The lesson of such home-based growth hasn't been lost. Anoka County has a unique effort to replay the Bakken story--perhaps not on the scale of a Medtronic, now with
thousands of employees, but at least its formula. Move an entrepreneur from basement or garage where Medtronic began into a business setting and help that new company grow from infancy.
That's the goal of the
nonprofit Anoka County Economic Development Partnership, a public-private effort to grow new businesses in the county. Not just any business, but technology businesses capable of creating living-wage jobs
and high returns for investors.
The partners include county government, banks, utilities, investors, a business incubator and, at times, state government's Urban Initiative Fund.
The McKnight Foundation recently provided $70.000 to expand partnership activities.
"We believe this concept is unique and unlike most economic development efforts that tend to focus primarily on chasing existing
companies." says Roger Jensen, executive director. "This usually results in a move from one community or region to another, often with substantial subsidies involved and minimal if any new jobs created."
Paul's effort, for laudable reasons, to lure Minneapolis' Lawson Software fits at least part of Jensen's description. Some observers warn about endangering St. Paul's good credit rating. And in the early I 980s St. Paul
officials emphasized building a homegrown economy.
The Anoka County partnership has created a for-profit capital fund that has made high-risk equity investments, typically $25,000 or $50.000 in 17 companies (three
have gone under). Five were matched by state Urban Initiative loans, a program targeting mainly minority entrepreneurs and women in distressed areas of Minneapolis, St. Paul and inner-ring suburbs such as Columbia
A main focus for more than half of the capital fund's investments is a Central Av. business center in Columbia Heights that once housed FMC Corp. There the partnership works with Genesis business Centers to
provide space and services creatively to early-stage businesses in exchange for stock. Such exchanges plus the capital fund equity investments produce much-needed working capital. The businesses must agree to stay in
The partnership ambitiously seeks both to build jobs and business in Anoka County and to produce profit for investors. Another Medtronic, though unlikely, would be the ideal outcome - a
win-win for residents, communities and investors.
Consider companies in the incubation center. Zebra Communications, the newest, was formed by two Vietnamese men seeking technology to transmit faxes over the
Internet. Med Link Medical, launched in a former nurse's basement, makes dual-microscope machines for doctors performing such difficult surgery as limb reattachment. Comedicus will produce specialized heart-surgery
devices: already a national corporation has agreed to invest $3 million if products meet goals. Each small company got a $25.000 Urban Initiative loan to match a capital fund loan that's convertible to equity.
Typically, only two of every 10 early-stage companies succeed. Jensen says, but those that do can generate a nice return. "and we're hoping to beat the odds."
The return comes when a successful startup makes
an initial public stock offering or is acquired, enabling early investors to cash in. Jensen anticipates that the first public offering will occur within 18 months.
The partnership is 12 years old, with Jensen its
director from the beginning. County officials launched it after their area failed to get the metropolitan region's racetrack in the mid-1980s; they recognized a need for countywide economic development. (Individual
cities such as Anoka have economic programs, often chasing companies elsewhere--for example, that city's gift of free land to a Minneapolis printing firm.) The partnership's first project was a medical-firm incubator,
but its results were limited by businesses' lack of access to capital.
Along with the county board, early supporters of the partner-ship were Dakota Electric Coop, Northeast State Bank and Norwest Bank-Anoka: they
also became the biggest investors later in the capital fund. Today the partnership has a 17-member board from business, government and education. The county provides nearly half of a $150.000 annual budget.
capital hind began only four years ago and now also serves business development in Sherburne County. It has 22 investors, most at $25,000, who have provided $737.000. Eleven are banks surely motivated by the Community
Reinvestment Act, as well as by a desire to promote economic development and be good citizens.
The partnership has spawned and manages several other ventures. One is Anoka County Investment Clubs, which make tag-along
investments. Another is Anoka County Project Outreach, a forerunner to the state's program to help businesses gain answers to technical questions. Anoka County Quality Council was the first Twin Cities countywide
effort to promote quality practices.
The partnership got a big boost when the Quality Council sponsored a 1991 meeting for 250 government and business leaders to hear Hillary Clinton and Ira Magaziner promote
workforce development. (Gov. Arne Carlson had the speakers as overnight guests at his official residence.)
That boost was followed by creation of the capital find and a partnership with Genesis Business Centers to
incubate companies in the Columbia Heights business center. Harlan Jacobs, Genesis president and small business expert, helps emerging companies get business, technical and financial services. The companies exchange
stock for space and services with Genesis getting one-third and the partnership two thirds.
It s too early to say how the partnership's emerging companies will turn out. Another Medtronic would be a remarkable
result--and far in the future (even Medtronic started slowly). Former stale economic Commissioner Peter Gillette once described the partnership's work as cutting-edge. Jensen calls it replicable (as is happening in
Dakota county). The partnership is working with Genesis on an incubator in Elk River in Sherburne County, and may develop two additional incubation sites in Anoka County, including one for manufacturing. Why not, Jacobs
asks, "make the Anoka model the Minnesota model?" Why not, indeed?