MNvest Provides Source of Previously Untapped Capital for Minnesota Entrepreneurs and Small Business Owners

The passage of MNvest legislation will boost startups in Minnesota, grant all entrepreneurs access to previously unattainable capital, and allow everyday Minnesotans to invest and support local businesses.

MNvest is a Minnesota law permitting equity, or investment, crowdfunding for the masses.  “As opposed to a Kickstarter or Indiegogo approach, where you’re getting some kind of reward or a product for your participation, you’re actually buying a share in the entity you’re supporting,” explains Scott Cole, volunteer Board Member at MNvest.org, a 501(c)(4) organization supporting and promoting investment crowdfunding in Minnesota.

We’re all entrepreneurs here.  Raising capital and finding investment streams is difficult, but vital, for survival.  Gaining access to accredited investors through a traditional Initial Public Offering (IPO)[1]  is expensive and complicated, often beyond the reach of startups, which severely limits access to capital.  MNvest looks to simplify the fundraising process for entrepreneurs and increase the velocity of investments through equity crowdfunding.

The MNvest legislation will unleash a realm of investment opportunities to the Minnesotan entrepreneur and small business owner, offering additional flexibility for capital financing in the startup and traditional business sectors.  In the life science space, the MNvest platform could be used to complete some upfront project or create a minimal viable product.  MNvest is perfect for small businesses that don’t necessarily have a tangible product or gift to give to supporters, which is vital for donation-based crowdfunding campaigns.  Companies using the MNvest platform might be your traditional businesses like hardware stores, coffee shops, or breweries that offer more of a service than a concrete product and benefit from having a built in local constituency, providing additional capital options for startups and small businesses beyond the traditional channels.

MNvest legislation provides all Minnesotans an opportunity to invest in local businesses and entrepreneurs and put their money right into the hands those who need it most, without having to be a qualified accredited investor. 

Equity crowdfunding was legalized in the United States with the passage of the Jumpstart Our Business Startups (JOBS) Act in 2012.  However, without new rules to accommodate non-accredited investors, this legislation only benefited provided accredited investors, the wealthiest three percent of Americans, with investment opportunities.  Congress charged the Securities and Exchange Commission with creating new rulesa platform where non-accredited investors- more of the everyday person- could participate in equity crowdfunding.  However, to date no regulations have been finalized[2] .  The passage of MNvest will provide a much more attractive mechanism to make investments accessible to a wider range of Minnesotans.

“This allows you and I and any average person who doesn’t have a bunch of money to make that equity investment,” explains Scott.  It provides the opportunity for the average Minnesota to invest in businesses and people right in their neighborhood, keeping the money local. 

Want to support that running store or craft shop on the corner?  MNvest makes that possible, democratizing investment opportunities.  “For small businesses trying to raise money, this is an opportunity to bring in local supporters in to help fundsupport their businesses, to invest in their business, and to have the transaction side of that be easy for the investor and inexpensive for the business,” explains Scott. 

MNvest makes it possible to funnel capital flow from both accredited and non-accredited Minnesotan investors through a streamlined, virtual portal system.

Currently, there are no limitations or guidelines[3]  for the amount of money that can be raised through MNvest online portals.  Issuers- people or businesses raising the money- will set some amount that they want to raise through the MNvest portals. Equity raised will then sit in escrow until some percentage of that total set amount is reached for the issuer “to be responsible for the intention for using the money”.  This amount it likely to be set by the issuer at 75-85% of the total funds to be raised, whatever minimal amount the business needs to be functional or reach some end goal.  Just like in Kickstarter, the money sits in escrow until the total sum of capital is raised.  If that goal is not reached, the funds are all returned to the investors.

For any potential equity investors, it’s important to recognize that no exchange is currently provided for underoffered by MNvest and any funds provided to an entitycash flow should be viewed as a long term investment in the success of the business.  “In this scenario, if you make an investment in the local coffee shop or local hardware store, or whatever that local business is, it might be that your investment is just to know that you are able to go to that hardware store, know that it is still going to be there serving your community.  But the anticipation isintention was for the business community to create anthe exchange so that a person like yourself and me could redeem our shares at some point in the future at a gain,” explains Scott.

The MNvest legislation was signed into law by Governor Mark Dayton last June, and quickly passed through the Minnesota House and Senate.[4]   The legislation hit a snag in the Commerce Department as new rules and processes needed to be created to support MNvest, but the final version of the law and regulations are expected to be released any day now.  And then it’s off to the races.

