;t CD C �. C 0 0 .C-_• 0011 0 o, 0 C -"c0 5--m m o n o a (p (73 Qo — m a v � -, v m °= 3 3 cD 0 m N 0 v, (D _ 0 g- (4 3 —(n 0 v -, c o g 0 a N O - tU .. 7. N 5 O, N a= .�. .A-' rt rt N = O < — o m Qo-co v•< ,_ y N 0 3 �<< 3 0 .. 0 o n moo = 3u)co = 0 �� u) cm0 0CD CD �'. � ' Q0 O • •" O Oyh, fl, -' n '. CD Q C 3•Zs- , mom _=. (3 (ADD0o 00 � m' a c Q 0 3 _ v o Q aosisaii 0.=-g- c0 -oc tea, -° ° 0 Q, QCD (n o y N M '�'', • liI C3. (na ° �D50o (c) ,N ''"0 N 0 N O 6 I '0� O a O Cl)(� — N „� 7� V) 5- - Q < as = x• 33 O c (a _v 0 0 , 3 ,. 3 o CD CD (D OCn3O .7-.,,a) -, E v s CD u) (Do rn Qv 0 0 -, coWC�nv m � �. c 0 ` 0 v, L 000 `•• CD-°,- co-05 .. < .= CD CDw0 (10 * '17 * (°i, m' � � (moi,=' c - 3 -I.� rn m Q 7 (D •v, 0 Rw o C71- 0— a, Q, ° 0 °- C 06„) S`< n) (n < (° C) : � D) `< 00o0(00 - a, N � Q-- Ouw, cD CD w m ° D � � � v (D 0_ o � � = m o v — � 0 6v, m y ° v 3 (u 0 0 -• Q = 0 5 0) () (Ti CD 0 0 ..(a „•c° -" m > > Q D _ r ty - < v o 0 � 0 � 3 70 c 0 0 3 30 Cu, Q. = v00i v 7 13)o -xaCCoc,� OON ° 0, (n � al �' o Q. 3 x. 0. 0 Q (1, 5 QD 5- g-03 3 � N (D 5-- _ 5. o' m 0 0 0 °(° r* =-° ? � CC n, 0 3 amu.. ° m a an, 3`0' 0 - 3 5. 2 0 3m � 61 *m ' c 0 ° � = vo0 ' °. * 3 < 03= *. N n, 0 E 0 � 0• D -' 7- 7- 0 0 0 v 0 � .� fl, < a, CD 7 m fl. ° N 0.`z. m 0 �. o m CD 3 m Cl) 3 3 c ° �• a) • (D ,. N v0, - v0, (� 0 ' (CD o v FA rt v Cn o m 0 CD -ti 0 ,-d DO III CD N O O N ID % 7 0 0 Lth7 6. 0 § o cno o_ a) m 3 > Rf 0_ cn / - o f0 0 0 CD Ho0 CD E- k•�/ q & z-CO / / . k` CV _ � = < qi v0� /\E/ 0 -. \>< $Ea \ c �© >_° a) 0- E §E° Q % LCD 2 0 <in V -n• 0_ � = \§ § % K m K »o £§ off k o «e � 2 ƒmoo k§ge : [22om = R0E_ ] ; ,� »I \ /S § 2. CD CD CD m CL9 = # oma 9 ■ = Ra) �90 \ En_ C� 3 ] -s CS ca en a 5-1 m -, E% / = = 2 O § � { Er * o %§ at /fa § 0 / / § _ co = 0 / CD % 0CMCD N.3 t•.) 0 00 NJ