Prairie Business October 2013

Shining Example

Border States Electric CEO leads company through tremendous growth

pg. 28

ALSO Crowdfunding

Entrepreneurs find project finance potential pg. 32

Gassing up on CNG?

Fargo feasibility study explores natural gas as fleet fuel pg. 48

KRIS BEVILL

MATTHEW D. MOHR

KELLY RUSCH

Tammy Miller, CEO of Border States Electric.

PHOTO: JAY SKJONSBY

Lake Area Technical Institute in Watertown, S.D., was named one of this year’s Top 4 two-year colleges in the nation and continues to break enrollment records.

PHOTO: LAKE AREA TECHNICAL INSTITUTE

KRIS BEVILL Editor

kbevill@prairiebizmag.com

What’s the big idea?

South Dakota Innovation Partners, a venture capital firm with offices in Brookings and Sioux Falls, displays this fantastic quote on its website from Thomas Edison: “The value of an idea lies in the using of it.” Keep that quote in mind as you peruse through this issue and I think you’ll soon agree that these pages are filled with examples of local leaders who acted on ideas and converted them into successful careers and business ventures, setting an example along the way for those of us who may sprout an idea but lack the vision to bring it to fruition.

This month’s cover feature profiles Tammy Miller, CEO of Border States Electric and one of the region’s most inspiring business women. Miller joined the company in 1991 and quickly rose through the ranks. She has served as the company’s CEO since 2006 and led the employee-owned electrical distribution company through an aggressive growth strategy that was extremely successful, more than doubling the company’s annual sales in five years. She has also taken an active role in supporting other women in her industry and was recently recognized for those efforts with the Women in Industry Trailblazer award from the National Association of Electrical Distributors. Read more in “Lighting the Way to Leadership.”

Miller is a fantastic example of the successful business women that make up a growing percentage of the region’s professional workforce, but we know that there are many more women in the area worth highlighting. I’m excited to announce that our March issue will contain the inaugural list of the region’s Top 25 Women in Business. Keep your eyes open for nomination details and don’t hesitate to submit your suggestion for the most inspiring, driven and successful business women you know.

This issue also provides several takes on the region’s blossoming technology sector. I recently attended the third annual State of Technology event in Fargo, hosted by the Fargo Moorhead West Fargo Chamber of Commerce and Sen. John Hoeven. The event has been growing each year, this year saw about 100 more attendees than the year prior, and is expected to continue to expand as a reflection of the industry’s growth. In fact, plans are already in the works to extend next year’s event into a multi-day event in order to provide more time to highlight the metro’s fascinating tech companies and the bright minds behind these ideas.

North Dakota’s tech sector is making fantastic progress, but South Dakota holds its own as well, continually ranking among the top states for research and technology growth. We caught up with South Dakota Innovation Partners CEO Mark Luecke to learn more about the venture fund’s partner companies and its focus on providing financial support to early-stage companies seeking to improve the world through agricultural technology, engineered technology and life sciences. Luecke says the Red River Valley Research Corridor has been a model for other parts of the country and his firm is interested in helping that technology hub continue to develop and extend south along Interstate 29 to Kansas City.

Finally, this issue also provides a look at a unique method of funding those great ideas — crowdfunding. The Internet-based funding model has become increasingly popular, for artists, researchers and business owners who are willing to reach out to the “crowd” to obtain the finances needed to complete a project. Curious? Find out more in “Entrepreneurs Tap Into the ‘Crowd.”

MIKE JACOBS,Publisher

RONA JOHNSON, Executive Editor

KRIS BEVILL, Editor

BETH BOHLMAN, Circulation Manager

KRIS WOLFF, Layout Design, Ad Design

Sales Director:

JOHN FETSCH

701.212.1026 jfetsch@prairiebizmag.com

Sales:

BRAD BOYD - western ND/western SD 800.641.0683 bboyd@prairiebizmag.com

SHELLY LARSON - eastern ND/western MN 701.866.3628 slarson@prairiebizmag.com

Editor:

KRIS BEVILL

701.306.8561 kbevill@prairiebizmag.com

Editorial Advisors:

Dwaine Chapel, Executive Director, Research Park at South Dakota State University; Bruce Gjovig, Director, Center for Innovation; Lisa Gulland-Nelson, Vice President, Marketing and P.R., Greater Fargo Moorhead EDC; Tonya Joe (T.J.) Hansen, Assistant Professor of Economics, Minnesota State University Moorhead; Dusty Johnson, Chief of Staff for South Dakota Gov. Dennis Daugaard’s office; Brekka Kramer, General Manager of Odney; Matthew Mohr, President/CEO, Dacotah Paper Company; Nancy Straw, President, West Central Initiative

Prairie Business magazine is published monthly by the Grand Forks Herald and Forum Communications Company with offices at 375 2nd Avenue North, Grand Forks, ND 58203. Qualifying subscriptions are available free of charge. Back issue quantities are limited and subject to availability ($2/copy prepaid). The opinions of writers featured in Prairie Business are their own. Unsolicited manuscripts, photographs, artwork are encouraged but will not be returned without a self-addressed, stamped envelope.

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Address corrections

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Beth Bohlman: bbohlman@prairiebizmag.com

Online www.prairiebizmag.com

Value of times interest earned

BY MATTHEW D. MOHR

One common financial ratio used by banks, credit, and accounting firms is the number of times a business earns the interest it pays annually. Typically a financial analyst will use the business net profit before tax and interest (EBIT) divided by the interest paid on its debt that year to calculate the ratio. This common calculation is used to assess the relative financial soundness (stability or solvency) of the business. A low number, especially compared to similar businesses, may indicate future or immediate trouble.

The measure is only a calculation of how much profit may be available to support interest costs. A ratio of 1.0 means the enterprise just makes enough money to pay the interest on its debt, which does not include the required debt principle payment. Usually a banker or credit analyst is smart enough to understand the times interest earned ratio is a rather simple measure and it is only used for limited decisions with minimal impact. A much better calculation to watch is the enterprise net annual cash flow, divided by required debt repayments, but the times interest

earned ratio is still often used because it is strongly engrained into our financial systems.

An organization could have earnings before tax and interest of $200,000, loans of $850,000 with interest at an average of 4 percent, but loan payments of nearly $188,000 (assuming $850,000 debt at 4 percent interest with an average amortization of five years). Interest would be $34,000 per year on $850,000 debt at 4 percent. A net profit of $200,000 before interest and taxes would calculate a reasonable 5.88 times interest earned, but the profit before tax and interest barely covers annually required debt payments (assuming $850,000 debt at 4 percent to be repaid evenly over five years). Income after tax wouldn’t quite cover total annual debt repayment requirements in this situation.

The times interest earned ratio is a common measure of financial strength, but it can be misleading, so it’s good to calculate and understand it, but not to rely on the ratio for important decisions. PB

Matthew D. Mohr CEO, Dacotah Paper Co. mmohr@dacotahpaper.com

A Paradox: Optimistic millennials burdened by debt

BY RYAN P. MCMANUS

According to a recent Wells Fargo study on millennials’ (ages 22-32) attitudes toward savings and retirement, more than half of them say debt is their “biggest financial concern currently,” surpassing day-to-day expenses. Forty-two percent say their debt is “overwhelming,” double the rate of boomers.

Millennials talked about the barriers they faced when it came to saving money. For 87 percent of them, they literally didn’t have “enough money to start saving” and another 81 percent were focused on paying down their debt first.

Even with those barriers, 61 percent of millennials say they consider themselves to be “savers.” But the fact is, just about half have actually started to save for retirement. The other half are putting off saving for retirement until their 30s.

We believe that starting out young in a savings journey is crucial. For this generation, saving shouldn’t be an “either or” option. It’s crucial for millennials to both manage their debt today and start saving for the future. This is a way for them to apply their multitasking expertise to their finances.

Millennials who are disciplined at saving early, regularly and saving as much as possible can greatly benefit from the power of compounding. Ultimately, it may help them create a more confident financial future.

Skeptical of the Markets

About half of millennials say they aren’t very confident in investing in the stock market for retirement, but many are already in the stock market through an employer-sponsored plan. In fact, 72 percent who are saving says they are in a 401(k) plan. Perhaps these young adults have watched their parents lose big in the stock market, and this has created a lasting imprint, which is completely understandable. Still, we need to remind this generation that because they have time on their side, they are better positioned to ride out the highs and lows of the stock market.

Optimism Intact

Despite the debt burden and skepticism of the markets, millennials are confident in their ability to create the future they want. Almost three-fourths of millennials tell us they feel in control of their future and believe they can achieve their goals.

We’re hopeful that millennials will be able to thrive, despite the economic odds they may face when first entering the job market. It’s time for this generation to translate optimism into action by taking some basic steps to build a financial foundation.

Three Steps to Consider:

• Begin saving as you pay down debt. Set up an automatic deposit into your savings account so it builds up on a regular basis.

• Create a retirement road map, either online or with a financial advisor, to set clear goals for saving and spending in order to accumulate enough for your future. If you’re saving in an employer-sponsored retirement plan, consider setting annual automatic increases to ensure it remains a priority over time.

• Invest a small amount in the stock market to potentially give yourself a clear picture of how compounding returns help as you build finances for the long-term. PB

Ryan P. McManus Retirement relationship manager, Wells Fargo, Moorhead Ryan.mcmanus@wellsfargo.com

This article has been provided for informational purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Investing involves risk including the possible loss of principal. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Since each person’s situation is different you should review your specific investment objectives, risk tolerance and liquidity needs with your financial professional before selecting a suitable savings or investment strategy.

