Minnesota Renews Angel Investor Credit

The State of Minnesota re-authorized its angel investment tax credit in mid-March. The good news for those facing the proverbial "valley of death" is that the credit can help attract investment from anywhere.

The California Technology Council asked its sister organization, the Minnesota High Tech Association, what this reauthorization means to the state's early-stage companies. Margaret Anderson Kelliher, CEO of the MHTA, replied, "This is an important commitment and investment by the State of Minnesota in the technology startup community. The renewal of the Minnesota Angel Investor Tax Credit is a critical signal that Minnesota is on the move with creation of early stage companies and the ability to attract capital into the state."

Brock Siegel, an angel investor at BIXPt and a member of the CTC Board, told this blog: "It has certainly helped make Minnesota investments attractive to California investors."

The State Government conducted an assessment of the program from 2010 through 2012. Their findings include remarkably successful changes in investor behavior: 48% of investors replied that they would have made no investment without the program.

Minnesota's Department of Employment and Economic Development oversees the program. "The Angel Tax Credit Program has attracted over $236 million dollars to Minnesota's high-tech startups since it began nearly four years ago," DEED Commissioner Katie Clark Sieben told the CTC. "The increased demand for this program highlights the vibrant entrepreneurial community here in Minnesota and their need for greater access to capital. This program fuels innovation and attracts new private investment into our economy."

Ian Hathaway, a member of the CTC Economic Advisory Board and Managing Director of Ennsyte Economics, told this blog, "It's good to see Minnesota lawmakers stepping up to make startups there more competitive -- particularly at a time when these programs have been rolled back at the Federal level. My research, and the research of others has consistently shown the impact such incentives can have on economic growth."

According to the Angel Capital Association, 26 states currently have some form of angel investment credit or rebate.