It turns out, of the 10 startups that were selected to present at the event, none even comes close to the level of adoption these guys have achieved to date, which they announced at the in their presentation at #EduTechMN: 1,000,000 students using the platform, in more than 80,000 classrooms. And all that from a startup that began as just a sideline for Matt to use in his own classroom!

Here’s my interview:

The founders describe their creation this way:  Kidblog is a platform that provides students with an authentic, engaging, and interactive learning experience. It’s designed for elementary and middle school teachers who want to provide each student with his or her own, unique blog. It has simple but powerful tools that allow students to publish posts and participate in discussions within a secure classroom blogging community. Teachers maintain complete control over their students’ blogs. And a teacher can set up a class with no student email addresses. 

Matt likes to say it’s “built by a teacher, for teachers, so students can get the most out of the blogging process.” He also points out that teachers who’ve tried other blogging platforms (perhaps with limited success), such as Blogger, Edublogs, or WordPress.com, “will notice the Kidblog difference immediately.”

Best of luck to this emerging, homegrown Minnesota edutech company!

[This post first appeared yesterday on Tech~Surf~Blog.]

Minnesota EduTech Startup KidBlog Now Reaching One Million Users is a post from: Minnov8 and published under a Creative Commons license.

This Week’s Show Hosts: Steve Borsch, Tim Elliott, Graeme Thickins and Phil Wilson.

Discussed during the show:

+ Twitter down (and Dragnet’s “Blue Boy” LSD episode); FanChatter; Blog comment addition vendors: Echo and BackType (and BackType Connect for WordPress); Minnesota startups BusinessCard2 and Extendr as well as Retaggr

+ Federal Trade Commission (FTC) looking in to Google’s Eric Schmidt on Apple’s board (now potentially a moot point)

+ Pending Federal Communications Commission (FCC) proceedings regarding wireless open access and handset exclusivity are in motion, and as part of this the FCC requested more information from the Google Voice app rejection by Apple (good overview of the controversy–and Apple’s overall app rejection policy–in this BusinessWeek article)

• FCC’s letter to Apple
• FCC’s letter to AT&T
• FCC’s letter to Google

+ HTML 5 and the open source video codec rejection; Google acquiring On2 and conjecture it was a strategic move to open source On2′s codec, move away from Flash (and minimize the possibility Adobe could make it a ubiquitous application platform as well as continuing to extend its reach as one for video) and not require licensing H.264

+ The MiFi device and the Wired article referred to by Tim; Comcast getting in to wireless broadband

+ “Social Media on a Stick“: Social Media Breakfast, Minneapolis/St. Paul (SMBMSP) is meeting at the State Fair

+ Blogwell is next week! This is positioned as a must-attend event for anyone interested in corporate social media use

+ Evocam: Steve’s geek fun this weekend.

Minnov8 Gang #46: Addicted to Twitter, Chatter about FanChatter & More is a post from: Minnov8 and published under a Creative Commons license.

Nyman, along with serial entrepreneur John Montague, are off on a new adventure — certain to make a big impact on the startup climate here in Minnesota — called “40 Ventures” and he tells us all about their innovative model of a fund for startups.

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

Discussed During the Show Notes:

• Go2Web20
• YCombinator
• TechStars
• New York Times article on venture capital study

Minnov8 Gang Podcast – Episode 37 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.

Their first application, known as LUNCHBOX, is in the process of being rolled off their platform.  LUNCHBOX offers the ability to view, rate and share menu items… all with the tap of a finger (among other features and benefits that are still confidential).  The application is designed to bridge the gap between restaurants and mobile consumers.  LUNCHBOX will inherit mobile ordering capabilities, thus eliminating the need for smartphone users to stand in line at a restaurant.

The Mxapp team visited my offices back several weeks ago and previously I’d worked with Geoff Dutton, one of the Mxapp partners. It comes as no surprise that these guys are poised to take a bite out of consumer migration to smartphones.  Rather than just slap some nifty app together, they have thoughtfully designed their launch for concurrent release on iPhone®, BlackBerry®, and Android®.  In addition, they have been out pounding the pavement — talking with both consumers and restaurateurs– to more intimately understand the needs of users.

Like so many innovators full of conviction but starving for resources, the Mxapp team is seeking to overcome constraints with a daily diet of courage.  Their marketing budget is relegated to word-of-mouth. So, if you want to know what’s good to eat in the neighborhood, open up your LUNCHBOX and find out.  Mxapp is hoping you’ll join their beta program today.