Scratch the surface or delve deep?

BY KELLY RUSCH

As an environmental engineer, what’s below the surface often provides interesting information. Blending what lies beneath, along with what appears in the road ahead, allows us to devise tailor-made solutions to meet unique challenges. The search for solutions drives both research and business.

At North Dakota State University in Fargo, research infrastructure is in place; new partnerships are underway and opportunities for faculty and students are being realized. NDSU ranks as one of the top 108 research universities in the country, according to the Carnegie Commission on Higher Education, with annual research expenditures of $134 million. The economic impact of NDSU research activities totals an additional $74.8 million each year, based on a study by EMSI.

On average, NDSU processes three research grants daily and a private sector research agreement every week. Cumulatively, NDSU has executed more than 300 private-sector research agreements over five years.

As the new vice president for research and creative activity at NDSU, I have the privilege of building upon the strong foundation laid by Philip Boudjouk, NDSU’s first vice president for research. I look forward to expanding the research footprint across the entire university.

We have more than scratched the surface and are poised to deepen research partnerships with local to global companies. Boudjouk, as executive director of corporate research relations, will now work to enhance corporate research partnerships to bring NDSU-developed technologies to the marketplace.

Opportunities lie ahead. Consider statistics from the National Science Foundation’s Science & Engineering Indicators issued in 2012:

• The business sector performed an estimated $282 billion of R&D in 2009, or 71 percent of the U.S. total

• Universities and colleges provided about 53 percent of all U.S. basic research

• Business provided the largest source of funding for applied research at 48 percent

• Median age of scientists and engineers in the U.S. workforce rose from 37 to 41 from 1993 to 2008 and those over age 50 increased from 18 percent to 27 percent

As the Greater North Dakota Chamber continues discussions to identify higher education programming that produces a workforce to meet the needs of tomorrow’s businesses, we will also deepen research relationships with the private sector that will increase our research portfolio and provide invaluable opportunities for student-enhanced learning. Initiatives with the Greater Fargo Moorhead Economic Development Corp. and state Department of Commerce will continue.

A state-of-the-art 35,000 square-foot research lab addition to Research 1 in NDSU’s Research and Technology Park opened this fall, providing additional research opportunities with the private sector. The $9 million addition was funded the by U.S. Department of Commerce/National Institute of Standards and Technology and the North Dakota Centers of Excellence Enhancement Program.

We are working to strengthen our ties to business, thus expanding the possibilities for businesses, researchers and students. Going forward, the multidisciplinary nature of NDSU research can help businesses connect the dots to solve competitive challenges.

By taking research collaborations further, our deepened partnerships will take students, faculty, and businesses farther. Such ties help to forge the region’s bright economic future. PB

Kelly Rusch

Vice President for Research and Creative Activity

Dakota State University

Promoting ND to international visitors

BY FRED WALKER

North Dakota’s tourism department is constantly working to promote the state as a destination for visitors, but many of us never think about those efforts outside of the United States. North Dakota has been marketing itself abroad to international visitors for over 16 years.

International visitors are drawn to experience North Dakota’s uncrowded attractions, safe travel, clean air, affordable rates and the hospitality of its friendly people. International marketing efforts are aimed at helping people outside the U.S. learn more about North Dakota.

In the past five years alone, North Dakota Tourism has hosted 73 international groups and media outlets to our state. These visits have produced more than 116 news stories, reaching more than 11 million international readers. This coverage computes to an advertising equivalency of over $4 million dollars.

We’re currently focusing our international marketing efforts in eight countries. North Dakota is part of the Rocky Mountain International group which coordinates international tourism activities for the state tourism departments of Idaho, Montana, South Dakota, Wyoming and North Dakota. We are seeing great influence from our cooperative relationship with Rocky Mountain International, which showcases North Dakota to the international marketplace as part of the region. These efforts in the international market allow North Dakota tourism dollars to go farther. Rocky Mountain International has been able to leverage state dollars by 60 percent in increasing the overall value of the program and grow the tourism economies of all five states and three gateways in the region.

North Dakota Legendary is a known brand worldwide. Relationships have been developed

and continue to expand in each of our markets. These relationships can be very successful if you plan to work for the long term.

Our state has seen an increase in international travelers including visitors from the Canadian market. North Dakota is the 10th most visited state by Canadians. North Dakota saw an 11 percent increase in visits by Canadians and a 15 percent increase in traveler spending during the past travel season.

North Dakota Tourism also works with partners throughout the state through travel show partnerships, advertising partnerships, familiarization tour support and package creation, all of which create a solid North Dakota brand outside our borders.

One example of this outreach is with Jay and Jeremy Doan, fifth-generation ranchers from Sterling. The Doans opened their working cattle ranch to international visitors. Through their relationship with North Dakota Tourism, the Doans have hosted 20 international visitors so far.

Clearly, North Dakota Tourism’s efforts are paying off. As the state’s third-largest industry, tourism plays a key role in the state’s economic success. Tourism continues to expose more people to the legendary experiences and lifestyle that our state has to offer. It is also one of five industries the North Dakota Department of Commerce has targeted to broaden the state’s economic base, create new wealth and generate high-paying, career-track jobs. PB

Fred Walker International travel marketing manager North Dakota Department of Tourism fwalker@nd.gov Twitter: @NorthDakota

The Research Park at South Dakota State University in Brookings is home to a collaborative effort between the university and Raven Industries Inc. to advance precision agriculture.

Raven Industries opens center at SDSU Research Park

Sioux Falls, S.D.-based Raven Industries Inc. has formed a partnership with South Dakota State University and the Research Park at SDSU in Brookings to support the research and development of precision agriculture and its associated workforce.

Raven Industries is comprised of three divisions — Applied Technology, Engineering Films and Aerostar — which design and manufacture products for precision agriculture, energy, construction, aerospace, electronics and surveillance technology. At the precision ag research center at SDSU, Raven Industries will offer engineering students hands-on experience in technical areas through internships, with the possibility for full-time positions upon graduation.

Matt Burkhart, vice president and general manager of the Raven Applied Technology Division, says the company is excited to collaborate with SDSU’s faculty and students. “This is a great opportunity to help solve the challenge of feeding the world, and at the same time support South Dakota’s higher education while proliferating the Silicon Prairie,” he says.

ND offers tech-based entrepreneurship grant

The North Dakota Department of Commerce is offering grant opportunities designed to grow technology-based entrepreneurship within the state.

The technology-based entrepreneurship grant (TBEG) program will offer funding to assist entrepreneurs and entrepreneurial centers in four areas: access to capital, marketing assistance, entrepreneur infrastructure and entrepreneurial talent. Each grant is limited to $10,000 for the first phase and $14,000 for the second phase. Applicants must be a certified entrepreneurial center or a tech-based business working with a certified entrepreneurial center. Programs or projects must meet specific criteria to qualify for

funding. Details are available at www.commerce.nd.gov/programs/technology-basedentrepreneurship-grant-program.

Minnesota Power expands ND wind project

Minnesota Power, a division of ALLETE, announced in August plans to expand its wind farm located near New Salem, N.D., by 200 megawatts. Construction on phase 4 of the Bison Wind Energy Center is expected to begin by the end of this year. More than 64 turbines will be added to the 101 turbines already on-site. The project, estimated to cost $345 million, includes a new substation and about 11 miles of transmission line. It is expected to be complete by the end of 2014.

NMF offers leadership scholarships

The Northwest Minnesota Foundation is offering Leadership Growth and Development scholarships to nonprofit organizations and small businesses located in the foundation’s 12county region. The scholarships are designed to help build the leadership capacity and service depth of the region’s nonprofit and small business sectors. Scholarships are available until funds are exhausted and are awarded on a firstcome, first-serve basis. For more information, visit www.nwmf.org.

Survey measures Bakken impact on Grand Forks

A survey recently conducted by the Grand

PHOTO: SOUTH DAKOTA STATE UNIVERSITY

Forks (N.D.)/East Grand Forks (Minn.) Chamber of Commerce on behalf of the Bakken Initiative found that more than half of the participating businesses attribute some of their past two years of revenue to Bakken activity. About one-quarter of respondents say they have added staff during the past two years to support Bakken-related business growth.

The Bakken Initiative is a Grand Forks area marketing effort to promote the region’s business and community benefits for Bakken businesses.

Texas storage tank maker expands to SD

Texas-based above ground storage tank and processing equipment manufacturer Permian Tank & Manufacturing Inc. is expanding to Belle Fourche, S.D., and will anchor the town’s new industrial and rail park. The facility will initially manufacture steel tanks but could be expanded in the future to produce a complete line of products for the oil and gas industry. The plant will employ up to 65 people. Hiring is expected to begin in the spring.

Belle Fourche’s central proximity to the oil and gas industries in North Dakota, Montana and Wyoming and family-friendly quality of life were factors in the decision to locate there, according to the company.

JLG Architects named Hot Firm of 2013

JLG Architects has been named to The Zweig Letter’s 14th annual Hot Firm List, recognizing the top 100 fast-growing architecture, engineering and environmental consulting firms in North America. In an industry comprised of over 100,000 firms, the Hot Firm list measures their increase in revenue over the past three years in terms of both dollar and percentage change. JLG was ranked 22nd on the total list and 2nd amongst architecture firms.

