Tee Up to Receive 2014 Minnesota Angel Tax Credits

The Minnesota Department of Employment and Economic Development (DEED) is now officially accepting applications for businesses and investors who hope to receive a portion of the $12 million in tax credits available in Minnesota beginning on January 1, 2014. 

The process is a multi-stage endeavor, but the ability to get started ahead of the new year definitely gives businesses and investors a leg up in ensuring they secure an allocation. At a high level, here are the requirements for qualification and submission that aspiring businesses can start working on now:  

• Ensure your company meets the eligibility requirements for the program by working through this Business Certification Checklist.

• If you believe your business qualifies, submit the 2014 Business Certification Application to DEED with the required fee. Your company will receive a certification approval email from DEED within 15 to 30 days confirming your qualification for the program, and your name will be posted on the DEED website’s list of qualified businesses. 

• Ensure your investors meet the qualifying requirements by having them work through the Investor Certification Checklist. 

• Have each investor submit the online Investor Certification Application and follow the instructions to sign the receipt and relay the required filing fee. Investors will receive their own certification approval email from DEED within 15 to 30 days confirming their qualification, and their names will be posted on the DEED website’s list of qualified investors. 

• After both your company and potential investors are certified, jointly submit a 2014 Credit Allocation Application. This will get you in the queue for an allotment of the $12 million in credits, which DEED will begin to process come January. Once you receive approval of your allocation (DEED will send both parties an email), you’re ready to move forward with the investment transaction!

There are additional steps involved once a transaction is complete, but the above points are gate-keeping items and can help get you ahead of the game this year. As of now, 2014 is the last year scheduled for the program, so its popularity and demand will likely be at an all-time high. In fact, it’s not far-fetched to project that the $12 million allocation may dry up within the first quarter of the coming year. If you’re planning to raise money utilizing the Angel Tax Credit, it makes sense to start the process now. And, of course, Gray Plant Mooty is always happy to assist at any stage of the process!  

A Post by Karen Wenzel, Guest Blogger

Come and Hear GPM at MobCon 2013

Gray Plant Mooty is excited to be a sponsor of this year’s MobCon conference, taking place next week (November 7th and 8th) at the Hilton in downtown Minneapolis. MobCon touts itself as the “premier mobile conference for executive, IT, and mobile strategy business professionals,” focusing on strategy, technology, and marketing best practices in the skyrocketing mobile industry. Organizers anticipate this year’s attendance to reach up to 800 individuals from across the country, who they hope will gain knowledge, share ideas, and become inspired by the event. 

In addition to presentations from over 70 speakers including Carl Schachter, one of Google’s Vice Presidents, Jeff Anderson, Director of Corporate Communications for the Minnesota Vikings, and Jason DeRusha, a news anchor for WCCO, attendees will hear from some of their favorite Gray Plant Mooty attorneys.  Chris Carlisle, a principal in our firm’s corporate group with a broad background in entrepreneurial services, Jennifer Debrow, a partner practicing intellectual property law with expertise in the technology space, and yours truly, will all be present – and presenting – for parts of the event. 

Specifically, Chris Carlisle will be participating on a panel with representatives from Lazard Middle Market, MentorMate (a mobile application development company), and StarTec Investments, LLC, on financing strategies for mobile companies (part of the “highlighted successes” theme at the event). Jennifer and I will be presenting a “best practices” session on “Avoiding the Legal Landmines of Mobile,” which will focus on key current legal issues in the mobile application space. These issues include development and protection of intellectual property, privacy and security concerns, advertising regulations and disclosures, and distribution matters such as developer and end-user license agreements. 

MobCon will also feature an application developer competition, “MobDemo,” with prizes of credit toward mobile development from MentorMate being awarded based on attendee votes. 

Last year’s affair apparently sold out, but it appears that registration for next week is still occurring through MobCon’s Eventbrite site.  Come and hear thought leadership on everything from innovative strategy to advanced technologies in the mobile space – and don’t forget to stop by and say hello to Gray Plant Mooty!

A Post by Karen Wenzel, Guest Blogger

Another Successful Year for Minnesota Cup

This year marked the 9th anniversary of the Minnesota Cup competition, an event that according to the Cup’s website is now the biggest emerging venture competition in the U.S. The competition culminated in a final awards event at the University of Minnesota’s McNamara Alumni Center two weeks ago on September 11, at which division winners gave oral presentations to the review board and the grand prize was awarded. Approximately 1,100 participants joined this year’s competition, which started last spring, competing for awards in six specific divisional categories: energy/clean tech, high tech, life science/health IT, social, general, and a student-only group. 

