Minnesota Investment Network Corporation: Minnesota Investment Network Corporation RAIN® fund Presentation – Humphrey Institute September, 2004


Minnesota Investment Network (MINC) : Minnesota Investment Network (MINC) dedicated to promoting community development by building capacity for equity investments in rural businesses


MINC builds capacity for making equity investments by forming and managing local, statewide, and multi-state equity funds. : $15 million Equity Fund RAIN® funds local/regional mini-quasi VC Funds $10-35 million multi-state growth & later stage fund MINC builds capacity for making equity investments by forming and managing local, statewide, and multi-state equity funds.


Minnesota Venture Capital Investment 2003: Minnesota Venture Capital Investment 2003 $203.8 Million VC Investment 99% Twin Cities 18% Early/Seed


MINC strategy removes barriers that block the flow of capital needed by small business: Form RAIN® funds to enhance financial and community returns Build capacity for making equity investments at local, state, and multi-state level Provide capital, formation, and management support to ensure success Provide experience management and disciplined approach Proven model MINC strategy removes barriers that block the flow of capital needed by small business


RAIN® funds are formal for-profit private investment funds.: RAIN® funds are formal for-profit private investment funds. Organized as for profit LLC’s Formed by angel investors (accredited investors) & institutions Function as mini-quasi VC funds Use thorough due diligence process Invest locally, regionally and beyond


RAIN® funds enhance investor returns.: RAIN® funds enhance investor returns. Share capital, expertise, and time Increase the quality of deal flow Ensure thorough due diligence and monitoring Reduce transaction costs and operating costs Increase capital available to sustain company Enhance opportunity for timely exists


RAIN® funds enhance community benefits.: RAIN® funds enhance community benefits. Sustainable investment fund Source of capital and expertise critical to early and high growth companies Helps recruit and nurture technology companies Builds capacity for local wealth creation Results in growth business creating good jobs


RAIN® funds are organized and capitalized by its member investors.: RAIN® funds are organized and capitalized by its member investors. Structure Limited liability company Capitalization $500K or greater Member Investors $30-50K minimum investment 10-30% upon subscription Accredited (angel) investors


RAIN® funds are managed by its members. : RAIN® funds are managed by its members. Establish Governance Structure - Board, Officers, Management Establish Investment Criteria - Geographic focus - Business type and stage Establish Investment Process - Screening and due diligence Approve Investments - One vote per investor - Investment decision by 51% of quorum


MINC provides capital, formation and management support to ensure success.: MINC provides capital, formation and management support to ensure success. Provides proprietary templates, work sheets and legal documents Up to $100,000 capital investment Ongoing management support Access to deal flow Access to co investors Thorough due diligence and monitoring process


MINC provides capital, formation and management support to ensure success.: Investment Process Screening Deal flow management Due diligence Pricing & structuring of investments Closing & monitoring MINC provides capital, formation and management support to ensure success. Organizational Membership Communication Meeting organization Bookkeeping


RAIN® funds are a proven model $8 million available with $4 million invested in 17 companies!: RAIN® funds are a proven model $8 million available with $4 million invested in 17 companies! Lakes Venture Group I and II, Alexandria, MN Prairie Capital, Worthington, MN North Star Fund, Grand Rapids, MN Two in Iowa One in North Dakota In process: 5 communities in Minnesota


Capital Infrastructure: Capital Infrastructure 250K 500K 1 - 2 million 5 million (Van Osnabrugge & Robinson 2000)


RAIN® fundsConcept: RAIN® funds Concept Cluster Strategy Capital Proprietary deal flow Expertise Local / regional ownership