EDND hires Bismarck PR firm

The Economic Development Association of North Dakota has hired Clearwater Communications, a Bismarck, N.D.-based association management and public relations firm, to provide management communication and legislative services. EDND’s mission is to increase economic opportunities for residents of the state by supporting primary growth sector, professionalism among economic development practitioners and coordination among development organizations.

Center of Innovation signs MOU with Norway group

The University of North Dakota Center of Innovation Foundation in Grand Forks and SINTEF, the largest independent research entity in Scandanavia, have signed a strategic memorandum of understanding (MOU) to develop mutually beneficial and innovative commercialization projects and entrepreneur activities in targeted technology areas. The collaboration will benefit tech entrepreneurs and university students in Norway and North Dakota. Technology areas of interest include oil and gas, sensors, ambient assisted living and unmanned aerial systems.

Grainger opens Williston branch

Grainger, a supplier of maintenance, repair and operating products serving businesses and institutions, has opened a branch in Williston, N.D., to serve oil and gas customers. The 12,000-square-foot location will stock thousands of products, with inventory tailored to oil field businesses.

SD DOT RR project wins national award

The 2012 Mitchell-to-Chamberlain (S.D.) Railroad Rehabilitation project recently earned the South Dakota Department of Transportation the Best Use of Innovation award at the America’s Transportation Awards. The awards were sponsored by the American Association of State Highway Transportation Officials, AAA and the U.S. Chamber of Commerce.

More than 61 miles of rail and 96,000 ties were replaced as part of the $28 million project. Collaborators included the S.D. DOT, the Mitchell-Rapid City Regional Rail Authority, the South Dakota Railroad Board and Dakota Southern Railway. The project received $16 million in federal funds.

Construction begins on Spiritwood biorefinery

Local and state officials attended a groundbreaking Aug. 9 for the Dakota Spirit AgEnergy biorefinery in the Spiritwood Energy Park near Jamestown, N.D. The facility is expected to convert 23 million bushels of locally available corn into 65 million gallons of ethanol, 198,000 tons of distillers grains and 6,900 tons of fuel-grade

corn oil annually. Midwest AgEnergy Group, a subsidiary of Great River Energy, is investing $155 million in the plant, which is expected to operational in early 2015. The facility is expected to employ about 36 workers.

NMF funds fishy research

The Northwest Minnesota Foundation has awarded $20,000 to the White Earth Land Recovery Project to study the market and potential building needs for a fish-based fertilizer product using fish waste produced at the Red Lakes Fisheries facility in Redby, Minn. The facility produces between 200,000 and 300,000 pounds of organic fish waste annually. A feasibility study will assess the nutrient content of the waste and explore how it can be processed, what kind of facility would be needed and what type of market exists for the end product. The Agricultural Utilization Research Institute and Headwaters Regional Development Commission are contributing time and expertise to the study.

Nor-Son, Eskuche Associates merge

Wayzata, Minn.-based design/build firm Nor-Son Inc. has merged with Minneapolisbased residential architecture firm Eskuche Associates. The architecture firm is now known as Eskuche Design and will work as a design studio that operates and markets separately under Nor-Son as its parent company. Together, the firms will offer integrated consulting, design and construction services. Nor-Son has offices in Fargo and Sioux Falls, S.D., as well as Baxter and Wayzata, Minn.

FAA gives $3.6 million for ND airport upgrades

The U.S. Federal Aviation Administration has awarded $3.6 million in grants to fund construction and maintenance projects at multiple airports throughout North Dakota. Airports to receive funding include: Grand Forks International Airport, Edgeley Municipal Airport, Bottineau Municipal Airport, Stanley Municipal Airport and Mott Municipal Airport. The state of North Dakota also received more than $332,000 to update its airport system study plan to address aviation needs impacted by energy development and economic growth.

Sanford Health expands reach to Montana

Sidney Health Center, a 25-bed critical access hospital in Sidney, Mont., has partnered with Sanford Health to access Sanford’s electronic health records system, Epic. It is Sanford’s first affiliation in Montana. Sidney Health Center will convert to the Epic software system in the spring. In a statement, Rick Haraldson, CEO of Sidney Health Center, said working with Sanford allows the hospital to take advantage of federal incentives for the implementation of electronic health records at a reasonable rate.

USD, a-tune software partner

The University of South Dakota in Vermillion has formed a technology partnership with a-tune software Inc., a software solution provider to the medical research community, to use the company’s tick@lab software application to provide administrative oversight for research studies conducted at the university. Peter Autenried, director of laboratory animal resources at USD, says the selection of a-tune was made based on the application’s ability to leverage the latest technologies. a-tune software is headquartered in Germany and has an affiliate in Cambridge, Mass.

Atchison buys Midwest Fire Equipment & Repair Co.

A family investor group led by Sarah Atchison has purchased Luverne, Minn.-based Midwest Fire Equipment & Repair Co. for an undisclosed amount.

Founded in 1987 by Scott and Pam Schneekloth, Midwest Fire Equipment & Repair Co. manufactures tankers, tankerpumpers and fire rescue vehicles in the U.S. and Canada. Atchison intends to continue operating the facility in Luverne and has retained all employees.

Atchison, along with family members Lyle and Jane Gessell, purchased the company because it aligns with their mission to work with small, Midwestern manufacturing operations that develop projects that help save lives, according to a spokesperson. Atchinson’s husband, Dean, owns and operates Fargo-based air medical equipment manufacturing company Spectrum Aeromed. He served as a consultant on the acquisition.

First International donates $250K to affordable housing

First International Bank & Trust recently contributed $250,000 to the North Dakota Housing Incentive Fund to support the development of the Wolf Run Village project in Watford City. The housing development is being constructed to provide affordable housing for teachers, law enforcement personnel, and city and county employees. First International Bank & Trust is owned by Watford City Bancshares Inc., which is owned by the Stenehjem family. In 2012, the bank contributed $220,000 to HIF to support projects in Minot, Watford City and Williston.

Multi-hotel project breaks ground in New Town

New Leaf Development recently broke ground on a hotel campus in New Town, N.D., that will include two hotels — a 91-room familystyle hotel and a 103-room extended-stay hotel, conference space and a 5,000-square-foot lounge. The complex plans to provide boat and trailer parking and guided fishing and hunting packages to accommodate Lake Sakakawea enthusiasts. The complex is expected to open in July and will employ up to 60 people.

DSU MBA goes online

Sioux Falls, S.D.-based Dakota State University is now offering its master of business administration degree entirely online in order to benefit the region’s full-time employed professionals. Delivering the degree in an online format will provide greater access to students outside of the Sioux Falls area and help meet growing demand for business professionals with graduate degrees, according to the university.

Summit to focus on small business issues

The Red River Valley Research Corridor, U.S. Sens. John Hoeven, R-N.D., and Heidi Heitkamp, D-N.D., and U.S. Rep. Kevin Cramer, R-N.D., are hosting the Small Business Innovations and Solutions Summit at the Holiday Inn in Fargo Oct. 18. The event will feature keynote speakers and breakout sessions on financing, the Affordable Care Act, social media, big data for marketing and other issues relevant to small business. For more information, or to register, visit theresearchcorridor.com/sbsummit2013.

From left: Scott and Pam Schneekloth, founders of Midwest Fire Equipment & Repair Co., recently sold the company to Sarah Atchison. Dean Atchison, right, served as a consultant on the acquisition.

PHOTO: MIDWEST FIRE EQUIPMENT & REPAIR CO.

CoBank adds staff in Fargo

CoBank, a cooperative bank serving agribusinesses and rural infrastructure providers throughout the U.S., has expanded its presence in Fargo, N.D., to better serve the regional market. Preston Kranz now serves as regional vice president for the bank’s regional agribusiness banking group in Fargo, a new position for CoBank in the area. Additionally, Eric Carlson, a relationship manager with CoBank’s Minneapolis banking center, has relocated to Fargo and Wes Griggs has been hired to serve as a new relationship manager.

CoBank’s Fargo Banking Center serves North Dakota as well as portions of South Dakota and Minnesota.

Prange joins Ackerman-Estvold

Jamey Prange recently joined Minot, N.D.based Ackerman-Estvold as a senior civil engineer. He has more than 12 years of experience and worked most recently for a private firm in Wisconsin, where he was an instrumental design team member in the transportation department.

Fritze named to Otter Tail board

Otter Tail Corp.’s board of directors has appointed Steven Fritze to serve the remaining term made vacant by the May 14 resignation of former board member Mark Olson. The term expires on the date of Otter Tail’s 2016 annual shareholder meeting.

Fritze formerly served as chief financial officer of Ecolab Inc., retiring from the company last December. He serves on the boards of Minnesota Public Radio, American Public Media Group, Minnesota Philanthropy Partners and Wenger Corp.

Ulteig adds Bismarck employees

Bremer Bank promotes Beito

Kevin Beito has been promoted to senior business banking manager for Bremer Bank’s Grand Forks (N.D.) Charter. He will be responsible for credit, sales development and leadership of the business and agricultural teams for the Grand Forks charter. Beito has 26 years of banking experience and has worked for Bremer Bank since 2009. Prior to joining Bremer Bank, he was employed at Wells Fargo.