NowAfter the base legislation is passed, the next step for MNvest.org is spreading the word, building a community around the created legal infrastructure, and most importantly finding issuers and portal operators to start using and trying out the system.  The group will launch a new, updated website in the near future with lots of information for people wanting to invest or raise capital through athe MNvest approved platform.

MNvest holds great potential for the Minnesotan life science entrepreneur and startup.

“…I am really interested where the startup community wants to plug themselves into this initiative.  In the life sciences…I would really be anxious to learn who the prospects are that might be willing to give this a try.  And even if we are not quite ready, meaning that there is not a portal ready to begin having a conversation with the prospects, and laying out the understandings that are needed so that we are closer to being ready when the portals are ready,” says Scott.

Are you an entrepreneur interested in trying out MNvest to help finance your business?  Contact MNvest.org at info@MNvest.org or click here to become a registered portal operator.

Garden Fresh Farms uses Indoor Aquaponic System to Sustainably Farm in Minnesota all Year Long

Maplewood-based Garden Fresh Farms provides a disruptive solution to conventional farming.  Their unique system allows for sustainable, year-long, indoor farming, providing 24-hour fresh food to consumers regardless of location.

I had to opportunity to learn about Garden Fresh Farms and spin off company MNPHARM from Founder Dave Roeser at the Worthington Bio Science Conference a few weeks ago.  Garden Fresh Farms uses a novel, aquaponic system to grow produce.  In this system, both plants and fish are grown in a symbiotic water system.  The fish naturally create waste products, or fertilizer, which is pumped through the Garden Fresh closed system to the plants.  The plants use the fertilizer to grow and in turn also purify the water.  The cleaned water is then pumped back to the fish holding tanks, completing the loop.

Garden Fresh Farms uses aquaponics to grow produce through two different systems.  The first is a vertical system, where plants are grown on densely packed shelving straight up into the air.  These indoor farmers also grow plants in orbiting gardens- large eight by four foot rotating drums.  Currently, Garden Fresh Farms grows lettuce and herbs using these systems but is looking to expand in the near future.

The Garden Fresh farming methods use far less resources than traditional outdoor methods.  The plants are grown at much higher density than is possible with normal agriculture.  The vertical growth shelving units are packed tightly together, allowing four shelves to obtain light from one fixture.  The orbiting gardens can also be stacked nine feet high.  These features allow plants to be grown at very high density; Garden Fresh Farms can grow an equivalent one hundred acres of crop in a one square acre building.

Garden Fresh Farm’s disruptive growing structure minimizes the amount of resources needed for plant growth.  Their system uses 90% less water and 50% less energy than traditional outdoor farming methods.

It’s no secret.  Winter is a rough time in Minnesota to find good, fresh produce.  The food is often overripe and looks like it’s been there all week.  However, if you stumble upon Garden Fresh Farms produce in your local Lunds & Byerlys or Kowalski’s, the produce will be extremely fresh, even in January.  Twenty-four hours fresh to be exact.

Often the problem with produce distribution is getting the food that very last mile to the consumer.  Farms are often in rural areas, far from dense concentrations of people.  With the Garden Fresh Farms system, produce can be grown anywhere.  Right now, the company grows food in a warehouse in Saint Paul.  They can harvest their product in the morning, send it off to a distribution center by noon, and have the food on the shelves the very next day.  This whole process reduces food spoilage and waste and increases the nutritional value of the food.

The indoor growth system also means that all Garden Fresh Farms products are pesticide-free, a huge bonus for many consumers.

Garden Fresh Farms not only provides local, fresh food.  The company also has a deep-rooted social component. 

Garden Fresh Farms provides year-long farming jobs.  A total of twenty-five jobs would be created by converting one pole barn into a Garden Fresh Farms indoor growth facility.  The company has their very first public-private partnership in the works to begin in June 2016 in New England.  Garden Fresh Farms will convert an old, unused building into a farming factory, providing the over 30M people within a 100-mile radius of that site with local, fresh produce.  And jobs.

Garden Fresh Farms is a Community Supported Agriculture (CSA) farm.  Consumers can buy produce directly from the company to support local farmers.  In Garden Fresh Farm’s program, consumers sign up for 12-week increments and receive weekly bags of fresh produce plus recipe ideas.  The bags can be dropped off at several locations around the Twin Cities area. 

The benefits of the Garden Fresh Farms system don’t stop there.  The company’s unique produce growing process could actually help fight climate change.

