Aside from sharing the same first letter, “mojo” and “Minnesota” are words that don’t seem to carry a lot in common, though that may soon change. The state is home to 19 Fortune 500 companies, a world-class hospital and research center in Rochester and SPAM–what else do you need? But the land of 10,000 lakes has long lacked competitive fire, the kind of risk-hungry entrepreneur and investor that not only tolerates failure, but embraces it.
Mindful of this, a group of entrepreneurs, lawyers and investors have formed MOJO/minnesota, a grass-roots group that wants to restore the state’s taste for risk and innovation. From advocating for the angel investment tax credit to finding the local Steve Jobs MOJO/minnesota hopes to light a spark under the state’s proverbial rear end.
MedCity News chatted with founders Ernest Grumbles, an intellectual property attorney with Merchant & Gould, and Brad Lehrman, an investor and lawyer with Lommen Abdo. Here are some edited excerpts from that conversation:
What is the genesis behind MOJO/minnesota? What are you trying to do?
Brad Lehrman: It was born out of frustration. We were frustrated that there wasn’t more of a dynamic and high-velocity movement of innovation and resources for entrepreneurs in this region. There isn’t necessarily the sort of feet-on-the-street, SWAT team that can help people move forward quickly without having a political agenda.
Ernest Grumbles: We’ve got this gap in financing and activity (because of the weak economy). We want to get people back into the fight and not defer their dreams for five years. But MOJO is less about reacting to a specific economic event than pushing this boat out into the water a little bit. Where are the next Medtronics? Where are the next 3Ms? Control Data? We just don’t see them, or a lot of the time they go somewhere else.
How much of this is cultural? In Silicon Valley, people feel sorry for you if you don’t work for a start-up. In Minnesota, people feel sorry for you if you don’t work at General Mills or Target.
Lehrman: There are some cultural problems we have to overcome. I also think that there is enough segment of the population that wants to be in the entrepreneurial game, and I don’t think we have the structural support right now. We need the tools for that subsection of the population to win. For the ones that are risk-averse and don’t want to leave the cubicle, so be it. But for the other segment, we need to create the elements of success.
But how is your group any different from the plethora of economic development organizations we have in Minnesota, like LifeScience Alley, The BioBusiness Alliance of Minnesota, The Collaborative, the Initiative Foundation, Minnesota High Tech Association?
Lehrman: Everyone of those organizations are business models with constituencies to serve based on specific self interests to promote. We’re all volunteers who are doing this, people who believe in this concept of mojo. We don’t have to respond to a board of directors. We do what we want to do based on our philosophy.
Grumbles: We see ourselves as street activists for the innovation culture. We’ll work quietly or loudly depending on what makes sense.
One of the things you want to do is convince coastal blogs like Tech Crunch and Venture Beat to write about companies in Minnesota. Got any ideas?
Lehrman: It’s got to be a company that shows strength and growth, and a great management team and the ability to win. Not necessarily that it’s already created x percent internal rate of return. There are a bunch of companies that have raised a lot of money and they’re going to win. They may not be 1,000 times greater return, but they will be very good for their investors. That kind of messaging will attract more people to say ‘hey, we should take a look at what’s happening here.’ For example, Celleration: They have raised $65 million from around the country. So let’s highlight those other syndicate partners. Why did they come to Minnesota? And that’s not happening nearly often enough.
How important is the newly passed angel tax credit? And what’s the next thing that should be done?
Lehrman: For competitive reasons, it was sort of a no brainer that this should be done. It shows that we’re in the game. That’s important because we can’t live on a legacy of what we have done in the past. We need to be in the here and now.
We need an early-stage or Minnesota-focused fund that will be funded by some of the dollars associated with the pension fund. The constitutional officers here have never viewed that as something that they would do. They always felt there was a fiduciary problem with that, you can’t just limit your dollars to a specific economic region like Minnesota. But the reality is that if you take a teeny, teeny, tiny amount of money, $50 million out of a $10 billion portfolio, I don’t think that’s a breach of fiduciary duty. [For some states] it’s created returns of investments that will make the pensioners very happy. It’s not just about angels doing it but also the government showing the policy initiatives they are going to put the money where their money is.
What kind of a role should the Department of Employment and Economic Development (DEED) play in all of this, if any?
Grumbles: DEED has a very important mission and I think they feel they are perennially underfunded and they probably are. But there’s a lot of good that can be done with the resources they do have. They are on our target list for getting together.
Lehrman: They need to be reshaped and reformatted. They need to engage with people with us, and they have never done that outreach. It can’t take 10 years to restructure something like it did with the angel tax credit. It needs to stay on people’s radar screen.