This year’s winners ran the gamut of unique, innovative technologies and ideas. In the energy/clean tech space, a company specializing in sustainable agriculture through the development of indoor/urban warehouse farming systems came out on top. In the high tech division, a business providing a practical and intuitive platform for company employee and staff scheduling won the prize. The winner of the social entrepreneur category was a Mankato-based community action agency that provides programs and services to help eliminate poverty, and the general division champ was a developer of a “safe and simple” blog for K-12 students.  My personal favorite was the winner of the student division, ShedBed, creator of a technology that attracts and contains pet hair and dander to a pet’s bed. I wonder if it works when your pet misappropriates your human bed… (I can’t help it—is anyone else’s dog THIS CUTE?!). 

“I’m sleeping in today.” – Mac (my parents’ Norwich terrier)

Overall, Preceptis Medical was the company that came out on top – the divisional winner in the life science/health IT division. This company received accolades for its development of tools to assist in ear tube procedures, the most common pediatric surgery in the U.S., allowing them to be performed in an outpatient setting in a fraction of the time, with parents present and less pain for the patient. 

With the Cup’s 10th anniversary approaching in 2014, it is clear that the competition continues to achieve its goals of not only supporting the Minnesota entrepreneurial community, but also of making the Cup a centerpiece of the state’s emerging business landscape. Good luck to next year’s participants!

A Post by Karen Wenzel, Guest Blogger

GPM Clients Profiled in August 3rd TECHdotMN Weekly Digest

Minnesota’s TECHdotMN's Weekly Digest email report, sharing tech news and events from around the state, is a staple of my weekend reading repertoire – so it was fun to see multiple Gray Plant Mooty entrepreneurial clients included in the lineup of headlines last week!

Naiku, a developer of classroom assessment software, has been chosen by the Edina Public School system to provide assessment solution products to Edina teachers for the 2013-2014 academic year. The article quotes Edina’s educational staff as calling Naiku’s products easy and efficient to use and able to be integrated with other popular classroom systems. This is definitely a “win” for “edutech startup” Naiku. 

SMART Signal was also called out for the “green light” it received from MnDOT to install a new software product on over 50 Minnesota intersections. The technology works to improve congestion due to traffic signal performance in Minneapolis’s most frustrating traffic zones, saving both time and money for drivers in the Twin Cities. Multiple Gray Plant Mooty clients have collaborated with the University of Minnesota to license and commercialize valuable technology developments, and SMART Signal is an illustrative success story. 

Fitness on Request, an on-demand fitness technology company, received a mention due to its recent financing.  Fitness on Request develops fitness class software and technology to allow for on-demand workouts at exercise facilities. As the article mentions, the company has been growing quickly, with a goal to double its revenues by the end of 2013. 

Last, ReconRobotics received a nod regarding the transfer of its Robotics Alley™ Conference and Expo event to Minnesota-based The Event Group, a production and marketing agency. The 2013 Robotics Alley Conference and Expo, hosted by the Twin Cities Chapter of AUVSI (also a Gray Plant Mooty client), aims to “bring together leaders in robotics research, design, business development, law, government and policy, and investment banking to share their insights into the explosive, worldwide growth of robotics and autonomous systems.” This November’s event will be the third annual conference hosted in St. Paul. 

While it’s always enjoyable to read about Minnesota’s entrepreneurs and their successes, it’s even better knowing that Gray Plant Mooty played a part in helping some of these companies achieve such noteworthy milestones. Congratulations to our clients and thanks to TECHdotMN for the press!

A Post by Karen Wenzel, Guest Blogger

Business Lending to Female Entrepreneurs on the Rise

A recent article related to female entrepreneurs caught my eye.  In connection with National Women’s History Month this past March, Wells Fargo announced its plans to commit to lend a total of $55 billion to U.S. women-owned businesses over the next seven years. While I was excited to read about this commitment from our country’s premier small business lender, I was more interested to learn that this isn’t the first time a bank like Wells Fargo has made such a pledge. 

Apparently, Wells Fargo began making lending commitments targeted at businesses owned and operated by women almost 20 years ago, in 1995, when it strived to lend $1 billion to this segment over a three-year time span. Their goals have continually increased, with this most recent target being the most aggressive yet.

And Wells Fargo is not the only national bank that caters to specifically women-owned businesses. For example, PNC Bank has a training program tailored specifically to bankers who want to work with women-operated small businesses, and there are reportedly 900 “PNC-Certified Women’s Business Advocates” currently, nationwide. KeyBank reported in 2009 that it had provided more than $3 billion to women-owned companies since 2005, and touts its “Key4Women” mentorship program that offers members relevant publications, networking opportunities, and sponsored “relationship managers” to foster development and growth. And the Citi Foundation supports investment in organizations that seek to create opportunities for women without access to traditional credit and funding sources through its sponsorship of the “Women Investing in Women Initiative (WIN-WIN).”