Plants need carbon dioxide to grow.  Plants use carbon dioxide during photosynthesis- the process by which green plants convert sunlight into chemical energy which is used to power cellular functions.  Plants store the chemical energy generated during this process as the carbohydrate glucose, which later can be converted into the essential cellular fuel ATP.

Plants love carbon dioxide.  But we humans usually think of the substance in a negative manner.  Carbon dioxide is a greenhouse gas and makes up the largest percentage of all greenhouse gas emissions.  Excessive carbon dioxide production alters Earth’s normal carbon cycle and adds the heat trapping gas to the atmosphere, contributing to the gradually warming planet.

During photosynthesis, green plants use light and water to make their own food from carbon dioxide.  Plants use up the carbon and release oxygen at the end of the process, sequestering something that we don’t want and transforming it into something useful.

Farms are usually in rural areas, often very close to ethanol plants which produce carbon dioxide byproducts, something the Earth definitely does not want.  However, with the Garden Fresh Farms system, this carbon dioxide byproduct could be pumped to the indoor farms and sequestered by the growing produce through photosynthesis.  The plants could actually be used to “recycle” these carbon dioxide byproducts and convert it to something more useful for us all- food.

Garden Fresh Farm’s disruptive technology has earned them several awards and national recognition.  The group won the 2013 MN Cup Clean Tech and Energy Division and also won the Midwest Regional Clean Tech Open Competition and National Clean Tech Open Global Forum that same year.  In 2014, the company earned a Progress Minnesota Award, Eureka! Award, Green Products award from Saint Paul, and Sustainability Award from the City of Maplewood.

Two years ago, Garden Fresh Farms developed and launched a company called MNPHARM using the same aquaponics technology.  Check back later when we talk about MNPHARM and the potential to use tobacco plants as individualized medicine platforms.     

Wanted- More Wet Lab Space for Minnesota's Life Science Entrepreneurs

Last week, Life Science Nexus was privileged to tour the Worthington Biotechnology Advancement Center (BAC) and developing wet lab space with Worthington Regional Economic Development Corporation (WREDC) Executive Director Abraham Algadi. 

Click here to access our previous story about the BAC wet lab incubator. 

The BAC and associated incubator have a great opportunity to begin to fill a gaping hole in our life science startup space in Minnesota.  It’s no secret.  We in Minnesota have precious little wet lab space for our life science entrepreneurs.   

But what is the real utility of a wet lab space?  How can it spur innovation and entrepreneurship?  What can the Worthington BAC incubator bring to the table?

The Worthington Bio Science Conference wrapped up last week with a panel discussion surrounding the BAC lab build-out, what needs to happen to complete the space, and what value the lab would add to the community.

This expert panel was led by non-longer “homeless” life science entrepreneur Goutham Vemuri, Agricultural Utilization Research Institute (AURI) Project Development Director Harold Stanislawski, and AURI Senior Director of Science and Technology Rod Larkins.

Lack of access to a wet lab space is a major barrier to success for life science entrepreneurs.  Unlike some other science disciplines such as robotics, life science companies require critical infrastructure and equipment like centrifuges, fume hoods, and sub-zero freezers to generate intellectual property.  A life science startup is not really something that can be launched out of a basement.

Minnesota has very limited wet lab space for non-institute associated scientists, especially outside of the Twin Cities area.  AURI is stepping up to fill these gaps at their Crookston and Marshall facilities in western Minnesota.  Vemuri himself found a great home to make progress on his proof of concept at the AURI Marshall facilities. 

The 2000 square foot wet lab area being build in Worthington will provide space and infrastructure for the “homeless researcher” in southwestern Minnesota, helping to build up the entrepreneurial community in the city.  The lab space has great potential beyond this application.  The area could also be used by the larger companies in Worthington, like the animal vaccine developer Newport Laboratories, for processes such as product validation.  Training and other STEM outreach initiatives could also take place using the lab equipment.

The WREDC and city of Worthington continue to bring the BAC wet lab closer to a concrete reality.  The community is motivated and pointed in the right direction.  We at Life Science Nexus and across the state look forward to watching this story unfold.


Avian Influenza- One Year Later, What have We Learned?

It’s been a little over one year since the first case of HPAI (Highly Pathogenic Avian Influenza) H5N2 was confirmed in Minnesota.  This infectious strain of avian influenza popped up in a commercial turkey flock in Pope Country in central Minnesota last March.  The last two cases of HPAI H5N2 were reported on June 5th, nearly three months to the day afterwards.  These twelve weeks of infection took Minnesota’s economy through the wringer, causing an estimated $647.2M hit to poultry production and $171.7M in lost wages, salaries, and benefits according to a University of Minnesota Extension study. 