DCN names new CEO

Seth Arndorfer has been selected as the new CEO of the Dakota Carrier Network. He has more than 15 years of experience working with DCN and its owner companies. He most recently served as DCN’s business development manager. Arndorfer is based at DCN’s network operations center in Bismarck, N.D.

Arndorfer assumed his new responsibilities in September following the retirement of Evan Hass, general manager of DCN. Hass worked in the North Dakota telecommunications industry for 47 years.

SDSM&T president joins Peabody Energy board

South Dakota School of Mines & Technology President Heather Wilson has been appointed as a member of Peabody Energy’s board of directors. Peabody Energy, the largest coal mining company in the world, often hires SDSM&T graduates and utilizes the school for continued employee training, according to Wilson. In a news release announcing the board appointment, the company commended Wilson’s expertise in global security, energy, strategy and technical intelligence and said her knowledge in those areas will be of great value to the company’s platform.

Engineering firm Ulteig recently hired Brian Mager to work in water resources in the civil services group as a graduate engineer in its Bismarck, N.D., office. Mager graduated with a bachelor’s and master’s degree in civil engineering from the University of North Dakota in Grand Forks. He previously completed summer internsthips with BEAMCO, AE2S and Northern Technologies.

Olin (Joe) Seago will work in the civil services group as a lead highway engineer in the Bismarck office. Seago has more than 15 years of experience in the industry, working on projects for both the private and public sectors. Before coming to Ulteig, Seago worked overseas as a roadway design engineer in Kuwait.

Preston Kranz

Kevin Beito

Jamey Prange

Brian Mager

Steven Fritze

Seth Arndorfer

Olin (Joe) Seago

Heather Wilson

Veitz appointed to AHA board

Larry Veitz, CEO of Spearfish (S.D.) Regional Hospital, has been appointed to the American Hospital Association’s board of trustees and as the chairperson of AHA’s regional policy board (RPB)

6. He will serve a three-year term beginning Jan. 1.

Veitz currently serves on the RPB 6 and is an associate member of the American College of Healthcare Executives. He has also served as a board member and chairperson of the South Dakota Association of Healthcare Organizations and as a board member for various state and local health care boards.

The AHA represents and serves all types of hospitals, health care networks and their patients and communities with national health policy development. The board of trustees is the policymaking body of the AHA and has ultimate authority for the governance and management of its direction and finances.

Collin joins Odney as strategic engagement director

Rick Collin has joined marketing and advertising firm Odney as director of the strategic engagement team. In this role, he will develop and implement public and media relations and social media campaigns for Odney’s clients.

Collin has more than 30 years of experience in news reporting, public relations, media relations and communications. He most recently served as the communications and outreach director for the State Historical Society of North Dakota Foundation. He also serves on the adjunct faculty at the University of Mary in Bismarck, N.D., where he teaches American history and political science.

Ritter named BMDA president

Brian Ritter has been appointed president/CEO of the Bismarck-Mandan Development Association. He had been serving as interim executive director of the BMDA since June, following the retirement of the group’s longtime leader, Russ Staiger.

“Brian has proven he has what it takes to lead BMDA to the next level,” said Craig Lambrecht, BMDA board chair. “The board tasked him with four immediate goals when he was appointed to the interim position, and we gave him six months to complete them. He did it in three months.”

Ritter joined the BMDA in 2004 and had served as its director of business development for the past five years.

Carlson, Raum join Fredrikson & Byron

Wayne Carlson and Michael Raum have joined law firm Fredrikson & Byron’s Fargo office.

Carlson focuses his practice on business and agricultural law. Prior to joining the firm, he was a senior vice president and general counsel at an agricultural financial services company in Fargo, where he was principal legal advisor to the board of directors, CEO and other members of the senior leadership team.

Raum focuses his practice on commercial law, with an emphasis on tax matters. Before joining Fredrikson, he was general counsel at an investment management firm in Fargo, with interest in ethanol processing, hotel development and management, and real estate.

KLJ hires 2 airport planners

KLJ, a multidisciplinary engineering and planning firm, has hired Ben Mello and Marcus Watson as airport planners.

Mello has more than 16 years experience in aviation planning and environmental reporting, including more than four years in commercial service airport management and six years with the Federal Aviation Administration. He is currently working remotely from northern Idaho, a central location to KLJ’s 18 office locations.

Watson will be based at KLJ's Fargo, N.D., office. He has 10 years experience in the aviation industry with more than six years experience in aviation planning, airport master planning and airport layout plans.

Larry Veitz

Ben Mello

Marcus Watson

Rick Collin

Brian Ritter

Wayne Carlson Michael Raum

Microsoft, SBA team up to provide free training

Online course offers small business owners tips on technology

BY KRIS BEVILL

Apartnership between Microsoft and the U.S. Small Business Administration is bringing technology training to business owners at their own computers for use on their own time. The complimentary online course series, called Business Technology Simplified, is aimed at teaching small business owners the benefits of using modern technology to take their businesses to the next level.

“Microsoft is proud to partner with the SBA on the Business Technology Simplified e-learning course,” says Cindy Bates, vice president of Microsoft’s U.S. small-andmidsize business group. “The course is a valuable resource that guides entrepreneurs and business owners through technology considerations for business and highlights the importance of running a business on modern technology.”

The series features three course modules that provide information on a host of basic technology tools, from creating marketing materials to accounting upgrades and

(continued on page 24)

(continued from page 22)

reducing hardware. Topics covered in the self-paced series include desktop technology, web-based services, how to reach more customers by extending your business online and managing your business’ sales pipeline. All three of the course modules offer audio-guided lessons and are designed to provide practical, relevant and easy-touse approaches to save time and money, reach more customers and take advantage of current business software, according to the SBA.

“We believe all business owners want to learn about and leverage technology to the benefit of their companies and customers,” says Sherree Stratton, economic development specialist for the SBA’s Minnesota district office. “Current users of the series span a range of aspiring entrepreneurs, startups and established firms looking to brush up on emerging tools and their knowledge of technology.”

The online learning series is an expansion on a print training course previously offered through SBA district offices and the agency’s resource partner network. Stratton says more than 3,000 hard copy versions of the SBA/Microsoft training series had been distributed previously to a variety of SBA small business clients. The digital version is expected to greatly expand the number of users. Approximately 4,000 users took part in the e-learning course in August alone, she says.

Participants of the course can test their knowledge through quizzes after each module. An e-book of each module is also available to download for offline reading. Those who finish the series will earn a certificate of completion from the SBA. Interested parties will have the opportunity to take part in the Business Technology Simplified online course series for at least two years. Updates and replacements to the series content will be made as necessary and will be based upon user interest and evolving technology tools. For more information, or to take the course, visit www.sba.gov/sba-learning-center/series/business-technology-simplified.

PB

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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Venture fund backs world’s problem solvers

Innovation Partners invests millions in SD-based companies

BY KRIS BEVILL

As the world around us becomes more crowded and complex, the human population faces increasingly difficult challenges, particularly in the areas of health care, food supply and energy. A host of innovative and disruptive technology-based solutions devised by researchers all over the world will be required to overcome those challenges. Perhaps not surprisingly, some of those solutions are being developed in our own backyard with financial support from homegrown investor firms.

Venture capital firm South Dakota Innovation Partners invests in early-stage companies that are working to commercialize technologies developed by university researchers, focusing on the areas of agriculture technologies, life sciences and engineered technologies. The firm was founded in 2009 by a small group of investors at the suggestion of Brookings’ South Dakota State University President David Chicoine, who had previously helped form a similar fund at the University of Illinois, according to Mark Luecke, Innovation Partners managing partner and CEO.

The firm’s first round funding closed in 2011 with $6 million and it has since invested in six companies, each one with a unique approach to providing energy, food or health care solutions to the world’s population. All of the firm’s partner companies have offices in Brookings.

Luecke says the firm specializes in identifying early-stage companies with significant potential for private development. “We’re not setting out to develop large-scale manufacturing and distribution businesses,” he says. “We’re really looking to leverage the strengths of the team and the technologies that have been developed.” The firm pays close attention to a company’s team and the ability of a researcher to identify their own strengths and weaknesses. “A red flag for us is someone who believes they can achieve commercialization on their own,” he says.

Agriculture and engineered technologies and life sciences are the firm’s primary areas of focus because they represent areas of research strengths in the upper Midwest and also present opportunities for valueadded solutions, according to Luecke.

Partner company Prairie Aquatech, for example, is developing a process to produce high-protein fish meal from soybean meal and dried distillers grains, a co-product of ethanol production. The resulting product is comparable in quality but less expensive than fish meal currently available on the market. It also adds value to an existing agricultural product. The company’s initial product is currently being used in commercial feeding trials and is expected to enter into the market next year.

Innovations Partners is also a partner in Medgene Labs, which is focused on developing a method to regenerate the lymphatic system in breast cancer survivors, thus reducing the risk of infection. The National Institutes of Health recently recognized the company’s innovative work by awarding it more than $135,000 in grant funding to achieve its phase 1 goals. It is the first South Dakota-based company to receive an NIH phase 1 grant since 2009.

Another Innovation Partners company, Applied NanoFilms, has received nearly $200,000 in grant funding from the National Science Foundation for its work in developing more efficient solar cell technology.

Innovation Partners has attracted significant interest from potential investors since its launch and Luecke says the climate for venture capitalists in South Dakota and throughout the region is strong. There are a number of active firms in the area and he expects that will continue into the future. “Good deals find capital and I think that’s happening.”

