Hosts: Steve Borsch, Tim Elliott and Graeme Thickins (Phil Wilson is off this week hosting a panel discussion at the fabulous Social Media Breakfast, Minneapolis/St. Paul (SMBMSP)).

Music: “Angel of Mercy” by Guitar Jack via the podsafe Music Alley.

Discussed during the show:

• Apple causes ‘religious’ reaction in brains of fans, say neuroscientists
• VISI’s: $10 million dollar expansion in Eden Prairie;  ReliaCloud offering; parent TDS
• LinkedIn Closes At $94 Per Share, With $8.9 Billion Market Cap
  • LinkedIn’s “Pop” on First Day of Trading (article at LATimes) (For comparison, here’s a local angle: In 1995 Secure Computing (then headquartered in MN & now part of McAfee) had a 274% first-day IPO gain)
• Apple Cloud Service (rumors)
  • Apple One Signature Away From Cloud Music Service
  • Apple’s cloud patent (article at AppleInsider)
  • Sony is latest label to sign up for Apple’s iCloud
  • How Apple Plans To Make Cloud-Based iTunes A Seamless Experience
• Earthquakes in the Midwest
• Amazon.com Now Selling More Kindle Books Than Print Books
• The uber-sexy Olympus LS-20 which will do both HD audio and HD video
• That Minnesota company in water Graeme mentioned is Pentair (article at Wikipedia; press release on recent acquisition)

Minnov8 Gang 124 – No Rain in This Cloud is a post from: Minnov8 and published under a Creative Commons license.

Hosts: Steve Borsch, Tim Elliott, Graeme Thickins and Phil Wilson.
Music: LA Big Daddy is the artist & the song is “Him Number 100” via the podsafe Music Alley.

Note: The Minnov8 Gang would like to express our appreciation for the incredible work of Ben Edwards and Luke Francl of minne* for setting up the country’s largest barcamp, MinneBar, and for their tireless efforts on behalf of the startup community. Additional thanks go to the sponsors of this great event without whom it wouldn’t have happened.

One person that deserves significant praise for his nurturing of the startup community in Minnesota—and who has been willing to make available the best possible venue one could hope for with an event like MinneBar or others held at Best Buy’s headquarters—is Best Buy CTO, Robert Stephens.

Minnov8 Gang 122 – Crashing is Not an Option is a post from: Minnov8 and published under a Creative Commons license.

LiveBlog: “MN Venture & Finance Conference” – 10/14/2010 is a post from: Minnov8 and published under a Creative Commons license.

This is great sport, people!  We can’t beat Wisconsin in college football for seven years straight, but, oh yeah, we got those cheeseheads when it comes to the game of innovation!  Or do we?  (And, Gopher fans, I won’t even bring up South Dakota.  Shees.)

“Innovation?  Jobs?  Has Minnesota lost it?  Not for one day in October we haven’t,” says The Collaborative in one of its promos.  “2010 marks our second full year of the worldwide recessionary malaise.  Our state’s economy is also not what anyone is calling ‘robust’.  Our unemployment rate is higher than it’s been in decades.  On the plus side, we’re still one of the brightest economies in the nation,” the pitch goes on to say.

“The positive gap between our jobless rate as compared to the nation is at its highest in 30 years… Yet we also hear many reports of our state losing its way in innovation.”

Can you sense the drama, people?  I’m nervously doing finger and hand exercises right now, in great anticipation of the nuances I may be able to capture on my Macbook or iPad (decisions, decisions) as I contemplate the live-blogging nirvana that awaits me Thursday.  It has me breathing heavy.

“Last year, in the throes of the recession, 54 companies gave presentations, 400+ investors and entrepreneurs came, shared, and discussed growth in tough times,” said Dan Carr, CEO of The Collaborative, in his announcement of this year’s event.  “It actually felt optimistic! These companies also go on to create jobs.  Lots of them.  Minnesota is 8th in the nation in venture backed employment: 365,000 jobs.”  (No word on how many of those people may have been laid off in recent times because those ventures couldn’t raise enough money.)

Carr continues:  “This year’s ‘homecoming’ promises another day-long celebration of ‘doing’ more than ‘hand wringing’.  It’s true that some of our greatest companies rise from difficult times.  Our annual conference has a knack for bringing together Minnesota’s best ‘Up & Comers’.”

The 2010 version of the conference will begin with a look at the current state of venture investing, by way of an opening address from John Taylor of the National Venture Capital Association.  That will be followed by 18 Presenting Companies giving seven-minute presentations, plus somewhere between 20 and 30 more startups in the “Entrepreneurial Showcase” giving one-minute introductions.  (I’ll be particularly interested to see if any of those entrepreneurs can make a impact in that minuscule amount of time.  I’ve heard several of the new 90-second “Alpha Pitches” at the last few DEMO conferences in California, most of which fail to impress, and they have 50% more time.)