Just Eat It! is a post from: Minnov8 and published under a Creative Commons license.

One key trend Minnov8 is closely tracking in 2009 — especially when it comes to Minnesota startups or companies involved in it — is in the area of social media aggregation along with social marketing, analytics and communication extensions to existing products and services.

If you’re one of the accelerating number of people that are always-on, always-connected, and  participating all over the ‘net — or are an organization trying to figure out how to get online, be socially connected, and in a position to build an audience, community or ecosystem surrounding the space in which you’re involved — than trying to ‘herd the cats’ and get them to behave (either your social media participation with your digital stuff left all over the place, or a company trying to figure out how to reach influencers in some given category and reach out to them while measuring the impact of their effort) is an incredible challenge and coordinating and orchestrating either of them seems impossible!

The good news? Many of you reading this are already using a wide variety of emerging aggregation tools and you’re trying to figure out what approach works best for you as this space evolves. Minnesota companies, who understand that millions of people participating online is a meaningful place to be as a marketer, are looking at ways in which to herd their cats. Fortunately for both sets of needs, new tools are proliferating and there are many thought leaders working hard on methods to make our use and management of increasing social participation online significantly easier to manage in 2009.

Yahoo's MyBlogLog Service Enables a Participant to Aggregate Multiple Social Media Services

Several developments occurred in 2008, gained traction in 2009, and are poised to make big inroads this year. Ones like OpenID, a “single sign-on” for all of your Web applications, social media sites and social networks are key, but others that are promising to make our social connections more portable are emerging:

• Google’s OpenSocial: A set of common application programming interfaces (APIs) for web-based social networks, so that applications developed using the OpenSocial APIs will be interoperable with any social network system that supports them. Some critics point to the limited adoption so far and its capabilities
• Facebook: They created their own application platform that developers can use and have eschewed the Google OpenSocial approach
• “Friend Connect”: In competition with OpenID, Google Friend Connect and Facebook Connect were both introduced to leverage the huge mass of users already using their respective platforms
• DiSO Project: DiSO is a project that today is focused on the WordPress platform, but the people behind it (and many others) understand that, “Social networks are becoming more open, more interconnected, and more distributed. Many of us in the web creation world are embracing and promoting web standards – both client-side and server-side. Microformats, standard APIs, and open-source software are key building blocks of these technologies. This model can be described as having three sides: Information, Identity, and Interaction”
• Cliqset: is “a social development platform designed to enable an open mesh of innovation and creativity across the social web. Acting as the system of record for your social identity, Cliqset empowers developers to build socially aware applications that create, share and define your social data on behalf of you, enabling a social experience unlike anything that exists today“
  
• Open Mesh: Though that title is used in several different contexts, Marc Canter (founder of MacroMind that became Macromedia and now founder of BroadbandMechanics) has a concept of all of the elements that need to come together to form a holistically coordinated and orchestrated mesh of online services. Makes my brain hurt just trying to absorb it though.

Along with infrastructure pieces like those above are hosted Web applications that have positioned themselves as your “social graph aggregator” or what your content participation is being referred to more frequently as: “lifestreaming“. The objective of these applications is to bring together all of your online digital stuff in one place, including your friends stuff, and provide you with better opportunities to connect with others using various social media services that exist today as well as those not yet invented:

• The Flock web browser whose approach is to be a browser-centric aggregator of all your social media services
• Friendfeed and even a Firefox web browser add-on for it called “MySocial 24/7“
• Plurk, who says that they’re, “A really snazzy site that allows you to showcase the events that make up your life, and follow the events of the people that matter to you, in deliciously digestible short messages called plurks“
• SecondBrain: “Secondbrain makes it easy to manage all your social media, bookmarks and files in one place. Organize everything in your library, follow your friends’ updates and discover good content“
• …and many more.

Lastly, on the company-needing-to-connect with social media participants side, we’re seeing an acceleration in analytics tools and, as I suspected last year, a major enterprise-class vendor entering the social media services and analytics space:

• There are several social media analytics startups doing very interesting work and with solid approaches: Collective Intellect; Radian6; Techrigy; ScoutLabs, Visible Technologies, Cymfony, and Keenkong
• Last week, Salesforce.com released their Service Cloud, that has as this stated value proposition, “The Service Cloud is the next-generation platform for customer service. You can tap into the power of customer conversations no matter where they take place. Harness know-how from the right experts, whether they’re on a Web community forum or having a dialog on Facebook. Suddenly, you’re part of those conversations.“  With a relatively inexpensive price and several key features like customer relationship management; campaign management; along with hundreds of 3rd party applications in their AppExchange facilitating bolt-on capabilities that extend the Salesforce platform.