Kris Bevill Editor, Prairie Business

PB

701-306-8561, kbevill@prairiebizmag.com

Prairie AquaTech, a South Dakota Innovations Partner company, received the 2013 Innovation Award during the Kansas City Animal Health Investment Forum held Aug. 27. From left: Linda Rhodes, chief scientific officer at Aratana Therapeutics Inc.; Mark Luecke, CEO of Prairie AquaTech and CEO/managing director of South Dakota Innovation Partners; Scott Bormann, vice president of U.S. Commercial Operations at Merck Animal Health. PHOTO: SOUTH DAKOTA INNOVATION PARTNERS

Tammy Miller, CEO of Fargo-based Border States Electric, is the 2013 recipient of the Women in Industry Trailblazer from the National Association of Electrical Distributors. PHOTO: JAY SKJONSBY

Lighting the Way in Leadership

Border States Electric CEO sets example for aspiring business women

BY KRIS BEVILL

APew Research Center study released earlier this year found that more women than ever serve as the primary or sole source of income for their families and more women are working outside of the home today than ever before, accounting for 47 percent of the U.S. workforce. Women continue to be a minority among executives, but progress is being made there, too, thanks in large part to groundbreakers such as Border States Electric CEO Tammy Miller and other female executives who continue to set the standard for leadership — not only for women but for the business community as a whole.

Forging a New Path

An accountant by training, Miller joined BSE, a Fargo, N.D.-based electrical goods distributor, in 1991 as an accounting manager with an eye toward eventually becoming the employee-owned company’s chief financial officer. The fact that there were very few women in the electrical distribution industry at the time did nothing to deter her from her goal. She focused instead on the company, its values and its culture, which she says meshed well with her devotion to hard work and delivering exceptional customer service, qualities she had learned while growing up in a small family business in Brocket, N.D.

As soon as she joined BSE, Miller began absorbing the nuances of the industry and the aspects of great leadership from several mentors whom she readily credits for preparing her to eventually head up the company. Paul Madson was the company’s CEO when Miller first came onboard and was especially influential by exemplifying the positive impact leaders have when they are accessible to customers and employees, she says. “Paul frequently reminded me that it was OK to slow down, walk around and spend time with staff and customers — visiting, getting to know them and getting to understand their interests, goals and challenges,” she says. “I tried to develop similar skills and replicate his approach.”

Miller received her first promotion in 1992 and was appointed corporate controller and treasurer of BSE. She continued to work her way up the ladder before becoming the general manager of the southwest region, a promotion which required her to relocate from Fargo to Phoenix in 2003. She was named CEO in 2006. Her progression through

the ranks sums up quickly, but the process was of course far from effortless. Miller says she was able to achieve her goals by making good choices, taking risks and by continuously learning and making an effort to promote her strengths.

“Having a solid accounting and business background provided a strong foundation to build on,” she says. “I continuously looked for opportunities to learn more about the industry and to use my skills to add value. I always tried to do more than what was expected and to anticipate and have the answer for the next question. From Bob Gill, another executive and mentor at Border States, I learned the value of being creative and finding win-win solutions for customers and employees. I am fortunate to have found vast opportunities at Border States and to have worked with leaders who valued talent, creativity and potential regardless of gender.”

Becoming a $1 Billion Business

Shortly after becoming CEO, Miller set forth an aggressive plan to dramatically grow the business. In 2006, the company was generating about $450 million in annual sales and had a track record of steady growth, but Miller and the other executive council members decided the company could be even more successful if it stretched and grew at a faster rate.

“We thought if we became a significantly larger organization we could provide more services and resources to our customers, be more valuable to our suppliers and create more opportunities and rewards for our employee-owners,” she says.

The executive council created “Blueprint to Billion,” a four-point strategic plan to leverage the company’s employee-ownership culture and grow BSE to become a $1 billion company in five years. Performance exceeded expectations, despite the worldwide recession that landed right in the middle of the five-year timeframe, and the company now ranks as the ninth largest electrical distributor in the U.S., generating $1.3 billion in annual sales from 55 branches in 13 states.

This impressive growth was carried out under Miller’s leadership, but she credits others, noting that the growth plan was a team effort and was successful because every employee had a stake in the game and contributed to the outcome.

“The four strategic goals in our plan were supported by hundreds of strategies and action items,” she explains. “Each

action item was assigned to a member of the executive council, deadlines were set, resources were identified, a communication plan was implemented and accountability was established,” she explains. “Our strategy was successful because we executed. We had clear goals, action items that employees could relate to, regular communication empowerment and accountability. When you set, measure and communicate clear goals in an employeeowned company, empowered employees are motivated to execute and exceed expectations.”

From Student to Teacher

Today, BSE employs more than 1,500 people throughout its many locations and continues to seek out ways to serve as an example for its industry. Miller, who learned so much from mentors in her early years at Border States, now takes great satisfaction in mentoring the next generation of potential business leaders. “It is gratifying to provide opportunities and watch our employees grow and succeed at Border States and in the industry,” she says. “I am very proud of our emerging leaders, especially our management trainee graduates and our new officers.”

She also takes pride in watching the company’s employees benefit from the rewards of working for a 100 percent employee-owned company with successful careers and comfortable retirements. Miller also strives to make an impact on the local community through volunteer work and financial contributions. In 2010, she served as chair of the United Way of CassClay’s annual campaign and raised a record $5 million. She serves on the board of a number of other organizations and cochairs the Valley Prosperity Partnership, which is focused on developing a comprehensive economic development plan for the entire Red River Valley region.

And while she may not point to gender as a significant hurdle during her own climb up the business ladder, Miller has

Continued Expansion

nonetheless become a leader for women in her industry. About 10 years ago, she helped to create a Women in Industry group for the National Association of Electrical Distributors. It has grown from a small group of women that gathered for an annual luncheon to a group large enough to warrant a standalone annual conference and a series of boot camps each year. Event attendance typically exceeds 100 women. “We are reaching many more women in our industry, creating a network and helping with recruitment and retention,” Miller says.

Her productive work in serving as a leader in the industry has not gone unrecognized and was likely a factor in her election to chair the NAED board in 2007, making her the first female ever to serve in that position. This year, the NAED recognized Miller’s pioneer leadership for women in the electrical distribution industry by awarding her its Women in Industry Trailblazer award. “I appreciate what others have done to help me be successful in this industry and I hope I can inspire others to explore the exciting opportunities this industry has to offer,” she says.

Miller encourages women to take initiative, exceed expectations and make sacrifices if they want to reach their full potential. “Take some risk and be open to relocation when opportunity knocks,” she says. “I encourage all women to get out of their comfort zone, seize opportunities and accomplish their goals.”

Miller lives in Fargo with her husband of 25 years, Craig Palmer. PB

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

On Sept. 16, Border States Electric announced it had agreed to purchase Salt Lake City-based Electrical Wholesale Supply of Utah. The 50-year-old family business has eight branch locations in Utah and serves large and small users and contractors. The company’s 134 employees will join the Border States Employee Stock Ownership Plan and become employee-owners. The transaction was expected to close Sept. 30.

“Border States has a long history of service excellence and EWS delivers excellence with service,” BSE CEO Tammy Miller says. “As our two companies join forces, it is truly excellence connecting. Together, we will deliver service excellence and increased value to our customers”

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Kelly Roden, co-owner of Roden Iron Inc., recently launched a crowdfunding campaign to help finance a second company known as Roden Crane Service.

PHOTO: RODEN IRON INC.

Entrepreneurs Tap Into the ‘Crowd’

Online crowdfunding sites offer fundraising opportunities for variety of projects

BY KRIS BEVILL

There’s seemingly nothing that can’t be done online these days, including funding new business ventures. Internet-based crowdfunding is becoming an increasingly popular tool for entrepreneurs and creative types around the world looking to finance their projects. It is expected to soon also become a valuable tool for businesses seeking investors. A provision passed in the Jumpstart Our Business Startups (JOBS) Act of 2012 makes it possible for businesses throughout the U.S. to raise up to $1 million through securities crowdfunding campaigns once the U.S. Securities and Exchange Commission completes the necessary rulemaking process.

At its core, the concept of crowdfunding — financially supporting a project in exchange for a prize or share of the goods — dates back centuries. Crowdfunding as we know it, however, was born about a decade ago; made possible by the Internet and its capability to connect anyone, anywhere, and allow them to easily exchange information and money.

A number of crowdfunding websites such as Kickstarter, Indiegogo and RocketHub have become wildly successful over the course of the past few years as people gravitate toward the concept of contributing to an artistic venture, a research project or a startup business in exchange for a prize. The most-well known of these sites is Kickstarter, which says it has generated more than $700 million in pledges from more than 74 million people since launching in 2009, funding more than 48,000 projects. Indiegogo, founded in 2008, is less specific about contributions it has generated, but a company spokesperson says it has hosted more than 100,000 campaigns and distributed “millions of dollars, pounds, euros and Canadian dollars to thousands of people around the world.” Likewise, RocketHub says it has helped thou-

sands of people raise millions of dollars for their projects since the site was launched in 2010.

What’s the Difference?