These programs are credited with increasing the prevalence of female-owned businesses in the U.S. According to an article related to the Wells Fargo announcement, female-owned businesses are one of our country’s fast-growing groups. The number of women business owners in the U.S. apparently increased by approximately 20% between 2002 and 2007, and women are currently billed as owning approximately 30% of U.S. businesses. Resources provided by specific lending programs have been recognized for assisting women in obtaining the financing they need to achieve their goals. 

However, there is still room for improvement. A report also published this past March highlights the problems women continue to face in owning a business and obtaining financing. The study found that female-owned companies were up to 20% less likely to be approved for an SBA loan in the last half of 2012. Interestingly, while the statistics reflected that women-owned businesses had generally lower annual revenues and higher operating expenses, an analyst connected to the study explained that this may be because women are more likely to own retail business which historically reflect lower margins and higher operating costs. In reflecting on the findings of the study, this analyst emphasized that being approved for quality small business loans is critical for any entrepreneur – alternative lenders may have higher cost borrowing terms, or founders may even turn to using personal credit cards, both of which could lower credit scores and exacerbate the problem of finding a quality loan. 

Overall, however, the focus on financing for women-owned businesses is promising news for any female entrepreneur. The commitment from large players like Wells Fargo to help develop and grow this segment of our country’s business population is exciting, to say the least.  

A Post by Karen Wenzel, Guest Blogger

Our Economy on the Rise (Knock on Wood): Should You Sell Your Home – OR Your Business?

Is it just me, or is everyone you know selling and buying homes right now? Five of my best friends have purchased new houses in the Twin Cities area and concurrently sold their previous dwellings just this spring. Two of them were forced into closings on their new purchases earlier than what they would have preferred, worrying that it might take some time for them to sell the condos they have lived in for the past few years. Both sold their condos in less than a week – for more than the asking price! During the process of viewing new homes with their realtors, all friends also experienced bidding wars and houses sold out from under their noses without getting a chance to bid or counter.

While I admit that my friends and I are in the typical age range for thinking about buying a new home (the “almost-30—but-definitely-not-yet-30” range), this housing market frenzy is not just a product of peer pressure in my close-knit circle of college pals. According to a recent Star Tribune article, real estate sellers are “leaping” back into the market, and this past April new listings in the Twin Cities metro area showed the biggest increase in two years. Real estate purchases also increased by over 5% from the same time last year, and the prices paid were over 12% higher overall. 

Reflecting on this recent trend, I was reminded of another article I read in the Star Tribune just a few months earlier related to the market for selling a business. As anyone in the M&A market (including we business lawyers!) has been made painfully aware over the past couple of years, companies have been reluctant to enter into the transaction conversation. However, according to this article, it is not only a “hot time” to sell your home, but also to think about selling your business. Investment banking firms have apparently been seeing valuations rising to pre-recession levels, with the typical six- or seven-times EBITDA commonly used as a valuation yardstick reportedly reaching closer to ten or even eleven times in certain industries. A representative from one of Minneapolis’s local investment banking firms is definitely not the only person who thinks these levels are “extraordinary.”

Even though I am still in a relatively nascent stage of my transactional legal career, I have also personally seen evidence of this trend. I have experienced an uptick in conversations regarding the buying and selling of our clients, and recently sat in on two different meetings with clients and investment bankers – the first two of my almost two-year-long career. The company my husband works for also just recently sold off one of its affiliates in a successful transaction. 

According to the Star Tribune article, there is an “unprecedented amount of capital that’s looking to be invested in business acquisitions,” including large capital pools of private equity investors. Additionally, the bank/lending markets are slowly becoming more amenable to transactions as well, while interest rates remain low. Ultimately, experts in the industry are advising entrepreneurs and other business owners that it’s a great time to think about going to market. While we M&A lawyers agree that these are “very unusual times” as compared to the past few years, we hope they stick around and provide us with some exciting opportunities to assist our clients with successful exits and/or acquisitions in the coming months and years!

A Post by Karen Wenzel, Guest Blogger

Names, Numbers, Dates, and Signatures – Cleaning Up Your Legal Documentation

As most of the entrepreneurial community in Minnesota is well aware, the funding still available under the state’s Angel Tax Credit program, which gives investors in tech start-ups a tax credit on qualified investments, is fast dwindling. I’m sure ours is not the only law firm in town working with clients that are still hoping to take advantage of the remaining allocation of credits, and reaching out to potential investors with their business summaries, financial information, and perfectly-crafted elevator pitches. 

These aren’t the only requirements of the savvy investor, however. Potential business partners also often want to understand the precise equity structure of company in which they are investing, who comprises the company’s board of directors, what the requirements are of the governing documents (articles, bylaws, buy/sell or member control agreements), and other corporate matters. These issues, while often easy to discuss and agree upon in theory, are not technically (or legally) solidified unless they exist in writing, with appropriate names, numbers, dates—and signatures. For some of our entrepreneurial clients, who are often working at break-neck speed, these items exist in spreadsheets, word documents, or emails, but not in legally-binding agreements. And the need to step back and complete this documentation in order to present it accurately to investors seems like a frustrating, stilted, “lawyerly” process that just delays the finalization of key partnerships and funding. 