Since this time, the smoke has cleared and settled.  But has Minnesota fully recovered and are we better prepared if this pathogenic AI strain returns to the region?

Avian influenza (AI), or the bird flu, is caused by infection of birds with AI type A viruses.  Wild birds harboring type A virus can serve as pathogen reservoirs, shedding the virus in saliva, nasal secretions, and feces.  At risk birds become infected after exposure to shed virus or by contacting surfaces contaminated with virus.

AI type A viruses exist in two flavors: low pathogenic AI (LPAI) and highly pathogenic AI (HPAI).  This classification depends on the virus’s ability to cause disease and mortality, although both LPAI and HPAI infections can spread rapidly among birds.

Infection with LPAI typically results in no observable disease or very mild symptoms, such as ruffled feathers or a slight drop in egg production.  LPAI might even go undetected in domestic birds. 

HPAI infection, on the other hand, is highly pathogenic and causes severe disease with high mortality rates.  Infection with these viruses typically results in sudden death, lack of energy and appetite, decrease in egg production, swelling, coughing, and sneezing.  HPAI can quickly diffuse through and decimate a domestic flock of birds.

Wild birds can naturally carry native strains of AI.  These viruses are usually of the low pathogenic, LP, variety, but still can spread to domesticated birds.  Birds infected with LPAI typically show no symptoms.  However, LPAI H5 and H7 strains can mutate into HPAI, then becoming a large problem.

In December 2014, the USDA detected HPAI H5N2, H5N8, and H5N1 strains in domestic and wild birds in the United States, including in the Mississippi flyway- an avian migratory path that follows the Mississippi River from the Gulf of Mexico to breeding grounds at the river headwaters in Canada. 

Infected birds were ultimately detected in a widespread path across the US, including: Arkansas, California, Iowa, Idaho, Kansas, Minnesota, Missouri, Montana, North Dakota, Nevada, Oregon, Utah, South Dakota, Washington, Wisconsin, and Wyoming.

AI type A viruses rarely infect people, and pose little to no threat to human health.  Proper handling and cooking of infected eggs and meat to an internal temperature of 165F will even kill off the virus and make the food safe to eat, according to the USDA.

The real threat of these HPAI strains was more bird-on-bird directed, particularly toward domesticated poultry.

HPA1 H5N2 blasted Minnesota’s turkey production economy, especially in the central and southwestern parts of the state.  Nine million birds were affected- including five million turkeys and four million egg laying hens- according to the Minnesota Board of Animal Health, impacting at least 110 separate sites.  The trickle-down down effects were felt for months, impacting industries even indirectly connected to turkey production.

Once a Minnesota turkey production site tested positive for HPAI H5N2, it was out of service for months.  If HPA1 was detected in one bird in a barn, the whole flock in that space was depopulated and destroyed to prevent further viral spread.  Poultry carcasses went through an unpleasant composting process inside affected barns for at least twenty-eight days to destroy any virus present in the birds.  The area was disinfected and scoured for at least twenty-one days.  Infected farms had to be completely eradicated of virus before being repopulated and resupplied with new poultry. 

Even the restocking of farms was not a straight forward process.  Egg and poult- or baby turkey- production was down at several frequently used poultry suppliers in Minnesota and Wisconsin, delaying production ramp-up at cleansed farms.

Layoffs and cut hours weighed down Minnesota’s turkey industry for the spring and summer.  Trickle-down effects also reared their head in seemingly unattached markets like truck transportation, restaurants, hospitals, and general merchandise stores, according to a University of Minnesota Extension report. 

All 110 HPAI infected Minnesota farms were disinfected and re-stocked by December 2015.  Farmers apprehensively waited for a possible return of HPAI H2N5 with the fall wild bird migration, but Minnesota’s turkey passed through that point unharmed.

One year after the first outbreaks occurred in the state, have we learned any information to better prepare Minnesota’s economy against another round of infection?

Researchers are still no closer to addressing how HPAI H5N2 reached Minnesota’s domestic birds in the first place.  Many conflicting theories continue to circulate.

The virus was originally thought to have spread from wild, migrating birds, especially ducks and geese.  The MN Department of Natural Resources (DNR) churned into full gear last year and collected over 6200 samples from wild birds, detecting only two cases of HPAI.

