EDSR INFORMATION 10-14-2002 TitLA
City of
Elk
River
MEMORANDUM
TO: City Council
CC: Economic Development Authority
FROM: Heidi Hall, Economic Development Assistant 1414
DATE: October 14, 2002
SUBJECT: Consider Proclaiming MN Manufacturing & Technology Week
Attachment
• Proclamation Certificate
• MN Manufacturing&Technology Week Flyer
• Issue
The Economic Development staff has been working with the Chamber of Commerce in
planning Elk River's 2002 MN Manufacturing&Technology Week event.
This year's event includes tours of NRG (Refuse Derived Fuel facility), Great River Energy
(GRE), and SoftPac, a luncheon and keynote speaker at GRE, and an open house at the
Landfill Gas-to-Electric Facility.
The event was advertised in the October Elk River Area Chamber of Commerce Newsletter
and on the Dept. of Trade &Economic Development's web site through the Event
Calendar,which highlights what each community in the state is doing for MN
Manufacturing&Technology Week.
In addition to the event, staff is working with Tammy Miller Design on a full-page"Thank
You" ad that will appear in the October 23`d issue of the Elk River Star News along with a
feature article. The purpose of the ad is to recognize Elk River's forty manufacturing firms
by acknowledging the importance of manufacturing in Elk River. The final concept of the
ad will include:
• Names of all firms
• Manufacturing value statement provided by Mayor Stephanie Klinzing
• Photos highlighting several Elk River manufacturing facilities
•
• Recommendation
In recognition of the above activities, staff recommends that the City Council consider
proclaiming October 21-25,2002 as MN Manufacturing&Technology Week in Elk River.
.
tifk --.-�
River PROCLAMATION
13065 Orono Parkway
Elk River,MN 55330 Minnesota Manufacturing and Technology Week
October 2 I — October 25, 2002
WHEREAS, Manufacturing and technology intensive industries are a dynamic part of Minnesota's
prosperous economy, and promotion of this sector's strength, success, and high
quality of life is an integral part of Minnesota's Big Plan; and
WHEREAS, Manufacturing technology provides skill, high wage jobs which significantly
contribute to Minnesota's high standard of living and economic vitality; and
WHEREAS, Manufacturing technology has the second largest total payroll of any business sector
in Minnesota,providing$23 billion in 2000 wages; and
WHEREAS, Manufacturing and technology intensive industries employ nearly one sixth of the
state's non-farm workforce. Since 1990 Minnesota's technology intensive
410 employment grew 18%; and
WHEREAS, Manufacturing and technology employees in Minnesota earn an average of 31
percent more than other Minnesota private sector employees; and
WHEREAS, The manufacturing and technology sector employment grew 2.9 percent nationally
between 1990 and 2000,while in Minnesota it actually increased 17.7 percent (an
estimated total of nearly 510,000 jobs)
NOW,THEREFORE, BE IT RESOLVED that I, Stephanie Klinzing, Mayor of the city of Elk
River, do hereby proclaim that the week of October 21 —October 25, 2002 shall be observed as:
MINNESOTA MANUFACTURING AND TECHNOLOGY WEEK
Passed and adopted this 14`" day of October, 2002.
Stephanie Klinzing, Mayor
111/
Phone:763.441.7420
Fax:763.441.7425
www.ci.elk-river.mn.us
• Acu--
ELK RIVER
INCUBATOR STATUS REPORT
14 October 2002
To: Ms. Catherine Mehelich,
Executive Director,
Elk River EDA
From: Harlan Jacobs
Genesis Business Centers, Ltd.
Date: 14 October 2002
Re: Incubator Status Report
Dear Catherine:
This report is divided into three sections:
Prospects, Graduates, and Tenants
• Prospects:
Acsion Industries, Inc.
Acsion Industries (Acsion) is a Manibota Canada based company that was a
spinout of the Canadian Federal Government's atomic energy program. The
company utilizes certain wavelengths of energy to sterilize medical devices
and the like.
It is exploring the establishment of a base of operations in the twin cities in
order to provide service bureau facilities for the medical device companies
here in the metropolitan area. (Its technology is different than the
conventional approaches to sterilization such as ethelyne oxide that is
performed by Quality Sterilization of Coon Rapids.)
Acsion also has metal parts treatment technologies for aircraft maintenance.
The company's website is: www.acsion.com
Genesis may be providing the Acsion with assistance in respect of accessing
• the capital markets and strategic investor/joint venture transactions.