Minnesota companies and startups are also seeing this social media coordination and aggregation trend and are beginning to capitalize upon it:

• Target, General Mills and Best Buy (the latter doing much more with Remix, Giftag and other initiatives) are in the early stages of dabbling in social media
• OnePlace, a team collaboration, project management and personal productivity, recently added Twitter-like communication capabilities called “TeamCentral” for their collaborative offering with significant management capabilities of it
• Cullect, is an offering that helps you find and share the relevant, important stories from your huge array of news and blog feeds. They also created a branded URL shortener for MinnPost, a very important tactical requirement for many social media uses like Twitter requires, enabling MinnPost to make it easier for social media participants to link to their articles
• Tumblon, a site for parents of young children that helps them track their children’s development and, most importantly, understands that giving these parents the power to publish (either private or publicly) through an easy blog publishing for family and friends is an imperative in today’s social sharing world.

You’ll see more and more approaches to leverage all of these infrastructure developments, hone the aggregator/lifestreaming methods, and make it easier to collect and deliver all of your digital breadcrumbs. If you’re a company looking to market to, or connect with, social media participants, the ways to do that with superior analytics tied to campaign and customer relationship management will continue to accelerate and make it simpler to enter and leverage the social media space.

Of course, that doesn’t do anything about you collating and delivering stuff of value that your friend, family or future connections might care about (see my personal post, “It’s the Value, Stupid” for more) or that companies identifying discussions and people using social media — and deciding on how to enter into conversations with them, engage them in crowdsourcing, or build an audience or ecosystem around their company or products — still needs to be done properly, ethically and above-board by organizations using them. But the opportunity will be there and the tools and solutions to do so in a meaningful way will be yours for the asking as they continue to evolve and emerge in 2009.

Herding Your Online Cats is a post from: Minnov8 and published under a Creative Commons license.

Nothing happens without a vision. Nothing gets created, built, or moved forward without a vision of an end-state or an outcome. It’s been said that we create and achieve what we focus on — whether that focus is on the positive or on something negative — and if we invest our conscious hours in focusing on positive visions, we’d be healthier and, most importantly, far more likely to realize our dreams and live a life aligned with our strengths, purpose and passions.

In this time of economic upheaval rippling across the globe, fundamental political and systemic change in the US, and a struggle to find good news or positive information amongst the hundreds of TV stations and tens of thousands of websites and publications available to us all — including our kids — the world needs to see possibility, hope, and visions of the future that accentuate and focus on the positive.

Any leader will tell you that vision is the most important first step to take before anything else happens, whether it’s a startup, a product, project or initiative, or anything else we strive to accomplish. Leaders will also tell you that the next great leaps in creativity and innovation will come from those that see the possibilities instead of downside, risk or failure, and empowering kids to see possibility, feel hope, and create, communicate and absorb a vision for their lives, for humanity and the world, promises to be incredibly profound, world-changing and an imperative for our future…

…if only there was someone with a vision about what could help our next generation create and live their own vision stories and celebrate their dreams, hopes and goals for themselves and the world.

George Johnson, a serial entrepreneur with the startups SHARE Seniorcare (now part of UnitedHealth Group); Internet Broadcasting, TECHIES.com and other adventures, has lived his life with vision first. Not just some sort of “generic vision”, but rather ones that matched his values and what he felt was his personal mission and purpose for being here: helping others live up to their potential.

Through vision after vision, George built successful organizations, but in his gut he knew there was something more he had to do. As he describes this ‘knowing’ he had he says, “What we need more than anything in the world are more visions of hope and possibility. We have become a nation of negativity and fear, much of it broadcast on television news. Unless we change our current course, we will become what we envision.”

George and I have been friends for many years, and we got together at his place up on Lake Superior earlier this year to brainstorm about the “What’s next? What’s possible?” as he was crystallizing his vision. Everything he’d done up to that point led him to one conclusion: He needed to figure out a way to empower the always-on, always-connected, new media generation of Millenials to use internet-centric tools and create their own vision stories, acting as a catalyst for positive change in the world.