Notable in the 2010 presenter group, says The Collaborative, is the mix of industries and stages… “reflecting Minnesota’s variety and also our strengths: Medtech (Inspire Medical Systems, Galil Medical, and InterValve) … Cleantech (EarthClean, tenKsolar and Packet Power) … Technology (Alvenda and Swift Knowledge) … and mouth guard maker Bite Tech … and more.”  (I don’t know about you, but I beam with pride when I tell people about Minnesota’s rich tradition in mouth protection.)

But wait, there’s more!  Panels and workshops during the day (speakers and panelists) will address these topics:

• Financing Innovation circa 2010:  Angel, Venture Capital, and Private Equity
• Medtech in 2010:  Innovating with New Science, Products, and Markets amid FDA and Reimbursement Challenges
• Next Generation Technology:  Minnesota’s Unique Advantages and Opportunities
• Financing in a Challenging Economy
• Exit Strategies
• Intellectual Property and Financing
• Going Public
• Planning Your Long-Term Financing Strategy

You can still register for the event.  And (pssst) I hear the “MHTA” might even have a $100-off discount code.

Some 350 or more are expected at the confab, Carr tells me.  Sure, I know most of them already — but the thought that some in the group may be potential new social media friends for me makes me almost giddy.  And, doggone it, I don’t even have to drive to Wisconsin or South Dakota to meet them.  (This conference has been attracting more and more out-of-state attendees in recent years, which is commendable.)

The Twitter hashtag for the event is #mnconf.  I wonder how many of the blue suits might be tweeting.  Not holding my breath on that, but maybe I’ll set my live-blog software to display all the tweets attendees are blurting out during the event.  It’s time we loosened up this venerable conference a bit — thank God Twitter happened, huh?

Watch for our post with the link to my live blog here on Minnov8, which we’ll have up by late Wednesday.

In Its 24th Year, Venture Conference Asks If Minnesota Has ‘Lost It’ is a post from: Minnov8 and published under a Creative Commons license.

Of course you’re paying attention to the always-on, always connected culture of participation online that is fundamentally shifting how we connect with one another, get our news and alerts, are influenced by people we trust and increasingly making our voices heard when we like or don’t like something a company or organization is delivering to us.

If you’ve read Here Comes Everybody by Clay Shirky, Wikinomics by Don Tapscott, or even the seminal book on the topic, The Wisdom of Crowds by James Surowiecki, than you know about the acceleration in companies looking to figure out how to embrace their customer base and ecosystem for fun and profit (but mostly the profit).

In a growing number of conversations I’m having with business leaders, virtually all of them are either engaged in some form of outreach to their customers, prospects, partners and employees and learning how to engage them in new and online ways. With enough input and smart decision-making, the ability to build and deliver the right products and services goes up dramatically. I thought it a good idea to visit this topic now, especially as there now signs the economy is growing and we’re beginning to experience growth in our trend forecasting businesses, typically one bellwether pointing the way in the housing sector.

Best Buy is the “poster child” for this sort of engagement on a host of fronts. From the employee-only BlueShirtNation (now “Mix“) to Giftag to the relatively new and well executed IdeaX, they’re highly focused on driving forward and engaging on as many fronts as possible.

Though Best Buy is quite public with their offerings — along with an unusual level of transparency and engagement — General Mills is also going out with initiatives like MyBlogSpark to engage women who blog (dubbed “mommybloggers”) in order to engage the typical decision-maker in a household and are the ones who usually drive the family nutrition.

Back in March, the site ReadWriteWeb had a guest author, Tom Powell from Co-Innovative, who wrote this fabulous post on the topic and categorized leading idea and suggestion management vendors with an extensive writeup. 

Powell pointed out these three categories of idea and suggestion management vendors:

Centralized Aggregators:

• Get Satisfaction
• SuggestionBox
• FeVote
• Featurelist

Anyone can start a product or company page on these sites to submit ideas, suggestions, or complaints, which are then voted up or down, Digg-style, and commented on. Companies pay for access to this data, more powerful features, and the ability to “claim” pages and register official employee moderators. Like review sites such as Epinions, conversation happens on these sites with or without you.

Tool Providers:

• SalesForce Ideas Management
• UserVoice
• IdeaScale
• Get Satisfaction
• Kindling

These systems provide similar functionality to that of the centralized aggregators listed above but are controlled and run by the companies themselves. They include features such as ratings (or up/down votes), moderation, the ability to limit the number of votes per user or the access of certain groups, time-limited contests, and automatic searching for duplicate idea submissions.

