To create an economic development fund, RAEDI and the Rochester Area Chamber Commerce plan to ask the city for $10 million from sales tax money.
Gary Smith, the executive director of Rochester Area Economic Inc., announced the plan Thursday at the end of a panel discussion titled "Building Rochester’s BioBusiness Future Through Collaboration."
"We've been doing this on a nickel budget. It is time for some real money to do this," Smith said after a panel of leaders from Mayo Clinic, IBM, the Hormel Institute and the University of Minnesota Rochester spoke about the potential of bioscience.
One theme was how biotechnology start-up companies with local roots are looking elsewhere to develop.
As part of the panel, Steve VanNurden of Mayo Clinic's Office of Intellectual Property said his office takes Mayo research to the market through patenting, licensing agreements and other corporate partnerships.
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He pointed out that his office has even directly launched 42 companies based on Mayo-created technology.
"And none of those 42 companies are based here," he said.
That's what the proposed economic development fund would be used for —- to create a "sticky factor" to keep start-up companies here.
"That's not Mayo's job. That's not IBM's job," said Smith.
Being a partner
John Wade, president of the Rochester Area Chamber of Commerce, said a lot of collaboration between Mayo Clinic, IBM, UMR and the Hormel Institute is very successful in creating innovative technologies and products.
"It is time to add another partner at the table — the community," Wade said.
Fill the gap
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VanNurden said the three M's — money, market and management — are needed to attract and keep companies in the Rochester area.
For the money piece, IBM's Drew Flaada said the Minnesota's new Angel Tax Credit is a step in the right direction and is already helping companies with financing.
However, it's still very difficult for bioscience start-ups to get the funding needed to make it from the early research stage to the marketplace, the panelists said.
"Biotech CEOs call that gap the valley of death," said VanNurden. "And that gap is widening. We have to look for ways to fill that gap."
Help to create jobs
After the meeting, Smith explained that the proposed economic development fund could boost the area's employment.
He estimated that the $10 million fund could help create 1,000 basic jobs locally over 10 years as well as 4,000 ancillary jobs.
"That's a conservative estimate," Smith said.
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Earlier in the event, Tim Penny, president/CEO of the Southern Minnesota Initiative Foundation, cited research that found that the wage of a typical bioscience job is 165 percent of the standard wage level. He also said that the research shows that for each new bioscience position generates an average of six ancillary jobs.
Penny said the initiative foundation has made eight gap funding loans and two "bioseed" loans to start-up companies in this area.
He named DiaServe of Blooming Prairie and Rushford Hypersonic of Rushford as two of the recipients.
Asking for money
Smith's announcement follows the RAEDI board's vote this week to approve going to the Rochester City Council to request the $10 million from the sales tax.
The city council recently formed a committee to study possibly re-authorizing the current sales tax request, which is expected to run out near the end of 2011 or 2012. If the city re-authorizes the local sales tax request, it needs to tell the state what the money would be used to fund. Local voters would have to approve the tax.
RAEDI and the chamber would like to see an economic development fund on the list as a beneficiary for the possible next round of sales tax funding.
"It's time to shake the bag up," Smith said.
