Festival of Finance

From Mini to Mega

Panelist Joy Lindsay described seed investing at StarTec Investments and the Sofia Angel Fund, both of which she cofounded. StarTec has invested $100,000 to $500,000 in each of 14 companies since 2000. Five have been acquired, one went public, one failed. Xiotech, a data storage company in Eden Prairie that was sold to Seagate for $360 million just before the dot-com boom fizzled (and has since been sold to a private investment firm), has been StarTec’s biggest success.

Sofia, organized last year, seeks to invest $100,000 on average in companies founded, led by, or marketing to women. It has raised about $1 million from 31 women, each pledging $30,000. So far, it has financed two companies: Chanhassenbased Ovation Science, which has developed a water pitcher that delivers more oxygen to indoor plant roots helping them grow larger more quickly; and St. Louis Park–based Tactile Systems Technology, which makes a lymph drainage device to help patients with vascular disorders and chronic wounds treat themselves at home.

Also at the conference: Past presenter Robert Kieval, a founder of medical device company CVRx, Minnesota’s 800-pound gorilla in landing venture capital. Since 2001, CVRx has received $125 million in four rounds. The Minneapolis company’s implantable device, used to control blood pressure, is undergoing a pivotal clinical trial.

Start-Ups Pick Up Steam

Dick Sommerstad, director of the Academic and Corporate Relations Center at the University of Minnesota, said more companies with university ties made long-form presentations this year than ever before. Two of this year’s presenters, Edina-based Orasi Medical and Medication Management Systems in Minnetonka, were born at the university’s Venture Center.

Orasi’s products diagnose and monitor neurological disorders. The company grew from the research of Professor Apostolos Georgopoulos, director of the Brain Sciences Center at the university and a world-renowned neurologist. Shawn Lyndon, who was the chief executive in residence at the Venture Center, is Orasi’s CEO. The company launched this year.

Medication Management wants to commercialize software and services developed at the university’s College of Pharmacy that pharmacists can use to manage patients who have several chronic conditions and take multiple medications. The company, led by former UnitedHealth Group executive David McLean, has raised $2 million so far.

The Venture Center has also been helping ReconRobotics in Minnetonka. Recon president and CEO Alan Bignall stirred up a buzz when he threw the company’s Recon Scout, a video reconnaissance device, toward the crowd. The Scout looks like a mini-barbell, and law enforcement authorities can toss it into a hostage situation to instantly size up the risks, instead of imperiling lives by sending their own personnel into the danger zone.

Professor Nikolaos Papanikolopoulos and three student inventors dreamed up the Scout at the university. Recon began operations at the start of 2007, expects to ring up sales of $700,000 this year, and plans to be profitable next year. More than $8 million in U.S. government grants went into the development of the Recon Scout. The company has raised another $1.25 million from family, friends, and the Norris Institute, a seed capital fund based at the University of St. Thomas that finances technology start-ups.