Integrated Innovation Management Suites:

• Imaginatik
• BrainBank
• SalesForce Ideas Management
• Brightidea
• Spigit

The idea management portion of these suites generally have more robust capabilities, such as weighting the contributions of users according to expertise and trust, creating virtual currency systems, providing enterprise-class security, and customizing captured information. By integrating idea capturing and prioritization into a more robust and sophisticated system, companies can then evaluate the cost of ideas, put ideas through a formal review process, and track their performance from conception to execution.

So which aggregators should you be paying attention to? Which has the greatest reach? The strongest offering?

Read more of Tom Powell’s post here to discover more.

Category to Watch: Idea & Suggestion Management is a post from: Minnov8 and published under a Creative Commons license.

We also talk at length about Minnedemo, the event itself as well as people we met there and reactions we had (Note: we’ll have a video up shortly of a few interviews we did at Minnedemo) and get into a discussion about URL shortening services.

Today’s hosts: Steve Borsch, Tim Elliott, Graeme Thickins and Phil Wilson.

Discussed During the Show Notes:

• Best Buy Idea Exchange (Best Buy is on a tear. Makes one wonder: are these guys going to single-handedly showcase ‘net and web innovation in Minnesota?)
• Shorpy.com; Fieldnation.com; CentralStandardTech.com; StartupShoppe; Magnet360 (MNCup); Reside, LLC
• Minnesota Interactive Marketing Association (MIMA) Events
• Fallon’s Skimmer app, coded by SierraBravo (& led by Chris Black who did an awesome job demo’ing it!)
• Glue Conference
• Garrick Van Buren & Cullect
• Steve Gillmor’s “Rest in Peace RSS” post on Techcrunch (note he also wrote about “The Death of Podcasting” in July of 2005….oops)
• Steve Borsch’s post, “It’s the Value, Stupid” in the mention of the disheveled and disorganized late William F. Buckley
• The bit.ly win over tinyurl; Mashable’s post on “90+ URL Shortening Services“

Minnov8 Gang Podcast – Episode 36 is a post from: Minnov8 and published under a Creative Commons license.

…and how that rate of change is accelerating exponentially.

In his book, The World is Flat, Thomas Friedman pointed out an interesting premise that any linear, serial process can be outsourced, even if that process is at the PhD level in mathematics (and he illustrates the point by citing example after example of accounting, algorithim creation and other mathematics outsourcing occurring from Reuters to Wall Street). This can be done since linear and serial processes are defined and understood, and making them more efficient (or cheaper) or shortening cycle times is fairly straightforward. He also points out, “The further we push out the boundaries of knowledge and innovation, the more the next great value breakthroughs — that is, the next new hot-selling products and services — will come from putting together disparate things that you would not think of as going together.”

When one delves deeper in to innovation — especially if that individual is involved in a startup, initiative or major project — the experience of seeing the explosion of content on the web, thought leaders who’ve emerged and are connecting the dots openly in blogs or with other self-publishing means, conferences about innovation which have appeared in areas as diverse as manufacturing, medical and education, it’s easy to get overwhelmed by the exponential increases in information and data that has accelerated online and challenging to know where to turn for help. Especially if you’re a linear, serial thinker who moves forward in that way.

Dealing with this onrush of information requires people who are suited to see changes in parallel and make associations (i.e., connect the dots) according to author Daniel Pink. In his book A Whole New Mind, Pink explores the move from the “Information Age” to the “Conceptual Age”, one demanding attributes people must possess in order to succeed in a world of accelerating change: “Lawyers. Accountants. Computer programmers. That’s what our parents encouraged us to become when we grew up. But Mom and Dad were wrong. The future belongs to a very different kind of person with a very different kind of mind. The era of “left brain” dominance, and the Information Age that it engendered, are giving way to a new world in which “right brain” qualities — inventiveness, empathy, meaning — predominate.” Pink also cites examples of parallel and associative leaps made by many people who’ve created value out of seemingly disparate pieces that, when combined, deliver much higher value in an innovative way.

Unfortunately for the linear and serial among us, the rate of change is exponential rather than linear change. As such, great leaps forward are occurring in all fields as people find ways to connect, associate and build upon one another’s thoughts, ideas and insights.

One scientist who has detailed this exponential rate of change is Ray Kurzweil, inventor, entrepreneur and author of the book, The Singularity is Near. Kurzweil defines the Singularity, achieved in 2045, as a point in the future when technological advances begin to happen so rapidly that normal humans cannot keep pace, and are “cut out of the loop.” Kurzweil emphasizes that this will have a profound, disruptive effect on human societies and on everyday life as the internet, web and connected machines become increasingly ‘intelligent’ and surpass human beings as the smartest on the Earth. Technological development is taken over by the machines, who can think, act and communicate so quickly that normal humans cannot even comprehend what is going on.

