7.0. EDSR 02-09-2004 - Laserfiche WebLink

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The NetSudsTM Report The January 1, 2004 Issue: 7.0 Going to Great Lengths for Financing by Matt Noah with contributions from NetSudser6rlan Jacobs, TedGenesis@aol.com Cima Nanotech recently concluded a venture round with Japanese investors. Now that's great news for its shareholders, its management team, and the various other stakeholders in the company.The other side of the story, often ignored in the mainstream media, is the curious and problematic lack of local interest from the local venture capital community in companies like Cima Nanotech. "Local venture capital companies have not been supportive of the early stage high tech companies in general and have not been supportive of the materials sciences companies in particular", said Harlan Jacobs of Genesis Business Centers (a Minnesota based high tech incubator/seed capital program for start up companies). Jacobs sed know ash was responsible for the critical introductions that led to the financing o Cymbet Corporatio ($4.5 million from Finnish and Israeli investors) and Cima Nanotech (a merger with an Israeli company that led to the Japanese financing). Both of these companies are involved in the commercialization of advanced materials. Cymbet makes state of the art lithium ion polymer batteries while Cima Nanotech makes nano-metal particles for conductive inks that are used in printing smart cards and sophisticated electronic circuitry. • The problem locally here in Minnesota is that no one has ever made significant sums of money in the field of advanced materials.Without a precedent, it's hard to mobilize the institutional sources of venture capital here. Comparable to the herd instinct that is all too common and well understood when the excesses of Wall Street are chronicled in newspapers and magazines, there is a herd instinct at work here in Minnesota in respect of how venture capital is invested. Whenever venture funds have made money investing in implantable medical devices such as heart valves and pacemakers, money tends to flow into these same fields with relative ease over and over again over the last two decades. The same can be said for servers and storage devices as well as software and systems in the information technology field. Sadly, no one has made significant capital gains in materials sciences or biotech or bioinformatics and any number of other fields in which centers of excellence exist right here in Minnesota. What's lacking are the comparable centers of excellence with respect to the formation and allocation of early stage risk capital. In the case of both Cymbet and Cima, Genesis helped with the initial funding by organizing bridge loans that provide warrants and attractive conversion features to the early stage investors. The investment funds in both of these cases were largely provided by business angels and in both cases one of the first olives out of the jar was the Anoka Sherburne County Capital Fund and Anoka Investors,LLC (a business angel group). Genesis further assisted with introductions to institutional investors in Finland and Israel where the venture fund managers have no problem investing from a distance of four to six thousand miles. This is a refreshing contrast to the typical west coast venture capital fund that makes a point of insisting that it will not invest in a company that is more than a one hour drive away from its office • on Sand Hill Road in Palo Alto. It's also encouraging that these foreign based funds made their investment despite the lack of a local lead investor here in Minnesota.