TEL•A•VISION was founded to create a way to give kids a voice and a platform to share their stories and dreams for themselves and a better world. It’s his hope that by sharing with each other, youth around the world will realize how much they have in common. 

You can read more about the starting of TEL•A•VISION on George’s blog here or more about their mission and vision on the TEL•A•VISION site.

He partnered with Minneapolis agency Haberman & Associates, to bring this vision to reality. Leveraging the Bay area video creation engine from OneTrueMedia, the skills and abilities of a host of others (disclaimer: I’ve assisted in creating the tutorials and the curriculum guide as well as playing a technical advisory role, though just in friendship and a strong belief in George’s vision), and what seems to be an instant acknowledgement by people that this effort is absolutely right and something desperately needed now, George has seen and unseen momentum behind him that is propelling his vision forward…

…and, of course, that’s the WHOLE POINT of starting with vision!

As I reflect on the conversations George and I had in January near the fire on Lake Superior, I remember the occasional thought that crept into my mind about “this idea is a little nuts” and I couldn’t see how he could make it a reality. I love this guy, but he’s no technoweenie and I struggled a bit to see his vision and how it could come together.

Now his vision is a reality. TEL•A•VISION will officially launch Wednesday, Oct. 22nd at Minneapolis North High School. Dozens of visionaries, community leaders, educators, parents and students will gather to celebrate the importance of vision and kick-off the TEL•A•VISION movement. Special guest presenters will include polar explorer Ann Bancroft, and TEL•A•VISION partners Best Buy, SEARCH Institute, Youth Frontiers and the National Institute on Media and the Family. 

The result of my own embracing of the TEL•A•VISION vision along with so many others behind it as well, how George has put this movement all together and aligned everyone’s motivations and incentives, and that it’s now an actual reality, makes George my pick for “poster child for vision”. I can’t think of a better role model for living your vision — and for being the TEL•A•VISION visionary — than George Johnson.

TEL•A•VISION Launches is a post from: Minnov8 and published under a Creative Commons license.

The Minnesota Department of Commerce just released this 2008 Investor Fraud Traps listing (in alphabetical order) and offer it as a warning:

Deficient Disclosure: The recent investigations by state securities regulators related to auction-rate securities (ARS) have reinforced that investors should remain cautious when pitched complex investment products accompanied by deficient disclosures or when advised to concentrate their investments too heavily in one investment product. It is best to avoid investment pitches that would lead you to put all of your eggs in one basket, especially if it’s a basket you don’t fully understand.

Energy Scams: The substantial increase in energy costs has made scams related to energy more prevalent. State and provincial securities regulators are seeing not only shady oil and gas investments, but also scams that promise the development of new technologies to increase the efficiency of energy consumption or to extract energy from sources previously thought too expensive to develop.

Online Affinity Fraud: In a new twist on affinity and online investment fraud, Tyler said NASAA members are concerned that unscrupulous individuals are trying to use social networking websites to lure people to meetings that may promote fraudulent or unsuitable investment products. “Social networking websites create an environment ripe for affinity fraud,” Tyler said. “Fraudsters can take advantage of the fact people freely share information with both their real and ‘virtual’ friends by posting it to their profile,” Tyler said. “Communication tools provided by some social networking websites make it easy to advertise and promote investment scams to a wide audience for free.” Investors need to do their own research before making an investment and should not simply rely on ‘expert’ advice given at a seminar or meeting.

Prime Bank Schemes: Promises of receipt of astronomical profits from vehicles that execute “off-shore trades of foreign bank debentures” only available to very wealthy people and cloaked in secrecy are the securities equivalent of a purse snatch. They simply do not exist, and once money is handed over, it will never be recovered.

Private Securities Offerings: Con artists are turning increasingly to private securities offerings under Rule 506 Regulation D of the Securities Act of 1933 to attract investors without having to go through the full registration process. Although sometimes legitimate, these offerings are often associated with fraud. Also, proceed with caution when encouraged to invest in “general partnership” or “limited liability companies.” Speculative deals often are packaged as such in an attempt to evade the consumer protection requirements of state and federal securities laws.

Promissory Notes: For sophisticated or corporate investors, promissory notes can be a good investment, providing a reasonable reward for those who are willing to accept the risk. However, promissory notes that are marketed broadly to the general public often turn out to be scams. Promissory notes are sold as instruments that guarantee above-market, fixed interest rates, while safeguarding their principal. When interest rates are low, investors may be enticed by the higher, fixed returns that promissory notes offer. These notes, however, can become vehicles for fraud when the issuer of the note has no intention or capability of ever delivering the returns promised by the sales person; leaving the note worth less than the paper on which it is printed.

