ST. PAUL, MN - The Minnesota Angel Tax Credit Program, which has attracted over $300 million for hundreds of high-tech startups in Minnesota since 2010, is accepting certification applications for 2016.
Of the $15 million in new credits available in 2016, $7.5 million is reserved for investors or investment groups funding minority-owned and -managed businesses, women-owned and -managed businesses or businesses located in Greater Minnesota.
The Angel Tax Credit helps Minnesota high-tech startup companies raise investment capital during the early stages of company growth," said Lt. Governor Tina Smith. "The Angel Tax Credit not only helps startup companies, it also has attracted more than $300 million in private investment to Minnesota over the last six years, and added hundreds of jobs to our economy."
So far in 2015, the Minnesota Angel Tax Credit Program has supported:
- $57 million in investment in 183 businesses certified or in the process of being certified;
- $6.4 million in investment in 24 Angel Tax Credit-certified women-owned businesses;
- $7.8 million in investment in 21 minority-owned businesses; and
- $5.7 million in investment in 26 businesses in Greater Minnesota.
Half of the $60 million in investments the program hopes to attract in 2016 is reserved for those businesses. Any leftover tax credits not tapped for investments in those businesses by the Sept. 30, 2016, deadline will be available for investments in businesses outside those groups.
Minnesota is the state of innovation, and the Angel Tax Credit Program is just one of the ways we are working with businesses to spur an increase in outside investment in Minnesota companies," said DEED Commissioner Katie Clark Sieben. "By focusing on businesses owned by women, communities of color, and/or those located in Greater Minnesota, the Angel Tax Credit Program is also focusing on increased economic prosperity and ensuring that all populations are well represented in the state's innovative environment."
The Angel Tax Credit Program was created six years ago to provide an incentive for making equity capital investments in high-tech startups - software, medical device and biotechnology businesses that need cash but are considered too risky for conventional bank loans. The program has expanded beyond high tech. Now businesses developing new proprietary products or services in the fields of agriculture, tourism, forestry, mining, manufacturing or transportation are also eligible to participate.
Under the program, qualified investors receive a state tax credit of 25 percent for investing in qualified businesses. As every $1 in tax credits awarded to private investors generates $4 in investments for startup businesses, this translates into $60 million in investment in Minnesota startups.
Businesses that receive angel funding must be headquartered in Minnesota and certified to participate in the program. They must have fewer than 25 employees, with at least 51 percent of the workers and total payroll based in the state. They also must have been operating for no more than 10 years and cannot have received previous equity investments exceeding $4 million.
