Roger Jensen isn't especially fond of most economic development programs.
Usually, they result in companies simply relocating from one area of the Twin cities to another, leaving metro-area
communities to compete with one another for jobs. That's why he's so enthusiastic about the innovative economic development program he oversees in Anoka County--a program known as the "Anoka Model."
Jensen's Anoka County Economic Development Partnership runs a venture-capital fund that invests in start-up companies, often bringing entrepreneurs out of their basements and into Columbia Heights. The $700,000
venture-capital fund--created with the help of local banks and utilities--invests in early-stage high-tech companies. Often the young companies have grown beyond what Jensen calls the "MCl plan"--getting money
from "friends and family"--but are not quite ready for full-blown private placements. "There's not a lot of funds that invest in out-of-the-box, out-of-the-garage ventures." Jensen
is partnering with a for-profit business incubator, Genesis Business Centers, to develop the young companies. Harlan Jacobs, who runs Genesis, says that getting venture capital into firms earlier in their development
can help the start-up companies, as well as the Anoka County community. "When it's one guy with a dream, it's very difficult to raise that first quarter-million or half-million." he says.
The two groups are
nurturing about a dozen young companies in an office building on Central Avenue in Minneapolis. James
Grabek, chairman, CEO, and founder of Comedicus, Inc., has developed a device that delivers drugs directly to the sac
around the heart. Grabek, who founded GV Medical with Manny Villafana in l983. says he was able to start his latest business for just the cost of the phone line, as well as $50,000 in loans and investments from the
Anoka County fund. "When you're starting out, that's a lot of money," he says.
This summer, Chiron Corporation, a major California-based pharmaceutical company, announced it would invest up to $3 million in
Comedicus--the equivalent of about $4.20 per share. By comparison, the Anoka County venture fund's early investment was purchased at $1 per share.
In addition to
Comedicus, the incubator houses companies developing
Internet faxing systems, microscopes for surgeons and computerized video systems.
A typical package for a start-up entrepreneur would include a $25.000 investment from the venture-capital fund, a $25,000 state
loan that is convertible to stock in the company, and a bartering agreement that offers free office space for equity in the company. In exchange, the companies agree to remain in Anoka County or Sherburne County for at
least five years.
Based on the fund's potential. Dakota County officials launched a similar program, and Jensen says such an economic-development model could work especially well in inner-city neighborhoods. But for
now, he's hoping his venture-capital fund will help Columbia Heights and other Anoka County towns develop the next Medtronic-which got its start nearby in Earl Bakken's Columbia Heights basement but is now a $2 billion
company located in Fridley.
"These entrepreneurs will go where the resources are, and they'll probably stay." Jensen says.