Pump and Dump Schemes: E-mail and fax spam, phony press releases and telemarketing drives are the tools of fraudsters who “pump” up the value of low priced securities traded on the “pink” sheets which are then “dumped” on naïve investors who purchase the stock at inflated prices. The balloon breaks when the promoters no longer maintain the myth that there is value in the shares and investors are left holding worthless stock certificates.

Real Estate Investment Schemes: As the housing market continues to reel from the subprime lending crisis, schemes promising large returns from various types of real estate-related investments also are increasing. Some real estate alternatives may actually be worthless real estate investments that promoters are trying to dump off to unsuspecting retail investors. State and provincial securities regulators also note that “reverse mortgages” pose several risks: they may not be appropriate for a given investor; if the homeowner chooses the option of accepting the funds all at once in a lump sum it may create a sudden supply of cash that may be diverted into other bad investments; and they enable promoters to gain access to a senior citizen’s entire financial profile. Such disclosure of other assets can lead to yet more scams—and losses.

Sale and Leaseback Contracts: Seeking to avoid protections afforded under federal and state securities laws, investments in equipment or animals are proposed to investors with the promise of a high returns and a guaranteed future repurchase of the product at full invested price. While these investments are touted as safe, the buyback features are unfunded and illusory.

Unsuitable Sales: State and provincial securities regualtors continue to see the sale of complex hybrid financial products, such as variable and equity-indexed annuities, to investors for whom they are not suitable—typically seniors. These products frequently contain features so complicated that even licensed financial professionals are not adequately trained to understand them.

To read the North American Securities Administrators Association press releases about each category (which contain deeper explanations and more info), look at their “Top Investor Traps” page from which the MN Dept of Commerce alert was derived.

2008 Investor Fraud Traps is a post from: Minnov8 and published under a Creative Commons license.

Based upon feedback we’ve received from you and many other listeners, the Gang is increasing the pace of the show and getting to areas of interest in a tighter show format.

In today’s show, a few links mentioned include:

+ Minnesota Interactive Marketing Association (MIMA) Summit

+ The concurrent UnSummit that occurred for those unable to get into the MIMA Summit 

+ TechCrunch article on the credit crunch

+ “With credit tight, young companies keep closer eye on cash” by Katharine Grayson, Twin Cities Business Journal

+ RangeBuzz, “...the Iron Range MN online guide to northern MN dining, nightlife, music and area events. RangeBuzz.com makes it easy for you to discover what’s happening on the Iron Range in Northern Minnesota!”

+ Next Social Media Breakfast on October 31st at Deluxe Corp. (watch their site for details to appear).

Minnov8 Gang Podcast – Episode 9 is a post from: Minnov8 and published under a Creative Commons license.

Scattered geographically once again, the Gang comes together for another show where we chat about:

+ Our potential economic meltdown and what it means for internet and web startups and companies

+ What’s up with Best Buy? We chat about how this behemoth retailer has now suddenly burst onto the scene with a whole range of internet-centric initiatives (see Minnov8 posts here and here)

+ Tim O’Reilly’s Web 2.0 Expo keynote where he denigrates developers seemingly focused on trivial applications like throwing sheep

+ The “Unsummit” going on as an alternative for those unable to get in to the MIMA Summit (it’s sold out).

Minnov8 Gang Podcast – Episode 8 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.

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.

One interesting take on green tech is from Stillwater-based startup ecoEnvelopes that hopes to bring a green touch to the well established envelope business. Literally my first job out of college was selling custom printed envelopes so I am well acquainted with the “tech” of envelope manufacturing (at least circa 1982). And ecoEnvelopes’ novel twist on the old “reuse, recycle” axiom makes this a Minnesota startup to watch.

After closing a round of financing with TC Angels late last month, founder & CEO Ann DeLaVergne looks to staff up and bring her innovative envelopes to market. The idea is to make each envelope easy to use two ways, eliminating the return envelope and reducing the amount of paper required for mailing.

As environmentally sound products become more mainstream, socially responsible choices in many product categories will emerge. And as electronic as many of our lives have become, we still receive a lot of paper mail so ecoEnvelopes makes sense to me. Visit their FAQ for more details.

ecoEnvelopes: Low Tech Meets Green Tech is a post from: Minnov8 and published under a Creative Commons license.