•
AVIEW, LLC
This company manufactures and markets a portable LCD (Liquid C rystal
Display) system for making PowerPointTM type of presentations on what
appears to be a laptop computer that folds up on itself and becomes its own
self-supporting easel from one of its two 'clamshell' halves. One of the
teachings of the patent application is this self-supporting, self-contained 360
degree container/easel combination housing for protecting and displaying
the otherwise fragile LCD unit.
This system enables the presenter to operate the display system from 'behind'
the laptop in the sense that it is not necessary to operate the keys on the
laptop as would conventionally be the case. Rather, this system is a 'slave'
unit to either a conventional laptop computer or can be 'driven' by a
handheld computer such as a Nokia Communicator or an iPaq (the latter is
about the size of a handheld transistor radio and has full input/output
capabilities of any laptop).
• The inventor is Robert Jackson of Orono, Minnesota. He is presently seeking
funding from the Anoka Sherburne County Capital Fund and various
business angels. Genesis Business Centers, Ltd. (Genesis) is a co-founder of
his company; yours truly will shortly be an investor in his 'bridge loan'
financing round that is currently underway.
Mr. Jackson will have many of the parts manufactured by others overseas
and will do final assembly/quality assurance/distribution as well as sales and
administrative functions from a business operation that could begin in the
Elk River Incubator Program and then migrate to its o wn 1 ight industrial
building over a one to two year timeframe as the volume of business
increases.
Ballistica, Inc.
This company manufactures and markets bullet resistant glass that permits
one way shooting (from the protected side to the outside where the criminal
or terrorist is located). This enables security personnel to capture or kill the
criminal or terrorist before the perpetrator has an opportunity to harm
anyone that may be a bystander on the same side of the glass as the shooter.
(Those on the inside of the bullet resistant glass are protected from the
shooters that are firing on them from the outside.) Page 2
This company is a 're-start' that has already raised over $1 million. A lawsuit
was filed and settled with the former president over certain allegations. It
was a messy deal. We are now doing due diligence on the remaining
members of management and the technology as well as the market prospects
to learn if this company is worthy of further consideration.
The company would be a prospect for the incubator program at the Elk River
Incubator as a corporate base while they seek the capital that will be needed
for t he 1 arge s cale industrial e quipment and facility. Elk River, as a light
industrial hub of the metro area that is also outside the seven county metro
area for State of Minnesota economic development purposes, may be an
ideal location for Ballistica's proposed new bullet proof glass manufacturing
area.
Genesis may be providing Ballistica with assistance in respect of accessing
the capital markets.
TransMed Corporation
TransMed Corporation (TransMed) is a homegrown medical device and
supplies company that is currently operating out of a single family home in
Elk River at 230 Evans Avenue. For the past five years or so, Sam McGhee
has been commercializing a proprietary medical solution (under license from
the University of Wisconsin) in respect of the need to perfuse (keep fluids
circulating) human kidneys for transport to transplantation surgery centers.
The company enjoys modest revenues and is breaking-even. TransMed
wishes to grow the business now vertically by manufacturing a 'cassette' that
would receive both the kidney for transplant as well as perfuse the kidney
with the TransMed proprietary fluids.
TransMed will need to raise several million dollars in two or more stages in
order to be able to develop this commercial opportunity. We are presently
conducting due diligence on this company and expect to have our findings
IDavailable in a few weeks.
Page 3
t
• At that point, Genesis will offer its services to help the company raise funds.
Further, TransMed will be encouraged to consider the new (proposed) Elk
River Incubator facility and to advise the EDA of the type of space that
would be needed in respect of laboratories and manufacturing facilities.
TransMed could be a client of the incubator program when the new facility
is available for a year or two. Thereafter, it would need its own large scale
facility built with clean rooms and laboratories.
Graduates:
Bixby Energy, Inc.
Recently, Bixby Energy graduated from the Elk River Incubator Program by
moving to about a twenty thousand square foot facility in nearby Rogers,
Minnesota. While none of us is pleased to have the company temporarily
leave Elk River per se, it is our understanding that a) there were no suitable
quarters in Elk River on comparable terms and conditions and b) that Robert
Walker, a resident of Elk River, is sincere when he commits himself and the
company to move back into Elk River at the earliest possible opportunity.
