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HomeMy WebLinkAbout2011-06-14 PACKET 07City of Cotta Grove Minnesota To: Economic Development Authority From: Ryan R. Schroeder, City Administrator Date: June 9, 2011 Subject: Business Incubator Program Proposal As of October, 2012 the current City Hall on 80 Street is expected to become excess property. The property could be marketed generally, could become part of a site for a future YMCA, could be delivered to the County for use as a future Library, or could become part of a larger redevelopment project. An alternative to these would be to maintain ownership of the building for alternative uses. One of the potential uses could be as a business incubator. Toward potential furtherance of the incubator idea we contacted Harlan Jacobs, who created and runs the Genesis Business Center in Columbia Heights as an incubator project. Enclosed is a proposal submitted by Mr. Jacobs in response to our request. The intent of this agenda item is as a general discussion: 1. Is there interest in a business incubator with walls (another option would be to identify non -owned space or alternatively no space at all, at which point the program would perhaps be limited to operating investments instead of real estate investments) 2. If interest, does the City Hall property have potential that should be pursued? 3. Identification of opportunities and obstacles 4. Level of interest in one or more phases of the proposed three phase engagement letter enclosed herein. EDA Action: Discussion Genesis Business Centers, Ltd. 901 % First Street North P.O. Box 5644 Hopkins Minnesota 55343 Telephone 612 455 2215 Facsimile 612 455 2216 www.GenesisCenters.com 31 May 2011 Mr. Ryan R. Schroeder City Administrator City of Cottage Grove 7516 80 Street South Cottage Grove, MN 55016 Re: Outline of Proposal for Incubator Program Dear Ryan: Genesis proposes a Three Phase Approach for a Proposed Incubator Program for the City of Cottage Grove, Minnesota. Phase I: Preliminary Feasibility Study Phase II: Feasibility Study and Program Recommendations Phase III: Management Services Contract Phase I: Genesis would meet with local community leaders in the business and non profit realms to learn of the likely level of general (non financial) resources that may be available in the community for the proposed incubator program. Genesis would assess the suitability of any surplus space at the present City Hail as well as the general availability of office and warehouse space that could be utilized for the incubator program clients if City Hall is not available. Genesis would also assess the community support level in terms of both financial resources that may exist or be able to be utilized towards the operational costs of the proposed incubator program as well as the likelihood that a locally based seed capital fund (comparable to the Anoka Sherburne County Capital Fund) could be established as a local source of seed capital for the incubator program clients. Genesis would also assess the likelihood of entrepreneurs from outside the immediate vicinity of Cottage Grove to move their businesses to Cottage Grove. Phase II: Genesis would conduct in depth interviews and prepare a formal Feasibility Study and Program Recommendations for the Structuring of an Incubator Program and the Management thereof. Phase It: Genesis (or such other party as the City of Cottage Grove may select) would provide on -going Management Services for the Incubator Program under an Annual Management Contract. Cost Parameters: Phase I: Genesis proposes to Conduct Research and then Prepare and Deliver the Preliminary Feasibility Study Report for $7,500 ( commencing with a $5,000 initial retainer followed by a payment of $2,500 upon delivery of the Preliminary Feasibility Study). Phase II : Genesis proposes to Prepare and Deliver the Formal Feasibility Study and Program Recommendations for an additional payment $ 17,500 ( commencing with a $10,000 initial retainer followed by a payment of $7,500 upon delivery of the Feasibility Study and Program Recommendations Report) Phase III: Genesis proposes to Provide On -Going Management Services for the Proposed Incubator Program for a Monthly Retainer of $2,500 plus Expenses (estimated at about $500 per month for mileage and business meals). The hourly billing rate would be set at $125 per hour with an estimated monthly billing of about 20 hours. There would be a provision for a monthly and an annual maximum billings ceiling that would be subject to review and require the prior written approval by the City of Cottage Grove for any proposed billings in excess of the maximum billing provision. Ryan, we look forward to the possibility of working with you to make Cottage Grove the Epicenter of Entrepreneurial Activity in your Region of the Twin Cities Metropolitan Area. Best regards Harlan T. Jacobs President HarianGenesis@mac.com -° News from Genesis: Genesis Business Centers Moves West New address: 901 112 First Street North PO Box 5644 Hopkins, Minnesota 55343 Small Times Magazine Feat C ymbet "Small batteries pack big punch." View point. Bridg.ing. th Cap Ch asm A gap in financial markets has left Minnesota Companies vulnerable to biotech cherry- picking by venture capital firms on the coasts. Fortunately, there's a simple cure. A Business Forum essay from the StarTribune More... Corp orate Giants Can Offer E ntrepreneurs Good Trainin Milwaukee Journal story on development impact