For Immediate Release: Contact: John Fisher

March 1, 2005 651-282-6791

DEED To Take On Role Of Minnesota Project Innovation

Betsy Lulfs Will Lead Statewide Push For Federal Grant Funding

St. Paul – The Minnesota Department of Employment and Economic Development (DEED) has taken on a new leadership role in seeking federal grant funding for early-stage technology companies. Minnesota Project Innovation (MPI), a private nonprofit corporation, had performed these duties for more than 20 years. The MPI Board of Directors officially transferred the program operations to DEED on Monday morning.

Since its creation in 1984, MPI has functioned as Minnesota’s primary focal point for assisting high-tech entrepreneurs and innovators in obtaining federal grants through the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program. Through these programs, MPI helped to identify funding opportunities and obtain high-risk capital for start-up, early-stage and existing companies to commercialize technologies into new products and services. Over the years the organization helped funnel more than $250 million to Minnesotans, spurring the creation and growth of several publicly traded businesses as well as numerous privately held companies.

Betsy Lulfs, who joined DEED in early February, will coordinate and expand the SBIR/STTR programs by tapping into DEED’s broad statewide network of Small Business Development Centers, regional business development representatives and business service specialists – as well as through partnerships with organizations like Medical Alley/MNBIO, the University of Minnesota and Minnesota State Colleges and Universities. Lulfs formerly worked with a similar program in Ohio.

“By taking on and expanding the role of Minnesota Project Innovation we expect to achieve greater success than ever in seeking and obtaining federal funding for emerging Minnesota companies,” said DEED Commissioner Matt Kramer. “As successful as MPI has been over the past 20-plus years, we’re confident that we can kick it up a notch and continue to leverage the ingenuity and inventiveness of small companies to create wealth, jobs and opportunities.”

Jim Runquist, Chairman of the MPI Board of Directors, said the board decided it was in the best interests of both MPI and Minnesota’s high tech entrepreneurs to fold MPI’s function and operations into DEED’s business development office, after last year’s state and federal budget eliminations.

“When funding was cut off, we began to explore our options in terms of moving MPI’s function and operations into another organization,” Runquist said. “As a board, we were very committed to making sure this valuable Minnesota business resource stayed alive. We all had a vested interest in keeping it going, and the decision in placing MPI at DEED under Commissioner Kramer at this time, made good business sense for all parties”.

Runquist, who is President and CEO of Temple Mountain Energy, Inc. in Eagan, said SBIR/STTR funding offers a significant boost to emerging companies as they explore and develop the commercialization potential of new technologies. “To me, this is a good bet,” he said. “If you’re betting your own dollars – as all small high tech companies are – this program provides a mechanism that validates your technology as you work to get it to the commercialization stage.”

When MPI was created in 1984, Minnesota ranked 35th among all states in the number of SBIR/STTR grants. Since the end of fiscal year 2002, the state’s national ranking has risen to 14th, with more than 100 Minnesota companies pursuing and winning approximately $30 million in SBIR/STTR funding for research and development efforts.

In her new capacity as coordinator of DEED’s MPI program, Lulfs said she expects those numbers to continue to rise. “We’re taking what was essentially a one-person shop and expanding its operations across DEED’s entire statewide network,” she said. “By broadening our efforts in this way, our goal is to offer Minnesota companies vastly increased exposure to these federal funding opportunities.”

Through SBIR/STTR grant programs, the federal government sets aside more than $2 billion a year to invest in high-risk, high-tech feasibility studies to explore the potential for commercialization and spur new development. Approximately $10 billion is earmarked from fiscal years 2004-08 to support research in science and technology in areas like nanotechnology, genomics, proteomics and bioinformatics.

Federal agencies participating in the funding programs include: the Departments of Defense, Commerce, Energy, Education and Transportation, NASA, NSF, USDA, EPA and the National Institutes of Health.

Examples of publicly traded Minnesota companies that have received assistance from MPI in obtaining SBIR/STTR funding include: SurModics, NVE Corporation, APA Optics, CyberOptics, CNS Inc., and Ballistic Recovery Systems.

Privately held companies include: Transoma Medical, Cirrus Design, Gel-Del Technologies, Discovery Genomics, Acera Biosciences, QRDC, Fena Designs and Hysitron.

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