Group Wants $10M from MN for Science/Tech Startups

In addition to its request for funding next year, the Minnesota Science and Technology Authority hopes to secure $750 million in state money over the next 10 years.

A newly formed group of Minnesota's science and technology stakeholders tentatively plans to ask the state legislature for $10 million next year and $750 million over the next 10 years to encourage startup activity.

The Minnesota Science and Technology Authority was formed in July to stimulate innovation and encourage investment in new technology products, companies, industries, and jobs within the state.

Its 18-member advisory commission came up with a set of draft recommendations and reviewed them Wednesday. The recommendations may change before they are presented to the legislature next month, but the authority now plans to ask for the following for next year:

  • $1.25 million for the authority's operations, including staffing and program marketing efforts
  • $2 million for a technology commercialization fund, which would provide matching funds for startups that have already secured money from the public or private sector
  • $2 million for an advanced entrepreneur program, which would provide advisory services and match funding given by business, industry, and investors
  • $4 million for Small Business Innovation Research grants, which provide federal money for small companies in the startup and development stages with the goal of helping them to compete with larger, more established companies
  • $750,000 for an internship program, which would focus on finding talent and connecting it with companies in the high-tech industry; the program would establish 200 internships for science and technology students at Minnesota companies, which would match the state's funding

Over the next 10 years, the authority hopes to garner $350 million for research and development programs and facilities, $150 million for talent development, and $250 million (including the angel tax credit) for capital and business development.

Dan McElroy, the authority's chair, said in a Thursday morning phone interview that there is “some validity” to an argument that the state isn't doing enough to encourage and foster technology-related growth and to attract and retain those types of startups.

“We're doing well and we need to do better,” said McElroy, who also heads the Minnesota Department of Employment and Economic Development. “Even in this difficult time, [the state] needs to find money to make investments.”

McElroy said that the authority ultimately aims to bridge the gap between idea generation and capital generation. He'd also like to see funding opportunities for a broader group of startups.

“My biggest concern is that science and technology progress has been narrowly concentrated in the areas of material science, medical devices, and plant genetics,” he said, adding that companies in other promising categories, including pharmaceuticals and electronics, also need investment help.

The authority's goals piggyback somewhat on the angel tax credit, which the legislature approved earlier this year. The credit gives a 25 percent tax break to individuals and investment funds that provide as much as $4 million in seed money to businesses focused on high technology or new proprietary technology.

The authority's draft report calls attention to the fact that Minnesota ranks 13th among all states in the 2010 State New Economy Index, a benchmark of economic transformation that's released annually by two national foundations.

“While the overall ranking is above average, what concerns the authority and its advisory commission is the fact that the economic factors where Minnesota does not perform well are those related to our long-term viability,” the report said. For example, Minnesota ranks in the lowest quartile in areas related to non-industry research and development and entrepreneurial activity.