of GE Medical cites Harlan Jacobs GYMBET Corporation R ec e ives Major F_unding MISSION MAN AGEMENT PROGRAMS PRESENTATIO ARTICLES TESTIMONIALS RESULTS Genesis is a member of the N Busine Incubatio Association Contents © 2000 -2011 Genesis Business Canters, Ltd. ittp: / /genesiseenters.com/ 5/16/2011 Contact Marian Jacobs 612 -455 -2215 -- D The GENESIS program is designed with the high-tech entrepreneur in mind. If you are a founder, officer or director of a high -tech start -up company, you should learn about the benefits of getting your business started at a Genesis Business Center near you. We offer a program of rent combined with valuable professional services in exchange for a negotiated equity position in your company. GENESIS is looking for the best and the brightest of the new high -tech start-up companies in the communities we serve. If your firm qualifies, please contact: Harlan T. Jacobs, President Genesis Business Centers, Ltd. Elliot Park Lifescienees Institute 700 Tenth Avenue South, Suite 323 Minneapolis, Minnesota, 55415 Telephone: 612 / 455 -2215 Facsimile: 612 / 455 -2216 Email: Harlan Jacobs ttp:// genesiseenters .com/html/Mission.html 5/16/2011 0 Genesis Business Centers, Ltd., announces several new programs to help high tech, start -rap companies to gain fast track access to capital and those business development services that are critical to achieving success. Genesis Transplant Program The Genesis Transplant program is designed to match entrepreneurs from the Twin Cities with select communities that are located outside the seven county metro area in order to address the imbalance between the capital that exists out -state and the metro -area companies that need that capital for the funding of start -ups or the expansion of small, emerging high tech companies. Genesis has identified certain communities that are willing to invest in suitable emerging companies now in consideration for a commitment from the companies to locate a sizable number of jobs in that community in the near future. The companies would be eligible to enter the Genesis incubator program here in the Twin Cities. Then, upon graduation, these companies would transfer certain jobs to the community out -state that provided the funding in the critical early phase. Genesis enjoys good working relationships with a number of progressive communities and programs including: Bemidji, DesMoines Area Community College, ITEx, Grand Rapids, Mn, ,Iron Range Resource & Rehabilitation Board (IRRRB), LeCenter, MN, VIDC, Mankato, MN, and WBIC, Spooner, WI.. Metro Area Expansion An incubator program has been maturating in Elk River, NIN since 1998. An incubator was recently established in the city of St. Paul during the summer of 1999. Genesis Portfolio Partners, LLC. Genesis has established a subsidiary that functions as a portfolio holding company. Investors may participate in a diversified portfolio of the Genesis incubator companies by investing in this entity. Collaboration with The Minnesota Private Investor Enterprise Genesis was a cofounder in 1994 of The Minnesota Private Investor Enterprise (MNPIE), an organization that helps the management teams from entrepreneurial companies to meet business angels in a cost - effective and user friendly manner. Mr. Brad Lehrman, the President of Portage Capital, Inc., a venture capital consulting firm, co- founded this entity. ittp:// genesiscenters .com /html/Programs.htinl 5/16/2011 Why Genesis? The following companies are among his successful investments since 1986: Aliro Ltd. Appl S pectral Imaging_Ltd 4 atheart.com CI Technologies Inc. Cl Sys tems Ltd. Iil CYM BET Corporation Dym edix, LLC Electronic Materials, LLC Excorp Medical Inc. First Ci rcle Medi Inc. G -Del Technologies GovDoes.com Jerus Optical Link T echnologies f JOLT) Le mna Corporation Medoc Ltd MedLink Medical NetBriefinas.corn NT International Inc. Optical Senso Inc. Peat _Tee h nolo Corporation Harlan Jacobs is the founder and president of Genesis Business Centers, Ltd., a diversified high tech, for -profit incubator program. Mr. Jacobs is a seasoned CFO with over 20 years experience as a corporate controller and treasurer prior to becoming involved in the fields of incubation and early stage venture (seed) capital. He was the CFO for FilmTec Corporation, a successful Minnesota high tech start- up company with a unique reverse osmosis membrane technology. Formed in 1977 with only $100,000 of founders capital, the company went public in 1979. In 1985, with sales of $10 million and net income of $1.5 million, FilmTec was sold to Dow Chemical for $75 million in cash! Mr. Jacobs was actively involved in the acquisition negotiations. Over the years he became interested in other early - stage, high tech companies like FilmTec. Most of the companies in which he invested were having great difficulty raising the first $250,000 of capital. Paying the rent and having adequate business advisory services available early -on were common laments among the management teams he interviewed for his prospective investments. A business opportunity seemed obvious. In 1993 he founded one of the most progressive high -tech business incubator programs in Minnesota, if not in the U.S., by offering to barter rent and "Acting CFO" services for a negotiated equity position in its incubates companies. This bartering program has become a cornerstone of the Genesis Incubator program. In recognition of his efforts and success in helping