TECHdotMN: News about Minnesota Startups

According to our 2011 second quarter analysis, at least 17 19 early stage Minnesota technology firms received investment capital during April, May and June.

Updated 8/4/11: Three additions to our Q2 2011 Minnesota tech investment analysis:

• Ability Network’s round was actually $27m, $7m more than previously reported.

• Video for Athletes’ (aka PrepAthlete) $200k was inadvertently omitted from initial numbers.

• Online/offline classified advertising and integrated multimedia employment company JobDig banked$1.25m from LFE Capital, according to recent PWCMT data.

Roughly $26.5m $35m in funding was attributed to Minnesota’s high tech sector, largely skewed by health IT firm Ability Network’s $20m round $27m round.  Ability’s raise was the largest tech deal Minnesota has seen since January 2010, when Cymbet raked in $31m for thin film rechargeable batteries. The remaining 16 18 startups raised roughly $6.5m $8m combined, for an average round of $405k $445k.

When contrasted against last quarter’s analysis, both the number of transactions (-15%) (-10%) and the aggregate funding volume are down (-30%) (-8%), although the average deal size is up slightly.

This analysis supports the full spectrum of financing ($25k+), regardless of stage or definition (angel, seed, series A etc.) and many startups are currently fundraising. While we attempt to compile the most complete set of data, it remains imperfect as unreported transactions occur.

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It’s time again for us to take a moment to recognize those who support the TECHdotMN mission and simultaneously provide technology resources for under-privileged youth in the Twin Cities.  Thank you Sponsors!

Primary Sponsors:

Entrepreneurial Law Firm  Gray Plant Mooty (Returning)

Student Employer & Staff Augmenter Maverick Software Consulting (R)

Custom Software Developer MentorMate (R)

World Class Backup Provider Code 42 Software (New)

Secondary Sponsors:

Web & Mobile Developers Bust Out Solutions (R)

Application Investor & Distributor W3i (R)

Talent Acquisition Specialist Andcor (R)

Capital Markets Intelligence Servicer DealPen (N)

Other Sponsors:

Commercial Real Estate SaaS MinuteBids (N) (Directory)

Coworking, Collaborative and Event Space CoCo MSP (N) (Calendar)

Once again, legacy media has used the broad brush of sweeping generalizations to paint another sloppy picture of the funding activity in Minnesota’s startup community.

“But it’s one [ecosystem] that remains starved of oxygen — money. Until we get more investors chasing ideas in Minnesota…”  says the author, citing one startup’s tale that apparently represents an entire marketplace.

While it may be fair to suggest that money doesn’t chase entrepreneurial ideas around here,  the claim of starvation is patently false.  As we’ve consistently reported since day one (and recently summarized [2]), money does exist and it has a tendency of gravitating towards those ideas which are executed on.

As a counterbalance to the mainstream misinformation, we offer quantifiable evidence from one timely source that speaks to the contrary:  investor tax credits allocated through the first half of 2011 under Minnesota’s 25% angel investor tax credit program. This single source does not account for the numerous transactions conducted outside the scope of tax credits, nor unreported deals — such as a friends and family round — which usually happen when plans are still conceptual.

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Bloomington-based MinuteBids recently reported closing $300k of a $700k seed round according to SEC filings.

The startup was founded by Jon Coudron and Jeremy Raadt in the summer of ’09 to provide commercial property managers with a RFP platform to request bids for their property maintenance needs.

MinuteBids has closed some key customers and signed-up over 600 registered service providers since inception — noticeable traction that has caught the attention of investors and others familiar with the market, including new CEO Cory Factor.  This is not the first tech business Factor has lead; as CEO of DayPort, he expanded the customer base and successfully negotiated a sale to Entriq, DayPort’s largest competitor in the streaming media and asset management space.  Joining Factor is Lon Bencini as Chief Marketing Officer.

“I am excited to join MinuteBids…the company has accomplished a tremendous amount with limited resources. We have a proven product, great beta customer base and very large addressable market,” says Factor. 

Moving forward, MinuteBids is opening its service to a wider variety of services.

Six startups gave their four-minute pitch at the second Crowdpitch Minneapolis event hosted yesterday by Rain Source Capital and FundingUniverse, but MinuteBids stole the show.

Crowdpitch is a competition event designed to bring together local tech entrepreneurs, mentors and service providers. Winners receive in-kind services valued at about $4,800.

Jon Coudron, co-founder of MinuteBids, made the pitch. After the event he said, “This was a great experience all around—not only did we get to field some great questions and receive feedback on our pitch, but we were able to walk away with some additional validation that we’ve got a good business.”

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One week from today—on Thursday, July 15—CrowdPitch returns to Minnesota. Only this time, it’s on the other side of town at the Dorsey Ewald Conference Center in St. Paul.

This Rain Source Capital/Funding Universe collaboration is designed to bring together local tech entrepreneurs, mentors and service providers in an informal and energetic setting.