It would be easy to simply laugh off Kurzweil’s premise as hyperbolic and unrealistic, if he wasn’t such an accomplished inventor, scientist and artificial intelligence thought leader, and that some aspects of the exponential rate of change is able to be measured, since Kurzweil lays out example-after-example in his book about how highly advanced technologies will arrive far sooner than linear-thinking people assume. The creation of the modern Internet and the completion of the Human Genome Project are two of the most prominent examples he uses to make his point.

EXPONENTIAL RATE OF CHANGE

One key aspect of this exponential rate of change is caused by Moore’s Law, the premise that computer processing speed doubles every 18 months. As such, the capability of machines, increasing speeds of wired and wireless networks, proliferation of devices and chips within cars, appliances and even books — along with an acceleration in software which is created and delivered by global teams collaborating on its development — means that our ability to leverage ever more capable internet-connected machines for higher value creation is also increasing exponentially.

As the ability for any of us (thought leader or not) to participate in a globally connected world and collaborate, create and consume information and data, is being eyed by many whose revenues depend on accurate predictions of exponential growth. According to internet networking giant, Cisco’s, Visual Networking Index, the sheer volume of information and data online — increasingly available to us all regardless of the type of device we’re using or whether it’s connected with a wire or wireless — is nothing short of astounding “…global IP traffic in 2008 stands at more than 10 exabytes per month, more than quadrupling to approach 44 exabytes per month in 2012. Consumer IP traffic will exceed 32 exabytes per month, business IP traffic will approach 10 exabytes per month, and mobility traffic will exceed 1.2 exabytes per month.” (Note: 1 exabyte = 1,000,000,000 gigabytes (GB)).

How do we stay on top of all of that content? What do we pay attention to and to whom?

INNOVATING IN A TIME OF ACCELERATING CHANGE
So how does one manage the rate of change? Handle that flood of data? Hope to see all of the important and meaningful things to us, our business or organization, and see changes in parallel and be able to connect the dots?

These are huge questions beyond the scope of this post, but let me detail a few tools that exist to get you started as an individual:

• One of the most useful tools in one’s arsenal is the RSS (Really Simple Syndication) reader. While many choices exist, Google Reader is one of the most popular. Find thought leader blogs (Alltop is a great way to find top ones in the industry or space you’re working in) and subscribe to their RSS feed. Also, go to your industry’s online publications and find their RSS feed or make one for any website that doesn’t have one (e.g., Feed43, FeedYes, Feedity)

• Follow these thought leaders and publications on Twitter and periodically use Twitter search to query “tweets” from everyone in areas you’re interested in

• Start a blog and get a Twitter account. Connect with others in your area of interest or industry and begin to build more relationships this way than you’d ever be able to do in a world that used to be connected only by telephone, travel or postal services

• Map out all the places where thought leaders are congregating by discovering where the discussions and human connections are occurring (e.g., in one of the one million social network/affinity groups at Ning), and ensure that you (or your company strategists) are connected and paying attention to these places online.

Many conferences exist as well (and the ones below have RSS feeds of your area of interest which you can subscribe to in your RSS reader or online calendar making it simple to stay up-to-date):

• Find conferences in your area of interest or industry by searching for them on AllConferences (e.g., here’s just the internet category) and find some to attend

• Here is an events calendar at the University of Minnesota and, if you sign up, you can stay appraised of events using Upcoming

• From unconferences like our local Minnebar to corporate ones like The Front End to Innovation or education events listed at Classroom 2.0, there is no shortage of groups wrestling with innovation and creativity in a rapidly changing world.

As Wikipedia states in their article on innovation, “The term innovation means a new way of doing something. It may refer to incremental, radical, and revolutionary changes in thinking, products, processes, or organizations. A distinction is typically made between invention, an idea made manifest, and innovation, ideas applied successfully.”

I submit that our shift from old ways of value creation being primarily linear and serial in nature (and essentially incremental) toward a time when the new normal is radical and revolutionary change, means that all of us need to find ways to connect to others also trying to connect the dots, use tools that enable us to better handle exponential change, and understand that the root of innovation and higher level value creation is becoming more challenging by the day so we must pay attention and understand what is happening.

This is also an exciting time to be paying attention to innovation in the internet and web and all of the changes that are resulting from a world connected. Problem solving on a global scale is achievable in ways never before possible and predictions abound that we’ll live longer, solve the energy crisis while stopping global warming, and find new ways to correct or reverse many of the world’s biggest issues. It’s just that we all need to pay more attention, be aware of change that is moving at an exponential rate, and ensure that we’re finding the tools — and the people — who can see things in parallel and make associations to move you, your company or school, ahead as fast as the rest of the world is already moving.