small businesses raise capital and get off the ground, Mr. Jacobs was appointed by Sen Rod Grains to serve as his delegate to the White House Conference on Small Business in 1995, and again as his delegate to the Congressional Small Business Conference, held in Washington, D.C., in June 2000. ttp:// genesiseenters .com/html /Management.html 5/16/2011 D ittp:// genesiseenters .com/html /Management.html Successful graduates of the Genesis Incubator program include SurVivaLink,a manufacturer of portable battery operated defibrillators that was acquired by Cardiac Sciences (stock symbol: DFIB), NT International, a specialty sensor manufacturer that was acquired by Entegris (stock symbol: ENTG), and Exeorp Medical, a bioartifieial liver company whose system recently received FDA "orphan drug" designation, a significant approval step. Other promising graduates and client firms of the Genesis program (and their technologies) include CYMBET, (infinitely rechargeable lithium ion polymer battery depositions on silicon substrates), Visual Circuits (video compression software and systems), First Circle Medical (full body hyperthennia therapies for Hepatitis C), Dyrnedix (dispoable sensors for sleep clinic applications), Venturi Medical Systems (multi -use, high efficiency electrodes for EKG signal acquisition), GEL -DEL Technologies (tissue engineering), Tracking Technologies (miniature tagant particles for anti - counterfeiting applications), Peat Technologies (organic and inorganic wastewater treatment technology), California Molecular Electronics (molecular optical switches), Provis (computer chip design tools), Bixby Energy Systems (biomass fuel furnace systems), and Electronic Materials, LLC. Electronic Materials may very well have a "basic patent" and therefore be in a position to engage in significant licensing transactions whenever an electronics company or others utilize a computer controlled inkjet nozzle for the deposition of electronic circuitry on flexible substrates. Genesis is assisting the company to secure licensing agreements on a global basis. Jacobs' personal track record of investment in private placement offerings such as in Recovery Engineering, Inc. ($1.00 per share in 1986 -- acquired by Proctor and Gamble in 1999 for $35 per share) has helped to engender the confidence of those third parties who utilize the Genesis Incubator program as a high quality screen for selecting investment candidates. Genesis works regularly with community development organizations that wish to bring high 5/16/2011 Petrometrix, Ltd. J Pro vis Corporation Recovery Engineering Inc. Sav _vyNet, Inc. Simon Industries, Inc. SolarAttic, Inc. StoreltOnline.Com Su rVivaLink Corpo ration Tracking echnologies Inc. Venturi Medical System s Vertical Publishing, Inc. Virogen, Inc. Visual Circuits Corporation WorldKnit.com ittp:// genesiseenters .com/html /Management.html Successful graduates of the Genesis Incubator program include SurVivaLink,a manufacturer of portable battery operated defibrillators that was acquired by Cardiac Sciences (stock symbol: DFIB), NT International, a specialty sensor manufacturer that was acquired by Entegris (stock symbol: ENTG), and Exeorp Medical, a bioartifieial liver company whose system recently received FDA "orphan drug" designation, a significant approval step. Other promising graduates and client firms of the Genesis program (and their technologies) include CYMBET, (infinitely rechargeable lithium ion polymer battery depositions on silicon substrates), Visual Circuits (video compression software and systems), First Circle Medical (full body hyperthennia therapies for Hepatitis C), Dyrnedix (dispoable sensors for sleep clinic applications), Venturi Medical Systems (multi -use, high efficiency electrodes for EKG signal acquisition), GEL -DEL Technologies (tissue engineering), Tracking Technologies (miniature tagant particles for anti - counterfeiting applications), Peat Technologies (organic and inorganic wastewater treatment technology), California Molecular Electronics (molecular optical switches), Provis (computer chip design tools), Bixby Energy Systems (biomass fuel furnace systems), and Electronic Materials, LLC. Electronic Materials may very well have a "basic patent" and therefore be in a position to engage in significant licensing transactions whenever an electronics company or others utilize a computer controlled inkjet nozzle for the deposition of electronic circuitry on flexible substrates. Genesis is assisting the company to secure licensing agreements on a global basis. Jacobs' personal track record of investment in private placement offerings such as in Recovery Engineering, Inc. ($1.00 per share in 1986 -- acquired by Proctor and Gamble in 1999 for $35 per share) has helped to engender the confidence of those third parties who utilize the Genesis Incubator program as a high quality screen for selecting investment candidates. Genesis works regularly with community development organizations that wish to bring high 5/16/2011 tech jobs to their communities. Genesis helps to establish business angel networks and community- based seed capital funds that receive funding from utility companies and commercial banks (in fulfillment of the letter and spirit of the law in respect of the Community Reinvestment Act) as well as from high net worth individuals who wish to help their communities to grow and prosper. ittp:// genesiscenters .com/html /Management.httnl 5/16/2011