•
Bixby has received a large number of orders from its distributor
organization. It is presently seeking working capital (equity and debt
financing) in order to build the finished goods and fill the dealer pipeline.
Bixby faces many of the normal hurdles that early stage companies
experience at this stage of growth. The challenge that its management team
and its board of directors face is to keep from 'running out of its socks'.
Cymbet Corporation
Cymbet continues to make excellent technical progress such that its present
investors (the two overseas based venture capital funds) are now making a
'bridge loan' to the company to help it during its efforts to secure an
additional $10 to $20 million in venture capital.
Until the company gets its next round of venture capital completed, it will
likely delay its expansion into new facilities.
Page 4
t
• The venture capital investors were wearing smiles when we met a few weeks
ago. Again, the technical progress being made at Cymbet is very
encouraging.
Yours truly is a co-founder of the company and will soon be exercising a
warrant to purchase additional shares of the company's equity securities.
Solar Attic, Inc.
SolarAttic continues its operations back in the founder's home. It needs both
working capital and marketing assistance to get its products into the
distribution and installation chain in large volumes.
Tenants:
KnowledGenetica, Inc.
111 Joe Roushar, its founder and president, continues to work hard to get his
team of part time (evening and weekend) professionals to complete the
architecture for the software systems that KnowledGenetica (K-G) is
building. In short, this software system will allow a significant number of
telephone callers to a health care center's claims processing or customer
service areas to be handled successfully (and with a high degree of consumer
satisfaction) by a computerized voice that is actually an 'intelligent' agent.
Many of us have already used American Airlines or Amtrak's personal
assistant; when we do so, we are 'speaking' with a computer. It's one thing to
have a computer recognize human speech in respect of a day or the week or
a flight or rail service destination. It is quite another however to have that
same computer recognize an inquiry from a person in Keokuk, Iowa calling
about t he anesthetist's i nvoice from the surgery performed on his stepson
with a different last name.
The K-G software system will help ordinary people speak with computers on
complex issues such as the health care reimbursement process handles on a
regular basis. It should be every bit as friendly and helpful and easy to use as
• the American Airlines computer.
Page 5
• When a call center can handle an incremental ten percent of its case load by
computer (without human intervention) then the call center can save
hundreds of thousands of dollars annually. K-G will sell its services based
upon those costs savings factors (value added pricing).
It has received funding from the Elk River Investment Club and is likely to
receive an investment from the Anoka Sherburne County Capital Fund
shortly according a conversation with Roger Jensen last week.
Joe has organized a good group of advisors that work a) for stock
options/warrants and/or b) to help assure the success of their investments in
the company. One investor is the spouse o f one oft he top o fficers o f a
major health care company in the twin cities (Joe Roushar had done about
$150,000 of independent software consultancy services for that same
company at the rate of$150 per hour prior to launching K-G).
This one investor became quite familiar with Joe and his work and has
invested over $50,000 in K-G. It is likely that this major health care
organization will be one of the first 'beta' sites for testing of the K-G
• software.
Yours truly is an investor and an advisor to K-G.
Vertical Publishing, Inc.
Vertical Publishing (VP) continues to modify its approach to marketing its
products and services while it adds new products and services in order to
beef up its revenues and margins.
Mr. Ben Moyer, its new CEO, is working hard and smart to grow the
business. It is likely that a new employee will be added in the near future.
We remain highly optimistic about the long term success of VP. Yours truly
is a cash investor in the company.
•
Page 6
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THE BUSINESS JOURNAL I twincities.bizjournals.com
October 11,2002
iotechincubators coming to
Introducing the Revolutionary G
„,-,„,..„,
life for Twin Cities startups � { 1
J
It sounds like something out of a Michael footsteps of a program at University ofIt
Crichton novel. Wisconsin at Madison, Dean Robert Elde of r
Coming soon:The Incubator. the College of Biological Sciences has mapped - -'y v A
You dont need to worry about mutating out an office park to translate university-orig- ,.. N r
viruses in this book,though.In the emerging Mated research into commercial applications. ,-
companies context,incubators are about pro- The shared services will include a wet lab in ,-- -, a -:-:::-.•,..,,,. ...,,,_
viding the right environment for growth. which researchers can borrow time and pay as
An incubator is a facility in which emerging they go. ■ Ideal Storage Solution ■ Professional
companies share space and resources. The The project is a major step beyond the uni-
incubator concept flour- versity's existing modest incubator, Biodale. ■ 10 Year Warranty ■ Easy to Cle.
ished during the last half of Biodale, says Elde, "is the Kinko's of biotech
the 1990s,particularly on the services."The new facility,however,when it is
West Coast,where technolo- ultimately funded and built,will take the corn-
gy ,
mercial and research potential to an entirely �T"
companies could use �
economies of scale to keep F new level.