Innovation in a Time of Accelerating Change is a post from: Minnov8 and published under a Creative Commons license.

Today’s hosts: Steve Borsch, Tim Elliott, Graeme Thickins and Phil Wilson. (Photo credit: Lee Odden (TopRankBlog; Flickr).

Joining us on the podcast is a brand new Minnov8 contributor and participant, Gary Koelling, who is Senior Manager, Social Technology at Best Buy Inc. After interactions with Graeme Thickins — who isn’t bashful about promoting Minnov8 — Gary decided he’d like to create for Minnov8 and completed the form (hint: you could too!).

Gary is the founder of BlueShirtNation.com, Giftag.com and leads several social technology projects within Best Buy. He describes himself as a tinkerer, gadfly (and an aspiring iconoclast), reader, tryer (someone who tries), teacher and listener (with a fairly tuned bullshit meter). Due to the success of the efforts he’s involved in, and the high profile of our hometown consumer electronics retailing giant, Gary has been able to talk to lots of people and companies around the country about social media and social technology.

Our favorite quote about his speaking around the country from his LinkedIn profile? “I don’t know if it’s helping, but I enjoy it.” We sure think so since he’s in-the-game, taking risks, experimenting and driving towards high value outcomes for his employer.

LINKS
Here are links to sites, products or other resources discussed during the podcast:

• Good economic news for MN tech firms in Q4 2008: MTS revs up 9%, EPS up 21% (view MTS “Test Suite“) and NVE up 24%, EPS up 44% (view NVE “Fun Facts” page)
• Mashable article on 40 Best Twitter Brands and the People Behind Them (Scroll down to the “Retail” section)
• Fortune Top 100 Best Places to Work: Mayo (24th) and General Mills (39th) as great places to work (via MNHeadhunter)
• Forbes listing America’s Top Most Wired Cities: Minneapolis is #7 on the list
• The (mostly mythological) “Osborne Effect” but is there some reality to it in an online world?
• Macintosh image editors increasingly used by Tim Elliott: Acorn and Pixelmator
• Gary headed to Etail in Phoenix and a Computerworld event (both he and his cohort and colleague, Steve Bendt)
• EVENTS: Social Media Breakfast 1/30/09; Minnedemo (RSVP if you want to get in!) 2/6/09; Unsummit 3/7/09.

Minnov8 Gang Podcast – Episode 22 is a post from: Minnov8 and published under a Creative Commons license.

They come to talk shop, learn, share tips, listen to presentations on the latest tech developments and tools, share war stories, listen to startup pitches, and (of course) take notes, blog, and Twitter about all the proceedings on the laptops and smart phones they never seem to have far from their sides.

The nice thing is, especially for the many self-employed among them, is that it’s all free — breakfast, lunch, a closing reception, even a free event t-shirt, and, best of all, more wi-fi bandwidth they they can possibly consume in one day — all courtesy of a bevy of sponsors that covet the attention of this highly influential and hard-to-reach group. The sponsors for this year’s event include VC firm Split Rock Partners, ipHouse, Swarmcast, SierraBravo, FindLaw, and the U of M’s Software Engineering Center (which is a special venue sponsor).

The original organizers of Minnebar — and its companion events called Minnedemo, which are evening gatherings that happen the other three quarters of the year — include three Twin Cities developer/entrepreneurs by the names of Dan Grigsby, Ben Edwards, and Luke Francl. (Edwards and Francl planned the ’08 edition of Minnebar.) The April ’07 event, held in St. Paul, had the distinction of being the largest Barcamp ever held in the U.S. to that date.

Something For Everybody

Sessions at this year’s events — all suggested by and conducted by the attendees themselves, many of them forming into panels, include such topics as these:

• The 7 Deadly Sins of Startup Marketing

• Scaling High-Traffic Web Sites

• Blogging for Benjamins: How To Turn Your Topical Blog Into Cash

• Communication For Geeks: How to Influence Your Boss, Your Customers, and Your Team

• From Programming to Profit: Skills To Pay The Bills

• Merb 1.0: Ruby on Rails that Scales

• The Mathematical Foundations of Music

• Enterprise Information Mashups: Web 2.0 + SOA + Data Visualization

• Distributed Teamwork: Managing Virtual Development Teams

• And much more…

A Soapbox for Pitching New Ideas

Minnebar even has a “Lightning Talks” session that gives anyone the opportunity to sign up to give a five-minute demo or presentation, whether it be a new technical idea or business concept, or perhaps you’re an existing startup that wants to update the attendees on your latest progress or product introductions. Anyone who wants to sign up for a Lightning Talk pitch may simply to go to the event wiki site, specifically to the Minnebar Sessions page, and look for the email link to apply. Or, to sign up for a full session (which can be 15-30 minutes or more), have your session title and description ready, then hit Edit Page and enter that information. Just be aware that time is running short, as the organizers will need to cut things off soon to publish the full schedule for Saturday’s event.