Despite the seeming insignificance of some of these items, the importance of the technicalities surrounding these types of business decisions cannot be understated. Promising an investor that they will receive 10% equity in your company in exchange for their investment, without clear documentation illustrating who owns the other 90%, when they received it, and for how much, does not instill much confidence in the certainty of that 10% (or in compliance with applicable state and federal securities regulation). And promising an investor a board seat without confirming to them how much power this may yield (will they be one of two, or one of seven board members?) may not add the value to their investment that a company thinks it should. 

According to West’s Encyclopedia of American Law, a signature is “a mark or sign made by an individual on an instrument or document to signify knowledge, approval, acceptance, or obligation,” with the purpose of “authenticat[ing] a writing . . . and bind[ing] the individual signing the writing by the provisions contained in the document.” I recently assisted a client who insisted that his company’s capitalization table reflected three current owners. However, the third owner had continually delayed providing his signature on the subscription documents evidencing his investment and ownership in the company. Ultimately, when push came to shove and the importance of reflecting the company’s ownership accurately was required, it became clear that there was no true meeting of the minds, and the company was left with its two, official founders. Signatures are the talismans that turn mere conversations (or that “hand-shake” deal) into something that companies – and investors – can rely on as permanent and secure.

I have also recently been working with a client that is attempting to raise money, and an investor inquired about composition of the company’s board of directors. The client had multiple notes as to who was supposed to have been on its board at different times throughout the company’s two-year history, but (much to the surprise of its super skilled legal team) had never followed the statutory process required for the election of directors, or properly documented decisions that had been made regarding the structure of the board. While getting these documents in order was not a very large undertaking, it did take additional time, delaying the company’s receipt of its equity capital and adding some undue headache to the process.

Dates are important as well. Providing a snapshot of your company’s capital structure requires that the documentation leading up to that point is dated and executed prior to the date of the snapshot. And as most business owners realize, subsequent investments dilute previous investors, so solidifying the order of who came in first, second, and third, is critical.

With the potential for at least one incentive to invest, the Minnesota Angel Tax Credit, appearing close to running out for the year (unless proposed legislation like this is passed to increase it), companies are realizing that any delay in communicating with an investor is a set-back. Getting your legal “house in order” with accurate and complete documentation can save time and energy down the road – when these attributes will surely be needed to polish that elevator pitch!

A Post by Karen Wenzel, Guest Blogger

8th Annual MinneBar “Unconference” a Hit

This Saturday I attended the 8th annual MinneBar conference held at the Best Buy Corporate Headquarters in Richfield. With over 80 panels, presentations, and sessions on technology and software scheduled in 50-minute intervals across the span of eight hours, and what was rumored to be over 900 attendees, there’s no doubt the organizers – and attendees – considered the conference an unqualified success. 

Actually, the event is touted as a “Bar Camp,” or an “unconference” – terms I was not familiar with before Saturday. I have to admit, the loose plans for the event (anyone and everyone can sign up to present, and we weren’t given the schedule of sessions until less than a day prior to the start time) was initially a bit off-putting. However, from the moment I walked in, I noticed an energy and excitement that are not typically present at a traditional conference. 

Apparently the idea for the “open space” format of unconferences was first developed in the mid-1980s by a man named Harrison Owen, though some compare the experience to science fiction conventions that have been held since the 1930s. The key characteristics dictate that an agenda is created by the attendees upon arrival rather than prior to the event, and anyone who wants to sponsor a discussion on a topic can set up a time and a space. The open discussion format works best when attendees are highly knowledgeable and experienced in the field around which the conference is centered. The term “unconference” wasn’t first officially used until almost 2000, and was popularized in the context of the BloggerCon convention first held in 2003. The phrase “Bar Camp” is a related term, referencing more specifically open-to-the-public forums centered around technology and the internet. 

I was ultimately convinced that there is no better format to use for an entrepreneurial, unconventional crowd (pun intended). MinneBar’s website promoted the feel for this event, stating on their website that no “spectators” were allowed – only participants. The event was free for anyone to attend or make a presentation. And while we were somewhat nervous about who would show up to our law firm presentations on technology agreements and intellectual property basics, the first session, at least, had over 50 attendees, including those sitting on the floor and standing in the doorway. They were even kind enough to laugh at our jokes relating to source code (“Why would we need that if we’re buying a new software system and the vendor will soon be going out of business?”) and Lotus 1-2-3. 