All crowdfunding sites share some similarities but there are variables to be aware of when deciding which site to use for your project. For example, Kickstarter uses an “all or nothing” platform, which means campaign owners must meet a pre-determined financial goal in order to receive any contributed funds. If the goal is not met, any contributors who signed up to support the project get their money back and the campaign owner is not held to a fee. If the project is successful, which the company says 44 percent of projects are, contributed funds are distributed to the campaign owner and Kickstarter collects a 5 percent fee from the campaign owner. RocketHub and Indiegogo allow campaign owners to keep any funds raised even if their financial goal is not met. However, while successful campaigns can expect to be charged a 4 percent fee from those sites, unsuccessful campaign owners pay a fee at least double that amount.

There are also a few restrictions on the types of projects that can be launched on certain crowdfunding sites. Kickstarter appears to be one of the pickier sites. It requires campaign creators to submit an application for approval before it can go live on the website. The site also gives preference to creative projects and does not allow charity or cause funding projects.

Kickstarter’s restriction against charitable projects was a deal breaker for Jon Melgaard, an intern and entrepreneur-in-residence at Fargo, N.D.-based Kilbourne Group who wanted to raise funds through the site for a project aimed at providing interactive North Dakota state map puzzles to fourth-grade classrooms.

As part of Melgaard’s internship, he was tasked with devising a plan to raise $50,000 through private and corporate sponsorships to support the production and distribution of about 400 conNecteD puzzles. He decided that bringing the project to the “crowd” made sense because it fit with the overall theme of the project. “Part of our goal was to get as many people involved as possible,” he says. “Being a statewide initiative, we thought that some sort of online planning source would be the best way to do that.”

Melgaard was initially drawn to Kickstarter because he was familiar with that platform and knew others who had successfully funded projects through the site. He set a goal of $25,000, rather large for a Kickstarter campaign, and brought the project to the point of launch before learning that the campaign’s charitable element disqualified it from being included on the site. He then turned to Indiegogo, which boasts no application process and not only allows charitable projects but even offers a discounted fee for nonprofit campaigns. He was able to launch the project quickly and within

three days of the campaign’s Indiegogo launch, it had acquired $560 in contributions. Melgaard says he is somewhat nervous about the campaign’s lofty crowdfunding financial goal, but he and Kilbourne Group are committed to bringing the project to fruition, which may require a mix of old-fashioned fundraising as well as crowdfunding efforts, considering that the Indiegogo campaign is scheduled to last only 30 days. “We are banking on [the project] succeeding,” he says. “We have the resources to make this happen no matter what.”

The conNecteD campaign on Indiegogo expires Oct. 3.

Startup Funding

Kelly Roden, co-owner of Milaca, Minn.-based structural steel erector company Roden Iron Inc., had been following the crowdfunding trend for more than a year before she decided to try it herself. In early September, she launched a project on RocketHub to generate startup funds for a new company called Roden Crane Service. She hopes to raise $5,000 by the project’s Nov. 12 closing date.

(continued on page 36)

Jon Melgaard, intern and entrepreneur-in-residence at the Kilbourne Group, is utilizing crowdfunding to partially finance the production and distribution of interactive North Dakota state map puzzles.

PHOTO: KILBOURNE GROUP

(continued from page 34)

While the planning portion of the campaign took time, setting up the project was easy, she says. “The most difficult part of launching the project will be marketing it in a manner that doesn’t look like you’re begging your family, friends and colleagues for money to get your idea or project started,” she says. “A company needs to find a balance between raising cash and providing the target audience with something of value or interest.”

Roden Crane Service will be based in Dickinson, N.D., and will initially support Roden Iron’s projects in western North Dakota, though the company may eventually also offer services to other construction trades and oil industry companies in the Bakken region. Roden says she and her husband/business partner, Brian, decided to launch the new company after three years of experiencing mixed results from local crane operators in western North Dakota. Cranes are required to hoist Roden Iron’s structural steel and so crane services play a critical role in the company’s work. By owning their own crane service, the Rodens will be better able to control project costs at Roden Iron, she says.

Roden Iron has built up an impressive list of projects in western North Dakota over the past few years, including a public works building in Dickinson, public school projects in

Watford City and Stanley and retail projects in Minot. Roden says this year’s annual sales will approach $1.6 million — double the company’s previously steady annual sales of about $800,000. She fields questions about western North Dakota every day at the company’s central Minnesota headquarters and she believes crowdfunding might offer a way for people outside of the Bakken to get involved in a small way. “My goal is to involve our target audience in exciting opportunities in North Dakota that we have had the privilege of partaking in,” she says. “Maybe by being included in the crowdfunding campaigns it will give people a chance to be part of the excitement!”

Regardless of the outcome of Roden’s crowdfunding campaign, the couple plans to move forward with their new business. In early September, Roden was finalizing the purchase of the company’s first 40-ton boom truck in preparation to launch the crane service company later this fall. PB

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

Minnesota-based Roden Iron Inc. provides structural steel services for a number of projects in western North Dakota and recently completed the steel setting for Dickinson’s public works building, shown here. Company co-owner Kelly Roden is utilizing crowdfunding to raise contributions for a supporting crane service company and to allow interested parties a chance to participate in Bakken activities through the company’s work.

PHOTO: RODEN IRON INC.

Lake Area Technical Institute in Watertown, S.D., was named one of this year’s Top 4 two-year colleges in the nation and continues to break enrollment records.

PHOTO: LAKE AREA TECHNICAL INSTITUTE

Continuing to build a base

Manufacturing, ag, stellar college power

Watertown economy

BY KRIS BEVILL

Afew years ago, the effects of the Great Recession were a little more apparent in Watertown, S.D., than in other communities throughout the region. Manufacturing is one of two primary industries in South Dakota’s fifth largest city (population: about 21,500) and local manufacturers took a bit of a hit during the worldwide economic downturn. Thankfully agriculture continued to be a strong performer throughout the recession and the local economy actually continued to grow throughout the recession, despite registering some job loss in the manufacturing sector. Now, as the worldwide economy continues to recover, lesser affected communities such as Watertown have already bounced back and are on the increase, provided they can attract enough workers to fill demand.

“The good news is that within a matter of about 24 months we were able to replace all of the job loss that we had during the recession and we’re now back up above pre-recession levels,” says Craig Atkins, president of the Watertown Development Co. “There’s just a really positive vibe right now in terms of where our economy is compared to where it was.”

Watertown’s economy is doing so well, in fact, that there were more than 850 job openings in August and the town’s current unemployment rate is sitting at 3 percent, compared to an average of 3.2 percent to 3.5 percent during previous strong economic times, Atkins

says. The WDC has responded to the labor shortage by working aggressively to recruit out-of-state workers to the area. For the past two years the group has focused on attracting potential new residents from similar-sized communities in Minnesota and Iowa with advertising campaigns that tout South Dakota as not only a place with ample job opportunities, but also a place where every dollar earned stretches farther, thanks to no state income tax.

Several advanced manufacturers are established members of the business community in Watertown, including metal fabricator Angus-Palm and work truck manufacturer Dakota Bodies Inc. In April, Metrix, a custom fabrication and powder coating company, which had previously been sharing space with Dakota Bodies, entered into a purchase agreement to buy a 40,000-square-foot spec building built by the WDC in order to further expand the town’s manufacturing sector. The sale was complete in June and the company plans to move in within the next six months, adding 50 new jobs to the community as a result of its expansion, Atkins says.

The spec building that will become Metrix’s new home was the first spec building the WDC had built in a decade. The $860,000 investment was so successful that Atkins says plans are already in the works to build a similar spec building in the industrial park that could entice another business expansion or attract a new business. Construction on that facility could begin this fall.

The Watertown area is also making an effort to attract entrepreneurs and support emerging startups. In May, the WDC and the South Dakota Enterprise Institute launched Kampeska Capital LLC, an angel fund devoted to providing initial phase funding to small businesses. Sixteen local investor groups have supplied $850,000 to the fund and have begun reviewing applications from businesses ranging from traditional manufacturing to tech-based startups, all seeking a start in Watertown. Atkins says the goal of the fund is to identify entrepreneurial business opportunities that could

Top 10 Employers

result in new sector growth in the community. “This fund fills a void and allows us to help small businesses that we were not able to help before,” he says.

While private industry is currently strong and growing in the Watertown area, the community’s gem remains to be Lake Area Technical Institute. The two-year college was named one of the 2013 Top 4 two-year colleges in the nation by the Aspen Insitute and has experienced a solid decade of record enrollment numbers. This year, about 1,590 students are enrolled at the school, a 5.6 percent increase over last year. In the past 10 years, enrollment has grown by more than 60 percent. The annual economic impact of the school is significant, totaling nearly $50 million last year, according to LATI. The school projects that between 2011 and 2021, the economic impact of the school will total $3.66 billion.

Luann Straight, director of insititutional relations at LATI, says the college’s enviable enrollment growth can be attributed to a 99 percent placement rate, national recognition as being one of the nation’s best two-year colleges and a willingness to add new programs as needed. In fact, the college just completed a five-year, $20 million expansion project that included several new buildings to house new programs such as energy operations and energy technology, and provide more space for some of the college’s largest programs including diesel technology and agriculture.

