Angels in Minnesota

Angels are coming to Minnesota — at least that is the hope.  The legislature is betting on the old Field of Dreams saying  “If you build it, they will come” and hoping it will apply to angel investors and venture capital dollars over the next five years.

This is actually a very good program both for small high tech businesses trying to get started and for investors looking to invest in our state.  I am dedicating this post to share a little more about this new program in the hopes that you can pass along the information to your friends both starting new high-tech businesses and to investors who are looking to add a little venture capital to their portfolio.  Although this is a little different topic than I have written on before on this blog it is essential for us to get the word out on programs like this because these are among the businesses that will become the foundation of the future and continue to allow us to have a vibrant region in which we can build leadership and community.

An investment program like this gives the State of Minnesota an advantage in attracting additional investment in our high tech businesses and increasing the number of jobs located here in Minnesota.  The tax credit removes 25% of the risk for an individual investor and therefore helps to make Minnesota a more attractive state in which to invest.  This program and others currently in place have the potential of helping us kick start the next Medtronic, 3M, Boston Scientific, EV3 and countless other major high tech innovators who call Minnesota home.

Program Details (Investor Standpoint):

  • 25% tax credit on invested amount which is refunded via individual income tax credit for qualified investors.
  • Maximum credit of $125,000 per year per individual (Given 25% credit a person could invest up to $500,000 per year).
  • Minimum investment $10,000
  • Total program credits available — $11 Million in 2010, $12 Million per year 2011 – 2014.

Minimum Qualification for Businesses seeking angel investors:

  • Be headquartered in Minnesota
  • Have a minimum of 51 percent of employees and 51 percent of payroll in Minnesota
  • Have fewer than 25 employees
  • Pay employees annual wages of at least 175 percent of poverty level, currently $18.55 per hour. Does not apply to business’ executives, officers, board members, 20 percent-plus owners
  • Not have been in operation for more than 10 years
  • Not previously have received private equity investments of more than $2 million
  • Not have been disqualified from investment under Minn. Stat. 80 A.50 (b)(3) Small corporation offering registration disqualifications
  • Not have generated more than $4 million in investments that have received an Angel Tax Credit. The Angel Tax Credit is capped at $1 million per business
  • Be certified by DEED before investment is made. The certification filing fee is $150
  • Committed to engage in technical innovation in Minnesota.  The primary business activity must include one or more of the following:
    • Using proprietary technology to add value to a product, process or service in a qualified high-technology field
      • Qualified high-technology fields include, aerospace, agricultural processing, renewable energy, energy efficiency and conservation, environmental engineering, food technology, cellulosic ethanol, information technology, materials science technology, nanotechnology, telecommunications, biotechnology, medical devices, pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, or similar.
    • Researching or developing a proprietary product, process, or service in a qualified high-technology field
    • Researching, developing, or producing a new proprietary technology for use in the fields of: agriculture, tourism, forestry, mining, manufacturing, or transportation

If this sounds interesting or to learn more information, please visit the Angel Tax Credit Website, email or contact Jeff Nelson at 651-259-7523.