In fact, even the location for the event – the Best Buy corporate headquarters – catered to the entrepreneurial crowd and the unconference vibe. Despite obviously being a fortune 500 company with a 1.4-million-square-foot corporate headquarters, Best Buy is decidedly hip. Having worked there for two years in the mid-2000s, I was reminded upon returning that the company embraces its humble beginnings with a huge memorial wall, and its playful attitude with a large gaming area complete with multiple video game stations, pin ball, and a pool table. And as we’ve all seen in the news in recent weeks, Best Buy’s original founder is returning to the helm of the company, proving that no matter how big you get, an entrepreneurial spirit and founder attitude may be the best thing for a company, even one with annual revenue of close to $50 billion. 

Needless to say, I have no doubt that the “conference” I will be most looking forward to in 2014 won’t be a conference at all. I will definitely be a participant in next year’s MinneBar!

A Post by Karen Wenzel, Guest Blogger

“Silicon Prairie”: The Increasing Entrepreneurial Draw of the Midwest

A few months ago, my mother forwarded me a link to an article in our very own Minneapolis Star Tribune entitled “Tech New Frontier: Silicon Prairie.” (Yes, my mom may be overly engaged in what I do for a living, but I do owe her for inspiring this entreVIEW post.) The article described the emerging high-tech startup community in the Midwest, emphasizing the home-grown roots of entrepreneurs in the area and the increasing attention – and money – paid to these businesses over the past few years. 

The moniker “Silicon Prairie” intrigued me, so I decided to dig a little more deeply into the origin of the phrase. It turns out that our nation embraces a few different prairies of silicon nature – an area in Texas north of Dallas, an area in Wyoming, an area surrounding Chicago, and our very own “Midwest,” which loosely encompasses Iowa, Nebraska, Kansas, North Dakota, Minnesota, Missouri, and South Dakota – the states bordering I-29. Each area boasts somewhat of a different start-up focus, with Texas named chiefly for the concentration of information technology companies in the area, Illinois centering on research companies, and Wyoming being mentioned for its Web 2.0 startups. 

But as the Star Tribune article emphasized, the Midwest has historically been known “more for its barns than its bandwidth,” and many of the burgeoning businesses in this space relate to agriculture, biotechnology, and manufacturing. Though the region currently reflects only about 6% of the country’s angel investment transactions, it is one of only two geographic areas that exhibited an increase from 2011 to 2012 based on a report prepared in connection with the Angel Resource Institute, Silicon Valley Bank and CB Insights. Because the history of the area reflects a “like on the farm” work ethic, those paying attention believe the region only has more room to grow. 

There’s even a publication called Silicon Prairie News dedicated to recognizing and supporting the area’s “entrepreneurs, creatives, and investors through an emerging model for grassroots entrepreneurial ecosystem development.” I’m not sure how I missed this one, but will be adding it to my regular reading list, as well as paying heightened attention to how this Silicon Prairie we live in continues to make headlines. 

Post by Karen Wenzel, Guest Blogger

Mobile App and Website Necessities – Do You Have Terms of Use and a Privacy Policy?

A few months ago, I received an email from Facebook regarding updates to its “Data Use Policy,” which explains “how Facebook collects and uses data when people use Facebook,” and its “Statement of Rights and Responsibilities,” which explains the “terms governing use of Facebook’s services.” Just this month, I received a similar email from Instagram regarding updates to its Terms of Service and Privacy Policy. This past week, some client disclosures prompted me to review how Pinterest deals with legal liability for copyright infringement via the company’s online Terms of Use.  

As entreVIEW readers probably know, all of these companies have recently experienced negative publicity and complaints relating to the policies they have in place governing the interplay between the company, its users, and content posted to the site (see my blog post from last month regarding the Facebook “furor,” this New York Times article about the Instragram “uproar,” and this TechCrunch article about the “trouble brewing” with Pinterest).

But as we’ve also recently seen, not having these policies in place could cause even more of a headache. Last month, the California attorney general office announced that it is suing Delta for Delta’s failure to include a privacy policy with its mobile application. This is the first of such type of legal action under the state’s privacy laws, but it seems a sure bet it won’t be the last. 

Online data privacy – and the way companies deal with the continually growing mass of rules and regulations related to this issue – has been climbing higher and higher on many businesses’ priority lists. We have seen this trend reflected in our own high-tech practice here at Gray Plant Mooty, as more and more clients are bringing up these issues at an earlier stage and asking us to draft documents that help mitigate their legal risks in this area. 

So what do these documents look like and how can they help your business? The two most common documents used by companies today are a statement of Terms of Use (or Terms of Service) and a Privacy Policy. 

Terms of Use. This document sets forth the rules for a user’s interaction with a company’s site or service. It puts the burden on the user to agree and comply with the Terms (either implicitly by using the site, or by clicking a box), and helps a company control and police its site. Some of the standard provisions typically included in this type of document are:

• Rules for accessing the site or service and account security;
• Guidance on intellectual property rights and infringement;
• Prohibited uses and user contribution standards; and 
• Company disclaimers of warranty and limitations on liability.