That’s a lot of poop for very little information.

The MN DNR has since scaled down their sampling efforts, a point of contention with some of the state’s turkey producers.

Poor biosecurity practices may have helped the virus to spread between farms.  According to one theory, actively tilled fields near poultry barns may have generated air borne virus from infected wild bird droppings, which then infected domestic poultry.  If migratory birds were the viral reservoirs in the first place.

Another idea is that a low-pathogenic virus may have incubated, undetected, in layer hens, and at some point mutated into pathogenic HPAI H5N2.

A vaccine protecting domestic birds against several AI H5 strains, including H5N2, is still being developed.

Join us at the Worthington Bio Science Conference Thursday April 7th for a dinner panel discussion around avian flu, including innovative research, management practices, and market impact of the outbreak in Minnesota. 

Local experts Jeff Barber, of TM Farms, Dr. Jill Nezworski, of Blue Horse Veterinary, and Dr. Carol Cardona, Professor in the UMN College of Veterinary Medicine, will lead the discussion.

Healthcare.mn Energizes the Twin Cities Healthcare Entrepreneurial Community. What's in Store for 2016?

Glafira Marcon is on a mission to learn as much as she can about healthcare.  The Macalester College alumnus joined the Healthcare.mn team shortly after graduation and took over as lead organizer this past October.  She has some fresh, new directives in store for the group in 2016.

Healthcare.mn, the Twin Cities community for healthcare innovation and startups, operates with the vision that “Minnesota is the best place to launch a healthcare startup,” explains Glafira.  The group’s main focus is “to bring together healthcare innovation enthusiasts to catalyze the community, energize it, and support it.”

Healthcare.mn lowers barriers to success for healthcare startups and entrepreneurs by making information and connections more accessible.  The group serves as a platform for exposure for these innovators and delivers “access to resources as well so that they can find a path to elevate and spread their solutions,” says Glafira.

The now over 1,100-member strong group was originally founded by local entrepreneurs Peter Kane, Thompson Aderinkomi, and Solome Tibebu in 2013.  The trio noticed the general lack of a community-based supportive group when launching their own startups and wanted to build a place where Twin Cities healthcare entrepreneurs could share ideas and build their network. 

Membership has rapidly grown over the past three years and Healthcare.mn continues to diversify in scope as the group expands, offering something for any entrepreneur operating in the Twin Cities healthcare space.  “Members find immense value in our group, whether it’s in the content of a discussion or just being in the same room with all these amazing people,” says Glafira.

The Healthcare.mn team continues to expand as a few more entrepreneurs were recently added to the organizing team.  These intrepid innovators mirror Glafira’s own passion and curiosity about healthcare and will complement her community and global health focus with experience in health tech, management/operations, and finance/investment.

Healthcare.mn events have always provided general education about hot healthcare topics, distilling down complex information and making it more accessible.  The group constantly works to connect startups with employees, investors, or end customers and offers entrepreneurs the space and opportunity to interact with key Twin Cities influencers.

Some new initiatives and programming have been added to the Healthcare.mn docket this year to continue to provide value to the Twin Cities healthcare community. 

One new series will help entrepreneurs better articulate the real issues they are trying to solve in healthcare by asking, “what is the real problem?”.

“Through experts at our events, we’re sharing frameworks for how startups can drill down and identify the problem they are trying to solve, get connected to people who are impacted by that problem, and design solutions that meet their needs and provide a good user experience,” sums up Glafira. 

Other Healthcare.mn events will feature stakeholders from specific industries or companies within the healthcare field, outlining the major problems they are facing.  “It’s them saying, we need innovation in this space.  We need startups to solve these problems. We hope this will enable existing startups to align their products and services with these real needs, or inspire people to start new ones,” explains Glafira.

Maintaining lines of communication and enthusiasm between events stands as a major initiative for Healthcare.mn in 2016.

“At our events, we have a ton of energy, a lot of conversations.  People are really excited.  It starts to drop off a few days after these events.  So what do we do between events to make sure that people are still talking and collaborating?  How do we facilitate that?” asks Glafira.

The group plans to rebuild and relaunch the Healthcare.mn website as part of the solution to provide an open forum for community conversations and connections.  In addition, they plan to host office hours with experts and provide a platform for sub-groups with specific interests to form.

Stay informed of Healthcare.mn’s upcoming events by joining the Meetup Group keep up with the conversation on LinkedIn.

Join Healthcare.mn at their next event focused on Service Design on March 14th.