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MOJO Startup School
 

MOJO Startup School

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    MOJO Startup School MOJO Startup School Presentation Transcript

    • STARTUP SCHOOL 2012
    • What’s MOJO• Innovation Co-operative• Working to build and promote MNs innovation ecosystem• Support to MN startups and high-level collaboration• Action-oriented
    • Startup Ecosystems“Boldness of enterprise is the foremost cause of America’srapid 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 Natl 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 •Specialty Finance•Govt. Grants/Loans •Equipment loans •SBIR / SBA •Inventory financing•Customers •AR financing •Working Capital loans•Vendors •Economic Dev.•Distributors
    • Angel vs Venture Capital Investments Angel 2009 Venture Capital Billions Invested $17.60 $20.50 #Companies 57,225 3,133 Average Investment $307,558 $5,584,376 % in Seed/Start-up Stage 35% 9.37% #Active angels/VCs 259,480 794 2010 Billions Invested $20.10 $23.39 #Companies 61,900 3,612 Average Investment $324,717 $6,475,637 % in Seed/Start-up Stage 31% 11.30% #Active angels/VCs 265,400 2011 Billions Invested $22.50 $29.45 #Companies 66,320 3,909 Average 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 greaterefficiency and productivity but also by innovation.”Thomas Friedman, author, That Used to Be Us