Privacy Policy. In contrast to the Terms of Use, which focus more on user responsibilities, this document sets forth the rules related to how the business handles the data it collects from and about its users. Companies must be sure to represent their data collection and use practices accurately, or they could be subject to legal liability. Some of the information typically found in this type of document includes: 

• An outline of the information the site collects about its users, both voluntarily (such as a form submission or post) and involuntary (i.e., through cookies, IP addresses, or global positioning technology);
• How the company uses and may disclose this information; and
• How the company secures this information.

As we’ve learned through witnessing the growing pains of the highly successful social media sites mentioned above, the issues addressed in these types of legal documents are issues that consumers are highly passionate about, and issues to which the law is paying more and more attention. While no amount of documentation can fully shield a business from complaints or problems that may arise in connection with these issues, as Delta – and many of our clients – have learned, it is better to protect yourself than to fly solo in this department. Sorry for the hideous pun. 

A Post by Karen Wenzel, Guest Blogger

Get In Line for 2013 Minnesota Angel Tax Credits

Among all of the other holiday tasks and resolutions likely still on your to-do list, if you are an entrepreneur looking to raise capital in 2013 and hope to take advantage of the Minnesota Angel Tax Credit, you should think about starting the process now. The state’s annual allotment of credits, which gives qualifying investors up to a 25% tax credit on eligible investments in Minnesota start-up businesses, has seen a trend of depletion earlier and earlier in each year of its existence. The first full year’s allotment of $16 million in 2011 was fully subscribed for by November of that year. 2012’s allotment of $12 million was exhausted by the end of July, in part due to a last-minute rush on the credits precipitated by articles reporting on the scarcity of credits. So, if word on the street is any indicator, the additional $12 million allotment for 2013 will be gone even earlier this year.

The credits have proven to be deserving of their status as a “hot commodity.” Between July of 2010 (when the program started) and the end of 2011, the credits helped generate $92 million in investments in Minnesota companies, and that number reached $140 million after the 2012 allotment. Over 100 companies were issued the credits in 2012 (a few of which, we are proud to say, are Gray Plant Mooty clients.) The program is currently only set to last through 2014, with the same amount of funding in its final year as in 2012 and 2013. 

So what should you do to make sure you get your share of the tax credits this year? Minnesota’s Department of Employment and Economic Development (DEED) is already accepting applications for business certification, which solidifies a business’s qualification to receive applicable investors in the coming year. Investors may also currently submit their certification applications to obtain qualified investor status. These forms and other directions can be found on the DEED website. You will still have to wait until 2013 to officially begin a joint filing between the business and the investors of the specific credit allocation application (and, of course, the making of the actual investment). With businesses and investors already poised to file for allocations and transfer money, I can only imagine that the DEED office is gearing up for a busy start to the new year next week!

A Post by Karen Wenzel, Guest Blogger

Facebook Furor and a Follow-up on Copyright Law

I recently wrote a post about United States copyright law, and how it applies to some classic Christmas carols. If you don’t like Christmas music (or even if you do), you may be still more interested in how copyright law has recently invaded your Facebook newsfeed. The below post showed up recently on the Facebook feed one of my fellow entreVIEW authors (and, as you’ll see, he couldn't help but provide a short response):

Like probably tens (or hundreds) of millions of others, I saw similar posts on my newsfeed. I assumed there was already some commentary “out there” about what this post actually means and accomplishes (which, by the way, is pretty much nothing), and that is in fact the case. Articles like “Quit Posting Facebook Copyright/Privacy Messages — It’s a Hoax,” and “Viral post won't copyright your Facebook updates” reference Facebook’s recent “Fact Check” statement that “Anyone who uses Facebook owns and controls the content and information they post, as stated in our terms.” 

Users of websites, including Facebook, are usually required to consent to “Terms of Use” (of course, there’s been litigation about the enforceability of these “click through” agreements, but generally they are held to be enforceable.) As a result, if Facebook’s terms said something different your alternative would be to stop using Facebook—a thought that, for some, would be more difficult than giving up food or oxygen…

More fundamentally, however, it’s worth embellishing on Dan’s response related to the rules of copyright law. As noted in my previous post, copyright protection for “original works of authorship fixed in a tangible medium” applies to works like novels, movies, and songs. These types of works are automatically protected under copyright the moment they are created and fixed in a tangible medium. So, for example, if you come up with an idea for a novel, your idea is not protected. But if you start writing the idea down on paper (or more likely on your computer), your creative work automatically becomes copyright protected. No “communique” needed.