According to the website,

“Crowdpitch is the ‘American Idol’ for those tech entrepreneurs selected to pitch their company to a panel of experts and a live audience.“

The panelists will serve as a means of vetting the early stage companies through a brief Q&A session before the audience casts their vote with $100 “funny money” towards the best business. Ultimately, the winner will receive in kind services ranging from financial and accounting consulting to Amazon web services – collectively valued at $4,800.

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With the official media announcement just made, this link on the MN Cup website points us to not only the semifinalists within the tech division,  but also some tech companies amongst the “general” and “student” categories.

Congratulations to all these ventures in passing the first test; with over 1,000 entries again this year – what a feat to make it this far!

Having a familiarity with many of these early-stage companies, no doubt the Tech Division is hyper-competitive and we look forward to meeting new faces so as to share their stories on behalf of the Minnesota tech community. Let’s take home the overall grand prize on behalf of Minnesota Tech (again)!

2010 Minnesota Cup Tech Division Semifinalists:

• CRAM Worldwide – Daren Klum
• Crick Information Technologies – Jason Caswell
• Curation Station – Jennifer Iwanicki
• Evolve - Adam Sellke
• GeaCom – Amanda Little
• InSight Solutions – Steve Johnson
• Mobile On Services – Scott Pearson
• Open Preferences – Robert Bodor
  Update September 2010: Open Preferences is now Inveni.
• Rushford Hypersonic – Daniel Fox
• VeraTech Aero – Dean Tangren

From the general division:

• MinuteBids – Jon Coudron
• Sportrabbit.com – Cale Loken

From the student division:

• Juxtapose – Owen Imholte
• HaulsMedia – Mackenzie Fletche

Where are they now? is a periodic review into the successes, languishments and failures of Minnesota tech startups featured some 6+ months ago.

When we met MinuteBids last August, the company was laser focused on getting a product to market and establishing Minnesota-based beta customers.  Nowadays, this free online RFP platform for commercial property managers has gone through a learning curve and ironed out the kinks as it expands nationally to reach New York, Arizona and Indiana.

MinuteBids largest account to date is Holiday Stationstores – a 450 unit gas station chain who brought with them over 60 service providers, created projects that drove over 1.2 million dollars of bids through the system and pushed this startup into profitability.

Reflecting on the earliest days, Co founder Jon Coudron describes the pivotal moments – most notably a fundamental change in shifting the focus from smaller individualized property managers to large portfolio firms. As Minutebids continually improves the SaaS based on customer feedback, the pricing model has also evolved by removing the bidding fee for service providers bidding on projects.

“As a startup you’re constantly tuning your product in pursuit of the right feature set” says Mr. Coudron “…and once you’ve got a method that delivers, it’s a simple function of scale. Naturally, many of our initial assumptions were tested and through early beta customers we’ve found a sweet spot that’s proven to work.”

The near term MinuteBids agenda includes the launch of an affiliate program, adding more sales reps and continued product refinement.

Part I

1. ArtsApp – (1:14)  Like Monster.com for artists to submit multimedia (Dejen Tesfagiorgis)
2. Reliacloud – (10:23) A cloud computing platform that allows people to build scalable computing infrastructure on demand (Jason Baker, VISI)
3. Pedal Brain – (18:50) Advanced cycle computer based on the iPhone platform combined with web-based data analysis (Matt Bauer)
4. MinuteBids – (29:25) An online bidding platform that makes it easy for property managers/owners to request and get bids for their property maintenance needs from top rated service providers (Jon Coudron)
5. Pedalr – (37:37) A many-to-many market place for people who love bikes (Andrew Korf)

Videography & Livestreaming Services By:

Part II

1. MobileRealtyApps.com – (00:01) Custom branded MLS home search apps for realtors on iPhone and Android (Aaron Kardell)
2. MileMarker – (10:00) Helps organizations capture ideas and prioritize them, making it easier to understand what to work on first (Bill Galfano)
3. Live Information Manager for Business – (19:43) Connects employees of an organization to their data and each other from anywhere in the world, all from within a single workspace (Roger Peters)
4. Mobile Roots – (28:41) Customized iPhone applications for campaigns (Lynn Smith)
5. WebSlide – (35:32) Provides you and your clients with a private, secure, easy-to-use system for uploading, sharing, and collaborating on designs without ever leaving your browser (Paul Armstrong)

Do you own commercial real-estate or manage commercial property?

Probably not – but that doesn’t mean you shouldn’t be paying attention to local Minnesota web startup minutebids.com and the brains behind it: Jon Coudron, Jeremy Raadt, Jerad Parish, and Seth Heiserman.

Minutebids is a free service for property owners/managers that saves them time by streamlining the process of obtaining multiple bids from reputable local service providers for property maintenance needs. Think lawn-care, snow removal, parking lot maintenance, landscaping, etc.

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