To simply sign up to attend (pre-registration is not necessary, but certainly recommended), just go to that same Minnebar wiki page, click on Edit Page at the top, and enter your name and company name or link at the bottom.

I’ll be at the event, along with the entire Minnov8 team of contributors, reporting on all the action. Watch our blogs or Twitter pages (as identified in the bios in the “About Minnov8″ tab at the top), if you can’t make it. For example, I’ll be posting at www.twitter.com/graemethickins throughout the day. But nothing beats being there in person! This is one fun, high-energy event, and really a must-attend if you’re involved in any way in Minnesota’s Internet or software industry. So, we hope to see you there!

UPDATE (5/5/08):  Forgot to mention!  Minnebar’s organizers have also mentioned there may be a “pre-event mixer” either this Thursday or Friday.  Keep watching the Minnebar site for details on where and when…

‘Minnebar’ Becoming Top Event for State’s Internet/Software Developers and Entrepreneurs is a post from: Minnov8 and published under a Creative Commons license.

According to the U’s own business development people (see link to Powerpoint presentation at bottom), the 20-year success record of the U’s technology company spinoffs is only half the university average nationally — and less than one-fourth the success record of the nation’s premier schools. What’s more, in one recent year (2004), for example, the U of MN spun off only one company compared to 14 at the University of Michigan and 16 at the University of Illinois. Why I am focusing here on spinoffs? Well, because, according the U’s own business development people, creating university spinoffs is “much more profitable than licensing (revenues)” to the school.

And, besides, the largest source of the U’s licensing revenues will run out soon. That was the focus of a recent Sunday feature in the StarTribune by my friend Thomas Lee, entitled U’s Transfer Problem: The University of Minnesota needs more eggs … and more baskets. With time running out on its royalty income stream, the U is scrambling to find the next Medtronic. An excerpt:

Judging from the university’s recent track record of converting its vast reservoir of research into cash, the U faces an uphill climb. The school that’s known for inventing the pacemaker, the heart valve and one of the Web’s first Internet browsers is desperate for a hit.

At a time when the state’s economy is slowing and its medical device sector is maturing, the U’s long commercialization slump has attracted the urgent attention of lawmakers, venture capitalists and others concerned about where Minnesota’s next Medtronic or St. Jude will come from.

The next day, we find this look at innovation at the U is a two-part series in the StarTribune, with another article appearing by Thomas Lee, this one entitled: His Job: Magician – The University of Minnesota’s research VP brings his experience honed in Madison to jump-start innovation in the Gopher state. In this piece, we hear about specific programs the U has undertaken since 2005 in an attempt to make up for the expected drop off in licensing revenues, starting next year.

One of Mulcahy’s first priorities when he arrived in Minnesota was to recruit industry professionals like former Honeywell executive Jay Schrankler to run the Office of Technology Commercialization. The office traditionally had been staffed with academics who had little or no business experience.

In the past, many of the university’s start-ups failed because the school lacked the business talent to fully develop the ideas before it sought outside capital, experts say.

The school hired a half dozen “strategy managers” with experience in fields like software, pharmaceuticals and medical devices to determine if faculty research or technology can be licensed or spun out into new companies. The Venture Center, under former investment banker Doug Johnson, launched a “CEO in Residence Program” in which outside entrepreneurs and business people regularly examine potential start-ups, mentor MBA students and help structure deals.

The article says the U has set some lofty goals compared to the numbers I cite in my first paragraph above. To wit:

Schrankler and Johnson say their goal is to spin off three companies a year, including one that has the potential to go public in five years with at least a $250 million market value. They also hope to generate $50 million to $60 million in royalty income annually.

Johnson said, “There is plenty of world-class technology at the U.” He cited a company called Orasi Medical, which the U recently spun out, and another university medical startup that several VC firms are interested in. He also cited the work of a medical researcher at the U, Dr. Doris Taylor, which recently received wide attention:

• Here’s the story as published by UMNnews: Researchers Create a New Heart in the Lab: Work Opens a New Path to Replacement of Hearts and Other Organs.

• The day before, the doctor’s work was published by the journal Nature Medicine: Technical Report abstract – Nature Medicine 14, 213 – 221 (2008).

• And here’s how the New York Times reported the breakthrough that same day: Researchers Create New Rat Heart in Lab.

Dr. Taylor will be the keynote speaker May 29 at the U of M Alumni Association’s 2008 Annual Celebration, being billed as “The Heart of Discovery,” and the featured guest is Earl Bakken, the founder of Medtronic. Tickets are available to the general public at the alumni association web site.