Don’t get me wrong – posting that new, special poem you wrote (or awkward family photo) as your next Facebook status certainly makes it easier for someone to use or steal it, but your own, personal copyright in that work will technically be protected under U.S. copyright law no matter what your other Facebook posts say.

A Post by Karen Wenzel, Guest Blogger

Christmas, Copyright, and the Public Domain

We recently had a client mention an idea to us for spreading holiday cheer throughout their company this season – they planned to videotape employees singing holiday songs and place the videos on the company’s YouTube site. While this sounded like a pretty innocuous exercise (the kind of thing that people probably do all the time), the client sagely realized it didn't want to inadvertently select any songs that were still covered by copyright protection. Suing someone for singing a Christmas song sure sounds a little “Grinchy,” but it could happen.

First, a little background on copyright law. In brief, a copyright is a form of intellectual property protection “grounded in the U.S. Constitution and granted by law for original works of authorship fixed in a tangible medium of expression.” These original “artistic” works include anything from novels, movies, and songs, to computer software and architecture. While many people believe works must be published or registered to be protected by copyright, this is not the case. A work is automatically protected under copyright the moment it is created and fixed in a tangible medium. 

When something is protected by copyright, the owner must give authorization in order for someone else legally to use the work (the “fair use doctrine” recognizes a limited exception – often more narrow than people understand – for minor quotes or samples used in scholarly articles, news reports, etc.) Desiring users who receive permission may have to pay royalties for the use, and unauthorized use could lead to a lawsuit.

So how does all of this apply to our client’s Christmas caroling plans? The protection provided by U.S. copyright law does not last forever. Our country’s rules attempt to balance the need to encourage and protect individual creativity with the benefits to society of free access to such creative output. Since the law has evolved over time, the matrix of potential expiration terms, depending on date of publication and placement of copyright notice, is confusing. In the U.S., published copyrighted works generally have entered the “public domain” (meaning their copyright privileges have expired) if they were created prior to 1923. As one might guess, this applies to many classic melodies.

So, how does your favorite tune stack up this year?

• “Jingle Bells”: Written by James Lord Pierpont and originally published and copyrighted under the title “One Horse Open Sleigh” in 1857. Result: Public Domain. 
• ”Deck the Halls”: A Welsh melody dating back to the sixteenth century, with lyrics likely American in origin dating from the late nineteenth century. Result: Public Domain. 
• “Silent Night”: Composed 1818 in Austria and published with an English translation in 1859 by John Freeman Young. Result: Public domain. 
• “Rudolph the Red-Nosed Reindeer”: Written by Johnny Marks in 1939 and famously recorded by Gene Autry and made #1 on the U.S. charts the week of Christmas 1949 (note, here, the music written by Marks and the recording by Autry are each separately copyrighted works). Result: neither is in the public domain. 
• “Frosty the Snowman”: Written by Walter “Jack” Rollins and Steve Nelson for Autry in 1950, after the success of “Rudolph” the year before. Result: NOT in the public domain. 
• “Have Yourself a Merry Little Christmas”: Written by Hugh Martin and Ralph Blane for the 1944 musical “Meet Me in St. Louis,” and more famously recorded in 1957 by Frank Sinatra. Result: NOT in the public domain. 

While Mr. Scrooge is unlikely to show up at your family holiday party with a summons and complaint because you decided to sing some carols, you should be careful if you’re planning to publish that video version of Uncle Albert’s rendition of a “modern” classic to the web...

A Post by Karen Wenzel, Guest Blogger

Debate Skills Matter for Entrepreneurs

Whether you’re a die-hard Republican or Democrat, somewhere in between, or don’t actually care much about politics, you have probably run into at least some kind of commentary about the recent presidential and vice presidential debates. Maybe it was about President Obama’s “lackluster” and “unconvincing” first performance, or the “confused and bored” audiences. It could have also been about Vice President Biden’s “nonverbals” or, if you’re someone who still watches SNL, Paul Ryan’s “shark eyes.”

No matter where you find yourself on the political spectrum (and even if you never want to run for public office), if you’re an entrepreneur, there are valuable lessons to be learned from the debate strategies and tactics of our presidential hopefuls. In fact, in reading through this insightful article on how debate skills can and should apply at one’s “home, school, and work,” I couldn’t help but think about the many ways debate lessons would also help budding entrepreneurs.

As Woodsome notes in her article on Voice of America, “being prepared” and “knowing your audience” are two of the most important attributes of a successful debater. This is often the same advice we give to entrepreneurs who may be meeting with potential investors or strategic partners.

It is crucial to be prepared at any discussion or meeting to explain in a clear and convincing way what it is you are looking for, and why the other party should give it to you. Many entrepreneurs can discuss the nuances and technicalities of their ideas for hours, but conveying a concise, exciting pitch – and actually asking for the business or investment – is much harder to do (note the relentless request of debate moderators to the candidates to stick to the question at hand and give a relevant answer). Honing this skill requires practice and preparation, both in understanding your own business and goals and those of the other side. Mastering your side of the debate, if you will, automatically makes you a more credible and convincing presence.