I Commercial ventures have proven a major
their costs down. (Yes,some
California tech companies source of funding for the university,which in
2000 settled a dispute with pharmaceutical really did try to keep their costs down.) Strategies maker Glaxo Wellcome over school researchJoin
Many of these incubators on an anti-viral drug by signing a licensing �,,
VI s G
were for-profit enterprises, Andrew Humphrey,. agreement valued at approximately$300 mil
S launched by entrepreneurs lion.
with financial or professional backgrounds, Harlan Jacobs,a seasoned financial veteran ;:-""
•
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who often took equity positions in the compa- of technology startups, has also launched ,
vies that worked in their space.Not surprising- Genesis Business Centers in St.Paul.Genesis
ly, since the tech crash,incubators (including is a high-tech, for-profit incubator program
several in Minnesota) have traveled a rocky that will add a wet-lab biotech component in V
road.Many incubators dissolved as their par- the first quarter of 2003. The Minnesota
slump.ump.
slcompanies fell victim to the market Pros and COOS Keystone Program g"
But there are signs that incubators may be Even though the reputation of incubators recognizes company -
making a comeback,at least in certain sectors. took a hit in recent years,the incubator model for giving over 2%
In the Twin Cities, several incubators are in may actually make more sense in the current,
place or on the drawing board,targeting differ- cash-strapped market than it did in the 1990s, , of pre-tax earnings
ent industries and offering varying levels of when capital was easier to find.For companies to the charitable
service and experience.The biotech sector is in resource-heavy industries such as biotech and nonprofit
particularly hot,with for-profit and nonprofit nology, an incubator may offer cost-effective
incubators in the works. building blocks for financial management, community.
infrastructure,marketing and technology.
Shared services This enhanced buying power,plus the ben-
Think of an incubator as the high-tech efit of working in close quarters with related This year
equivalent of college students teaming up to companies and with professionals who have The Minnesota Keystone
rent an apartment. An incubator targets the experience in your sector,may make an incu-
key needs of emerging companies,which usu- bator an attractive option. Program presents the 200
ally have all the infrastructure costs associated But as with any strategic decision,it pays to
with launching a business but are often short look at the market and make a careful cost-
.
ost Honored Company AWart
on cash or are hoarding cash for key R&D and benefit analysis.There are downsides to this i H 1
marketing expenses. model,too.If the incubator is not well-man-
By bringing together several emerging corn- aged,you may find yourself with more admin- RB C
panes in related industries, an incubator can istrative headaches than you anticipated — RBC
• provide reduced costs for space, shared sup- and with less flexibility to make changes to =e
Dain
port staff and telecommunications systems, help your business. RBC ,,,
technology services and so on.Depending on If you grow dissatisfied with the professional
the incubator and the background of the peo- services offered through the incubator(such as ,
pre behind it, the services provided may also financial counseling or business planning),you
include financial consulting, business plan- may be partially handcuffed by the terms of 1 :30am
ning, marketing expertise, and (for scientific your contract. Finally, the quality of the other Hilton Minneapolis• 1(
ventures)shared laboratory and research facil- companies sharing your space can have a posi-
ities. tive or negative impact on the arrangement.
Many of these services would be difficult or Will an incubator work for your company?If
impractical for a single emerging company to you can identify an i cubator in your business Tickets: $48
replicate on its own. Instead, the incubator sector that meets he cost-benefit analysis $425 table of 10 Online
puts them under one roof and divides up the outlined above, th n it is certainly worth a Nonprofit: $40
costs.Some incubators are designed under a careful look. $350 table of 10 RS
for-profit model,and others(such as universi
ty initiatives) are run as nonprofit organiza-
tions. Andrew Humphrey is partner and chair of the Emerging compa- 2002 Minnesota Keystone Program Sp
nies practice at the law firm of Faegre&Benson.He can be reachedle Minnesota,BORN,The Business JourBIOteCh boom at ahumphrey@faegre.com. Target Foundation,Wells Fargo Minne
The University of Minnesota is pursuing an The Minnesota Keystone Program is operated by
ambitious biotech incubator.Following in the