What’s the take of the investment community to the U’s latest initiatives in technology commercialization? Well, one VC gives the U a big thumbs-up. David Spreng is a Minnesota native (and U of M grad), and is now based in Palo Alto, CA, as Managing General Partner of Crescendo Ventures. On his blog, called “Lightbulb,” he wrote an upbeat blog post citing Doug Johnson’s CEO-in-residence program: The University of Minnesota May Have Cracked the Code.

(By the way, here’s a link to the Powerpoint presentation I mentioned at the beginning of this post, actually a PDF: A Presentation on Industry/Academic Partnerships, by Doug Johnson, Office of Business Development, University of Minnesota, which is dated May 2006.)

What’s your take on the U of M as a source of technology innovation? What about the Institute of Technology — are you aware of any promising new technologies coming out of the computer science and EE programs? Is medical technology sucking all the oxygen away from IT and Internet startups in Minnesota? And do the innovations that really matter happen outside the walls of academia, anyway?

Speak your piece in the comments.

The Latest on U of M Technology Innovation and Commercialization is a post from: Minnov8 and published under a Creative Commons license.

The capital needs of early-stage companies used to be served well by VC funds, but the aforementioned gap has been growing ever wider in recent years as most VCs have moved toward later-stage deals. Since the beginning of time, individual angel investors have been a factor in helping young companies with their capital needs. But never before have they had to step up as an organized force to address such a big problem as we now face in our country, and right here in Minnesota.

The good news for all you entrepreneurs out there is that angels remain your best friends, because they’ve been banding together increasingly in groups to better fuel the capital needs of emerging companies.

So, why is this such an important issue? “If we’re not investing enough as a society in growth capital, we won’t grow jobs,” says Pete Birkeland (pictured here), CFO of St. Paul-based RAIN Source Capital. And his firm, the biggest little Minnesota investment firm you’ve never heard of, is doing much to innovate the process. Other members of RAIN’s management team are listed here.

Get this: RAIN Source is now the largest network of managed angel funds in the country, coming a long way in recent years in case you haven’t been watching. “We’re on the cutting edge,” said Birkeland. RAIN Source now numbers 24 funds in its network (including three licensees), across Minnesota, Iowa, North Dakota, South Dakota, Montana, and Idaho. And it already has its expansion sights clearly set on Oregon, Washington, and Florida.

The company’s RAIN Funds® are made up of angel investors interested in supporting growing companies. It helps organize these angel groups, providing part of of the capital for their funds, as well as legal templates, a process for due diligence, management support, access to deal flow, and other resources. The individual funds share expertise, deals, and experience between and among the other funds (angel groups) across RAIN Source Capital’s multi-state network. These groups range in size from seven to 61 members, with each pooling from $500,000 to $2 million in their own fund. The RAIN Source network currently has more than $25 million invested in 43 companies across its entire multi-state presence. At current count, RAIN has $17 million in available capital. And, since members can make side investments in any of RAIN’s deals, it estimates that at least another $17 million is available for investment.

RAIN Source supports and advises its RAIN funds, each of which makes its own investment decisions, typically by majority with quorum, and seeks to make a return of 25 to 50 percent. Local investors pledge an aggregate minimum of $500,000 to start a fund, at which point RAIN Source invests an additional 10 percent, up to $100,000, and assists with legal formation. RAIN Source furnishes deal structure templates tailored for individual RAIN funds, performs initial screening of business plans, administers a business plan database, and shares best practices across the network.

A typical investment by RAIN Source is in the range of $400K to $1 million, with each fund participating in the deal contributing $150-200K. The process for the firm to evaluate an investment opportunity and close on funding currently averages 90-120

days. Birkeland said RAIN Source has 15 deals in the due diligence pipeline at the present time.

The Minnesota Stats

So, what specifically is RAIN Source doing in Minnesota, its home state? Since inception, its angel groups have funded no less than 42 Minnesota-based companies. That’s counting from 1998, when the organization was formed (first calling itself Min Corp., later adopting the name RAIN Source Capital). Of that number, 17 are still independent firms, while 12 have been acquired.

In 2006, RAIN Source funded only two Minnesota-based companies. But in 2007, that number jumped to five. When I asked what the projection was for the number of Minnesota deals it will fund in 2008 (meaning initial investments), Birkeland said six to eight.

Within the state of Minnesota, RAIN now has 12 angel groups, or individual RAIN Funds. Birkeland expects the firm will add one or two new funds in the state this year. A full list of all the RAIN funds may be viewed here.

Of its more than 400 individual angels members, approximately 225 are in Minnesota. Funds are closed to new members once fundraising is completed. (Members, of course, must be accredited investors.) But, once a fund is fully invested, the members may choose to start a new fund.