Your opponent, or in this case potential partner or investor, will also inevitably have tough questions or push back. It’s crucial to your success to not only anticipate these questions, but to have prepared and well-thought-out responses.

If you know that there is a weak point in your business strategy, or a strong and well-recognized potential business competitor, don’t just hope that question won’t be asked. Think about the hardest variations of the question and plan out your responses – or even consider preempting the question by including the pain point and how you plan to overcome it in your initial pitch or presentation. And as Woodsome notes, be sure to listen closely. If an inquiry is made for which you didn’t prepare, don’t just attempt to fit a stock answer to the question. Take a moment to analyze what the true concern appears to be, and respond accordingly.  

Last, remember that your audience will ultimately always want to know what’s in it for them. They are making a choice as to where to spend their “investment” – whether it is a vote, time, reputation, or money – and they want to be excited about the choice and convinced it is the right one for them. Satisfying the person on the other side of the table that your interests are aligned with theirs will be the overriding factor in whether or not they ultimately decide that you are their candidate.

A Post by Karen Wenzel, Guest Blogger

What Do Entrepreneurs Have In Common With Their Fantasy Football Team

I’m sure it’s not just me, but I have been made acutely aware over the past few days that the 2012-2013 NFL season has officially begun. Not only is my husband in at least four Fantasy Football leagues (with buy-ins of $100 or more – where does this money come from?), but this is also the guy whose college DLP TV had the “ESPN” logo permanently burned into the bottom right-hand corner of the screen so that you could see it even when the TV was off. Oh, he’s also a die-hard Packers fan (sorry about the start to the season). Needless to say, I had my fair share of football over the weekend; and while I was dutifully contemplating this upcoming blog post (with Faith Hill warbling in the background), I started thinking: I wonder what connections there might be between professional football and entrepreneurship?

It turns out there are many more than I would have imagined. A simple Google search using the terms “NFL” and “entrepreneur” yields multiple “Top 10” lists of NFL players turned entrepreneurs – complete with information on how and why they ended up in their new professions and some even with specific financial information on just how successful these athletes have become off of the field (see “The NFL’s 10 Richest Entrepreneurs”). The endeavors include everything from car dealerships to restaurants and franchises, liquor stores and wineries, construction companies, technology products and services, non-profit organizations, sports and fitness-related businesses, and even an advertising and design firm (owned by Dhani Jones, an NFL linebacker, and coincidentally one of highest valued at $3 million).

I found it fascinating to read through the varied endeavors and motivations of the likes of Drew Brees, Donte Stallworth, and Daniel Wilcox, to name a few. Brees owns a Jimmy John’s franchise, and explains that it started with simply a true love for the product that began during his freshman year in college at Purdue. Wilcox owns a residential and commercial remodeling business, and notes that part of his entrepreneurial passion stemmed from the desire to be his own boss. Another noted the desire to prove that his was “more than just a football player.”

Competition was also an explanation by many of the athletes for their entrepreneurial pursuits. Rosevelt Colvin, a Super Bowl champion with the Patriots, is quoted as saying, “As an athlete, you’re always competitive. You look for another challenge to tackle, to be a part of.” Professional athletes are groomed to maintain a high level of discipline, perseverance, and focus on teamwork – all characteristics that serve entrepreneurs well (see also "The Best Entrepreneurs Are Hyper Competitive and Hate Losing" and this article on what playing sports can teach about entrepreneurship).

The NFL itself even recognizes the synergy between players of its beloved sport and entrepreneurialism. In 2005, it founded the NFL Business Management and Entrepreneurial Program, which provides both current and former footballers week-long intensive courses at prestigious business schools like Harvard and Northwestern’s Kellogg School of Management. Course topics range from business plan assessment and human resource management, to property management and personal investments. According to one article, since the program’s inception, close to 700 players have undergone the program, and testimonials on the program’s website indicate that players have found it truly valuable. An article from 2008 stated that 48% of participants in the program become interested in starting a business, and since completing the program, 25% of the players have started their own businesses.

Unfortunately, I can’t say that this newfound knowledge of the NFL’s entrepreneurial spirit will make watching endless hours of football over the coming months that much more enjoyable. However, I do have a renewed sense of appreciation for the players, and their aspirations both on and off of the field. I also have an inkling that, the next time I’m watching Drew Brees throw a touchdown pass for the Saints, I may get a craving for Jimmy John’s.

I wonder if anyone in our Entrepreneurial Services Group is up for a fantasy league where we draft former and current NFL players and get points for their successes as entrepreneurs?

A Post by Karen Wenzel, Guest Blogger