“We’re very happy with what [LATI] continues to do and we think that they offer us, and our local industries, a great opportunity to continue to take advantage of the new workforce,” Atkins says. Likewise, Straight says the college is proud to call Watertown home. “We’re very fortunate that our homebase is in Watertown,” she says. “They’re always watching out for us and we watch out for the community.” PB

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

Simply

Event highlights continued growth of tech sector

Hundreds gather in Fargo to explore future of tech industry

BY KRIS BEVILL

The technology sector is an industry on the rise throughout North Dakota and Fargo-Moorhead serves as a hub of tech-sector growth, thanks in large part to an example set years ago by the phenomenal growth of Great Plains Software and the continued presence of Microsoft. Combine with that a steady stream of fresh minds from the metro’s three universities — North Dakota State University, Minnesota State University Moorhead and Concordia College — and incubation opportunities offered at NDSU’s newly renamed Office of Research and Creative Activity, and the potential for continued growth in the sector is phenomenal.

This potential was on clear display during the third annual State of Technology event, held Aug. 20 in Fargo. Hosted by the Fargo Moorhead West Fargo Chamber of Commerce and Sen. John Hoeven, R-N.D., the event provided the business community with a chance to hear from some of the area’s innovative tech-sector business leaders. An additional focus of this year’s event, according to Hoeven, was to address the next steps that should be taken in order to continue growing the state’s tech sector.

“Technology is a key to our success,” he said. “From the advanced equipment and methods that are driving economic growth in

Tami Reller, executive vice president of Microsoft's marketing group, talks with Don Morton, former Bison football coach and site leader for the Microsoft campus in Fargo, N.D., Aug. 20, 2013, at the Ramada Plaza & Suites.

PHOTO: MICHAEL VOSBURG/FORUM NEWS SERVICE

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Dr. Mark Dotzour

Chief Economist and Director of Research for the Real Estate Center at Texas A&M University - Exploring the Economic Outlook for Farmland and Business Decision Makers - Why have land prices increased so dramatically? Are current price trends sustainable? What is the national outlook for job growth, interest rates and real estate?

Dr. Tim Ball

Environmental Consultant, Speaker and Columnist based in Canada - Climate Change is Normal; the Untold PerspectiveNo stranger to controversy, Dr. Ball’s views about CO2 not causing global warming goes against prevailing wisdom,“The fact that they’ve only heard one side of the issue – that’s the problem,” says Ball.

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western North Dakota, to the cutting-edge innovations that are driving growth in agriculture, information, biotech, health care and aviation businesses in the Red River Valley, technology is fueling our state’s economic vitality.”

More than 400 attendees were on hand as keynote speakers Doug Burgum, a well-known entrepreneur, venture philanthropist and Microsoft alum, and Tami Reller, executive vice president of Microsoft’s marketing group, offered their takes on technology in North Dakota and growth within the sector. Fargo tech company leaders also shared their outlook for the industry’s future and its impact on the local economy.

The overall impression from the day’s speakers was that the industry offers enormous potential for job creation and economic benefit to the state. But a surprise challenge issued by Burgum during his speech also highlighted the need for continued state and private support to allow the tech industry to fully blossom. “Vision 2015” calls for North Dakota to capitalize on its economic success by utilizing private/public partnerships to implement the fastest Internet speed and greatest bandwidth infrastructure in the world by 2015. “When you’re at the top of your game, that’s the time to take risks,” Burgum told attendees, adding that the state’s size and enviable financial situation perfectly positions it to win the race to offer the nation’s best Internet capabilities. “If we blow this opportunity it is going to be completely our responsibility,” he said.

Reller commended Burgum’s vision and said if the state implements better bandwidth it would be easier for Microsoft to expand and for new businesses to enter into the arena. “I’m a huge fan of that initiative,” she said.

Other speakers at the event included Jeff Young, CEO of Evolution1, which utilizes cloud computing to provide electronic health care and other reimbursement account services; Alex Warner, CEO of Pedigree Technologies, a maker of software systems that allows companies to track equipment, fleets and assets; Jake Joraanstad, CEO of Myriad Devices, a mobile app development company, and Barry Batcheller, CEO of Appareo Systems, which designs and manufactures electronic, mechanical and software products for aerospace, defense and transportation applications. The companies are all based in Fargo and, together, employ hundreds of workers.

Craig Whitney, CEO of the FMWF Chamber, says that by highlighting the area’s tech sector, Hoeven and the chamber hope to shed light on the opportunities for growth, both locally and on a national stage. “It’s exciting that in a market our size there is so much going on,” he says. “There is a lot more going on in North Dakota than most people think. I think it sends a message nationally … that North Dakota is a good place to do business.”

PB

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

Big Smallsmiles.egos.

Company makes progress on ND wind project

Construction on 200-megawatt wind farm to begin this year

BY KEITH NORMAN

Officials with Geronimo Energy are still planning to start preliminary construction on the Courtenay Wind Farm Project in Stutsman County, located in southeast North Dakota, this fall, according to Betsy Engelking, vice president of the company.

If constructed, the Courtenay Wind Farm could be the largest in North Dakota constructed under a single permit. It would produce 200 megawatts of power from 100 to 136 turbines.

“There really isn’t an official status because we’re working on a lot of different fronts,” Engelking says. “We’re working with additional parties in the area to resolve their concerns and we’re making progress. We’re working with (Stutsman) county to arrange a significant upgrade to about nine miles of road that we hope to begin work on this fall.”

The road upgrade would allow the heavy trucks and equipment necessary for a wind farm construction project access to the area. Geronimo Energy plans to pay for the improvements as part of the project costs.

Engelking also says company officials are continuing to work with residents of the area about turbine locations. In July, Robert and Julie Sprague, owners of a private airstrip known as Sprague Airport, presented additional information to the North Dakota Public Service Commission. The information came after the PSC hearing on July 12, which was held at the Stutsman County Law Enforcement Center. The PSC voted at that time to consider the new information as part of the record and allowed Geronimo Energy to respond.

“The case is still pending before the PSC,” said Jerry Lien,

attorney for the PSC. “We’re still pending late filed information from Geronimo Wind.”

Lien says the PSC would make a decision on the case as soon as the new information was received.

“We are working with the parties that provided additional information to resolve their concerns,” Engelking says. “When that is wrapped, we will get the information to the PSC.”

In order for the project to qualify for tax credits, some work or equipment purchases must be done before the end of the year.

“We must either have substantial construction of a physical nature or incur costs of at least 5 percent of the project,” Engelking says.

Substantial construction could be defined as upgrading the haul roads and building access roads to the planned turbine locations. The company could incur costs by purchasing turbines or entering into agreements with contractors to purchase cable and other components for the project. Purchased components would have to be delivered to the construction area by March or April to qualify.

“We plan on starting road construction this fall,” Engelking says. “And begin work on the wind project when the load limits come off the roads in the spring.” PB

Keith Norman Reporter, Forum News Service knorman@jamestownsun.com

Fargo studies feasibility of CNG

State grant allows city to explore possibilities of natural gas-fueled fleet

BY KRIS BEVILL

Fargo, N.D.’s MATBUS public transport system boasts more than 1 million riders annually, requiring millions of dollars in diesel fuel. The city is exploring the potential use of compressed natural gas as a more cost-effective and environmentally friendly fuel, with city buses a likely candidate to be among the first converted vehicles.

PHOTO: CITY OF FARGO

In August, the city of Fargo, N.D., received the first grant ever awarded through the North Dakota Commerce Department’s State Energy Program to study the feasibility of using compressed natural gas (CNG) to fuel city vehicles. The $50,000 grant will be used to finance a feasibility being conducted by Wenck Associates Inc., to explore the costs and best practices of converting the city’s fleet, the costs of establishing the fueling infrastructure, safety requirements, overall short-term and long-term risks and mitigation strategies and the expected return on investment. The study is expected to be complete later this year.

Fargo was selected to receive the grant because city officials had already spent several years exploring the potential use of CNG as a method of lowering the city’s fuel costs and reducing vehicle emissions. The city has also carried out a successful effort to increase the use of public transportation within the past decade and as a result requires more fuel for its fleet. Ridership on the metro’s public buses has tripled since 2004, up to 1.2 million riders annually, and the city currently spends about $4 million each year on transportation fuel for its fleet, most of which is diesel for buses.

“North Dakota has an abundance of natural gas,” says Andrea Holl Pfennig, SEP program administrator. “If it can be utilized in a manner that will reduce operating costs while improving air emissions, it will be a great benefit for the community.”

Fargo is already experienced in converting gas into a valuable resource and plans to apply that knowledge, and existing infrastructure, to the potential use of CNG as a fleet fuel. The city captures methane gas from its landfill, compresses it and sells portions of the usable product to Cass County Electric and to nearby Cargill to power its boilers, generating about $400,000 a year for the city’s coffers. The city currently captures the equivalent of about 3 million gallons of diesel fuel per year at the landfill, which is about three times as much fuel as the city currently requires to fuel its fleet.

Part of the feasibility study will explore the possibility of converting landfill gas to vehicle

fuel as another option for the city’s CNG plans. The study will also take into consideration existing infrastructure, including Xcel Energy natural gas pipelines located near potential fueling station sites, and existing gas compressors at the landfill.

Mike Williams, Fargo city commissioner and member of the city’s renewable energy and conservation committee, says the city is well-positioned to deploy CNG for use in its fleet, but because of the time required to convert a fleet and the high costs of establishing a filling station, there may be a need for private business participation as well. “You can’t just transform your whole fleet overnight,” he says. “You might start with a bus here, a garbage truck there and a couple of pick-ups. That really doesn’t justify a $1 million compression station. So you have to build a market. We can start to create that demand by starting a project that the private sector might not do alone, and it would benefit taxpayers at the same time.”

