Tuesday, October 25, 2016

Random October Musings

I wanted to share a few quick thoughts as I look out the window and wonder whether I should do anything about all the leaves in my yard.  There are a depressing number of leaves on the ground, and yet still hundreds of brilliant yellow, green, orange and red leaves in the trees.  It seems silly to spend all that time cleaning up these fallen leaves, when there are just going to be more on the ground tomorrow.  Fall is a great time of year to be a Minnesotan, but I could do without all the accompanying yardwork.

Oh yeah, the thoughts….Here they are:

  • Here’s an interesting post by Rand Fishkin, co-founder of Moz, a Seattle-based search engine optimization (SEO) company.  Moz recently went through a round of lay-offs as part of refocusing on its core business and disengaging from ancillary pursuits.  I found the post interesting, in part, because the author is very honest and transparent about the failed business strategy that led to the pivot and resulting terminations.  We spend a lot of time discussing and celebrating success stories, but spend very little time acknowledging and learning from failures.  A lot can be learned from our own mistakes, and the mistakes of others.  I found his openness on this issue refreshing.
  • On an unrelated note, TECHdotMN recently reported that the 3rd quarter experienced the smallest amount of investment capital in Minnesota-based tech companies for any quarter since at least 2009.  From July 1, 2016 to September 30, 2016, their data shows that only about $8 million was invested in Minnesota tech companies.  I found this surprising, as we’re working with several companies that recently raised capital or are in the process of raising capital, which in the aggregate would exceed that amount.  While raising money has always been a challenge (at least for most companies), I haven’t noticed that the early stage capital markets are any harder to access than they have been in the recent past.  One interesting point of contrast is a report recently published by Medical Alley Association, which shows that $117 million was raised in the 3rd quarter by medical device and digital health companies.   While Medical Alley’s report includes more later-stage companies, especially in the medical device space, it’s at least an interesting contrast to what is being reported about the tech sector.  I’ll be curious to see if this is a trend, or if the last quarter was just an anomaly for tech companies (which is what I suspect).  
  • One thing that should help those still trying to raise capital this year is that, as of October 24, $2.9 million of tax credits still remained available in the Minnesota Angel Tax Credit program.  As you probably recall, $15.5 million of credits were made available for 2016, $7.5 million of which were reserved for investments in companies located outside the metro area, or for businesses that are minority- or woman-owned.  As of October 1st, $5.1 million of that $7.5 million was made available for all companies, and approximately $2.2 million of that has already been spoken for.  For companies that are ready to raise capital now, the tax credit may be a nice incentive for participating investors.  If you’ll be looking to tap credits in the program for 2017, note that applications will be accepted for certification beginning on November 1.

Enjoy what remains of the fall.  Sometime soon we’ll stop putting off raking leaves, and start putting off shoveling snow.

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