Is There a Role for Government?

The history of RAIN Source Capital has been an evolution. It first operated inside Minnesota Technology Inc. (MTI), which is a state government-funded entity. When more funding was needed in 1998, RAIN’s founders, Steve Mercil and Joan Wurzer, spun the company out to become Min Corp. So, the RAIN people know something about state government involvement in funding early-stage businesses.

An article by Thomas Lee in our own Star-Tribune a few days ago looked at a current attempt to get our state government involved directly in helping fund new startups: Proposal Would Invest Pension Funds in Start-ups. It speaks of another in a long-standing string of attempts to get the Minnesota State Board of Investment to dedicate just a small portion of its funds to funding promising startups. As the article implies, don’t hold your breath.

RAIN’s Birkeland thinks he has at least part of the solution. “Look at the Oklahoma model of using contingent tax credits to create a statewide ‘fund of funds’ in a state,” he said. “The company that did that in Oklahoma is Cimarron Capital. Their approach creates a pool of capital that is managed by a third party. The state is on the hook if the returns of the ‘fund of funds’ are below the tax credits, but Oklahoma has not lost money on this program in eight years.”

He continued: “Someone should track venture activity and state economic growth. I think such an analysis would show that states with lively business growth and private investing are better protected from downturns than those relying on large businesses that are global in scale.”

So, is Minnesota a leader or a laggard in angel investing? “I think we’re in a second tier after Silicon Valley, Southern California, and Boston,” said Birkeland. “I’d put us on par with Seattle, Atlanta, and Austin. Our medical device industry will keep us near the top of angel investing.”

Raising Minnesota

And what can be done to advance angel investing in Minnesota? “We need that state ‘fund of funds’ program.” Birkeland reiterated. “That would help create a greater VC presence, and some of those funds should be used to set up a statewide ‘angel capital network” with both angel funds and a central fund to invest side-by-side. The goal should be to get deals through to the levels where national investors can then come to town and invest.” That would of course include large VC funds, which now do only a minimal amount of investing in our state — certainly in early-stage deals. Again, Birkeland said our state’s leaders “should look to Oklahoma as a key example of how to develop this statewide model through the use of tax credits.”

RAIN Source Capital has some relationships with VC firms, “but we’re not currently on their radar screens for deal flow,” Birkeland said. “We do have good relationships with the local brokerage firms, such as Feltl and Athelon. We just closed a deal that a local investment bank led, and our funds and members were significant investors.”

But related to that point is an interesting, recent development with a Minnesota angle. David Spreng, Managing General Partner of Crescendo Ventures, is the new NVCA liaison to angel groups. (That’s the National Venture Capital Association.) David, who’s based in Palo Alto, is from Minnesota, still visits here often, and is quick to point out his firm’s continuing interest in investing in Minnesota. (Full disclosure: Crescendo has been a client of mine.) So, Minnesota’s impact as a center for angel investing may be getting even more attention nationally in the coming year. For more on David’s take on the improving relationship of angels and VCs, check out this article he co-authored in the current issue of the Venture Capital Journal: Angels and VCs Find Common Ground.

For a further look at the topic of driving growth through angel investing, here’s a just-published report from the National Governors Association, Center for Best Practices: State Strategies to Promote Angel Investment for Economic Growth. RAIN Source is cited in the report, as are current efforts by various states. One can only assume Governor Tim Pawlenty will be giving this one a good read.

The Role of Technology in the Process

One way RAIN Source is helping to contribute to a standardization in the process of angel investing, which national investors certainly expect, is its adoption of a software platform that is specifically designed for angel group management. More than 200 angel groups nationally now use this software to manage their deal flow and facilitate effective collaborate among their members. That software is from AngelSoft, a firm based in New York City. It recently announced that RAIN Source had adopted its platform for its entire multi-state network of funds. The way the process works for companies that successfully pitch RAIN Source is this: the startup is given access to a private, secure portion of the AngelSoft web site, where it enters key information about its company and uploads its business plan — all of which is immediately available, on a confidential basis, to the members of the specific angel group or groups to which it was given access.

The Innovation Continues

RAIN Source’s impressive expansion proves that angel investors can indeed be found and organized in small towns and rural areas. By the way, RAIN originally stood for Rural Angel Investor Networks, but the company began substituting “Regional” for “Rural” when it found itself establishing more of its angel groups in metro areas, including the Twin Cities.

Minnesota can indeed be proud that it’s home to a firm that is leading the charge to have angel investing carry more of the load in financing promising young startups to drive economic growth, both here in our state and across the country.

Innovation in Early-Stage Investing? You Bet! And MN Firm Is Major Player is a post from: Minnov8 and published under a Creative Commons license.

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