Williams says city officials have had discussions with local businesses, focusing on those with fleets that stay in Fargo and fuel up in the city daily, and have received positive feedback. The primary attractant for private businesses is the low cost of natural gas compared to diesel with the added benefit of natural gas being a cleaner burning fuel, he says.

The city will not move ahead on a plan to convert any of its fleet until the results of the study are available, but Williams is confident the study will prove the environmental and cost benefits of utilizing the fuel and that natural gas will become a vehicle fuel option for Fargo fleets sometime in the future. “I think we will end up with some kind of station just because it makes such good economical sense,” he says. PB

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

Hundreds seek oil patch connections during annual meeting

North Dakota Petroleum Council gathering draws attendees from around the world

BY JOHN HAGEMAN

Booths lined Grand Forks, N.D.’s Alerus Center arena floor Sept. 17, with tables covered in pens, coffee mugs and hats marked with companies’ logos. But perhaps the most prized commodities of all during the North Dakota Petroleum Council’s annual meeting, held Sept. 16-18, were business cards.

Companies ranging from Halliburton to Red Wing Shoes were on hand during the threeday event, along with public agencies such as the North Dakota Department of Transportation, as well as the University of North Dakota’s petroleum engineering department. Many business representatives said they were hoping for more visibility among others working in the oil patch. And it seems many businesses recognize the event can yield results. NDPC President Ron Ness said the 350 booths for the Williston Basin Petroleum Conference, another industry event, in May 2012 sold out in 17 minutes.

“And a lot of our members didn’t get booths,” Ness said. He said this is the first time an expo with attendee display booths has been held during the NDPC’s annual meeting.

Richard Warren, a sales manager for Winnipeg-based No-Spill Systems, said his company has seen more demand for its oil draining products from companies working in the oil patch. He said their products are used on drilling rigs, trucks and generators to service machinery lubrication more efficiently.

“The longer (the oil rigs) are down, the more it costs,” he said.

Warren said the company was recently in Dallas for a trucking convention, but said there’s much more opportunity for new business with North Dakota’s oil industry.

“Those are the guys who are looking for solutions like this to help save money and make more money,” he said.

Tapping the Industry

Oil and gas production had a $30.4 billion impact on North Dakota in 2011, up from $4.4 billion in 2005, according to a North Dakota State University study. Many companies are trying to tap business opportunities in the Bakken oil formation of western North Dakota.

Trinity Consultants, an air quality permitting and environmental firm based in Dallas with a Minneapolis office, is looking to gain a larger presence in western North Dakota, where it traditionally hasn’t done much business, said consultant Will Backus. “It’s nice to get our name out there.”

Others echoed that sentiment.

“It’s a visual representation for us, so they get familiar with us,” said Wayne Lagorin, president of Spartan Engineering Inc. “Even though we are based out of Tulsa and Denver, we do a lot of work up here.” PB

John Hageman Reporter, Forum News Service jhageman@gfherald.com

Kelvin Faul, MW Industries mechanical supervisor, left, and Walter Knight of PCC Logistics of Seattle are dwarfed by a 70-foot mast on a workover rig built by Kenmare, N.D., manufacturer MW Industries and on display in the Alerus Center for the North Dakota Petroleum Council's annual meeting held Sept. 16-18 in Grand Forks, N.D.

PHOTO: ERIC HYLDEN/FORUM NEWS SERVICE

Venture Capital Firm Puts Money Where Ideas Are

Arthur Ventures continues support of fledgling software companies

BY DAVE OLSON

Arthur Ventures, a Fargo-based venture capital firm that uses financial muscle to help fledgling companies grow and prosper, is itself growing.

Formed in 2008 with an initial fund of $11 million, Arthur Ventures recently announced the establishment of its Growth Fund II, a $45 million pool of money that brings the total value of assets under management at Arthur Ventures to more than $65 million.

Dollars from the new growth fund, known as AVII, will be invested in software companies that cater to the information technology, health care, agriculture and energy markets.

Similar to what occurred with an estimated $20 million of investor money pooled earlier by Arthur Ventures, dollars that are now committed to various companies, the new growth fund will focus on firms in the Upper Midwest – with some exceptions.

“We’re going to invest where the good deals are,” said Doug Burgum, Arthur Ventures chairman and co-founder.

Burgum, whose own money makes up a portion of the capital Arthur Ventures puts at risk when it invests, said one of his motivations for starting the company was the gratitude he feels for opportunities he’s been given.

That includes his success with Great Plains Software, a company Burgum provided seed money for and led for years until ultimately guiding it through an acquisition by software giant Microsoft.

“A huge team of people built that company,” Burgum said. “I have an interest in giving back, or paying forward, however you want to think about it.”

When it comes to his investment choices, Burgum remains a strong believer in the power of software to drive economic development and job growth.

Doug Burgum is co-founder and chairman of Arthur Ventures.

PHOTO: JOHN BROSE

“Software is still the greatest invention to date that extends human capability,” he said. “You get very excited about being able to have an impact on humanity.”

Early Intervention

Arthur Ventures occupies a particular niche in the world of venture capital, one aimed at a specific moment in the life of a start-up company, said James Burgum, brother to Doug Burgum and co-founder of Arthur Ventures.

“The type of investing we’re doing is called early stage, which is one stage after what we call seed stage,” James Burgum said.

In the seed stage, he said, companies typically seek “angel” investors to provide them with the resources needed to get an idea off the ground.

“What we do,” Burgum said, “is come in with $500,000 up to $3 million over the life of the business to try and help take that initial seed idea and turn that into an early stage company.”

More often than not, Arthur Ventures dollars go toward helping pay a company’s staff, James Burgum said, because the value of a hightech company often rests in the minds its workers.

“If they are successful and start selling their products to customers, as the company grows and builds value we’ll have a chance to return that increase to our investors,” he said.

Risking All

It can take years before investors in start-up companies see any kind of return.

Some never do.

James Burgum said he and others who hold a financial stake in Arthur Ventures understand the risk – and take it anyway.

“Part of the role we have as managers of a venture firm is really risk

Fargo-based Arthur Ventures recently completed a successful second round fundraising effort, generating $45 million for investments in early stage technology companies in the region. Back row, from left: Patrick Meenan, director; James Burgum, co-founder and managing director; Kathy Laney, operations director. Front row, from left: Kayleigh Biloki, accounting; Megan Lind, executive assistant; Andrew Christensen, associate.

management, because early stage ventures are inherently risky,” he said.

“These are companies without customers, sometimes without proven product, even sometimes without experienced management teams,” he said. “There’s a chance they (invested dollars) could turn to zero.”

The flipside of the coin is this: Potential rewards can be substantial.

“Businesses we invest in typically are businesses that at some point will get sold to another business, or have an initial public offering where the ownership we have in those underlying businesses gets returned back to our investors,” James Burgum said.

“If we do that successfully,” he said, “they should have very high returns that are far above averages you would receive in other types of investments, like public stocks or bonds.”

James Burgum said potential investors are told up front they may not have access to their funds for five to 10 years, a commitment that requires a certain type of investor.

“The Securities and Exchange Commission has pretty strict regulations around who can participate in something like this,” he said.

Because there’s a chance for total loss, he said an individual must be what is called an accredited investor to participate in venture capital arrangements.

“Basically, the SEC says: ‘If they have a certain amount of net worth, then they can afford to lose it,’ ” James Burgum said.

Profit and Patience

To date, none of the companies Arthur Ventures has invested in have returned a penny to investors, but there is every reason to believe they will, James Burgum said.

“All six of the businesses that started as early stage ideas are now

PHOTO: ARTHUR VENTURES

growing companies. It’s been fun to see the evolution,” he said, adding the progress has been enough to inspire a new round of capital contributions from Arthur Ventures investors, also known as partners.

“Investors in the second fund saw we had done a nice job creating value in taking seed-stage ideas to the point where they’ve become real companies,” James Burgum said. “They know there are potential returns down the road.”

He said one business being helped by Arthur Ventures that has a bright future is Intelligent InSites, a local company whose software has many applications, including helping hospitals track their equipment and supplies.

The first company to receive dollars from AVII, the new growth fund, will be Infusionsoft, a large Phoenix-based business that provides sales, marketing and e-commerce software solutions for small businesses.

While Infusionsoft doesn’t qualify as a start-up, it is in keeping with Arthur Ventures’ strategy of investing in a few established companies to add a dash of stability to its otherwise speculative portfolio.

“A company that’s very stable provides us some protection against early stage risk we’ll be taking with other companies,”

James Burgum said. ‘Local Impact’

Given the high-risk nature of venture capitalism, firms willing to dabble in it are few, said James Burgum, who is “thrilled and humbled” by the number of individuals and families willing to put their trust – and money – behind Arthur Ventures.

“It’s important to know there are a lot of investors that care deeply about having an impact locally,” he said, referring to individuals and families that have strong track records of business success in a variety of sectors.

“There’s not a lot of venture capital,” James Burgum added, “So, for them to put capital at risk says a lot about the investor base.”

Doug Burgum agreed.

“It’s about investing and it’s about building successful companies. Where that happens matters to communities,” he said. PB

Dave Olson Reporter, The Fargo Forum dolson@forumcomm.com

Female CEOs

Exchange

Interest Rates

Data provided by David Flynn, chair of the University of North Dakota Department of Economics. Reach him at david.flynn@business.und.edu.