TECHdotMN: News about Minnesota Startups

By Wendy Lee, Star Tribune

“A Minnesota program that offers tax credits to angel investors has made its requirements more flexible, due to changes recently approved by the governor and the state legislature.

The program gives qualified individuals a 25 percent tax break on their investments of $10,000 or more in Minnesota start-ups. There are three major changes to the program, said Monte Hanson, spokesman for the Department of Employment and Economic Development.”

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Led by $50k in equity capital,  Minneapolis Biomass Exchange (MBioEX) recently signaled that it has initiated an equity fundraising round of “indefinite” size.

MBioEX is a Minneapolis-based software startup which has developed an online exchange for animal bedding, livestock feed, renewable energy, and the biopharma markets. Biomass feedstocks such as corn cobs/stover, dedicated energy crops, hays/alfalfa, wheat straw and wood chips/residues can be sold through MBioEX’s proprietary platform.

“We may raise more funds as part of this offering, but it is unknown at this time,” says a note from CEO Kevin Triemstra on the new filing, which commenced on September 9th, 2010.  The company was one Minnesota’s first software technology companies to receive certification under Minnesota’s new Angel Investor Tax Credit and DEED has confirmed that 25% of the $50,000 raised (thus far) has been allotted to the investors side in the form of a tax credit.

Last month, it was reported that Doug Cameron and Rajesh Aggarwal had joined the MBioEx board of directors.

via Minnesota High Tech Association

Bright (hot) and early Monday morning, hundreds gathered at the ADC auditorium in Eden Prairie for  a comprehensive panel discussion centered around the recent passage of the Angel Investor Tax Credit.

Commissioned by MHTA and moderated by Joy Lindsay, this insightful event featured personal appearances from Senator Kathy Saltzman and Representative Tim Mahony – two congressional forces that helped shape and pass this monumental legislation.  The panelists, all well-versed on the topic, included: Dan McElroy, John Alexander, Dan Mallin and Jay Hare.

Kudos to the tech entrepreneurs who took advantage of the free admission to gain firsthand knowledge into this beneficial new tool for startups.

Watch the video, find resources and review the liveblog.

By Thomas Lee, MedCity News

“Battle-weary proponents of Minnesota’s historic $60 million angel tax credit had a simple message for the state’s entrepreneurial community:

Now that we passed the darn thing, you better use it!

“We’ve passed the baton onto you,” Sen. Kathy Saltzman (D-Woodbury) told the audience who gathered in Eden Prairie Monday to learn about the tax credit.

“Make good use of it,” said Rep. Tim Mahoney (D-St. Paul)”

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Resources:

1. Final legislation text
2. MOJO guide
3. DEED’s overview (application window said to open before 8/1)

By Steve Borsch, Minnov8

“Join the Minnesota High Tech Association on Monday, May 24 at the ADC Auditorium for MHTA’s Angel Tax Credit Panel.

Registration:  7:30 a.m.; Program:  8:00 – 9:30 a.m.

The Angel Tax Credit Panel will feature an outstanding line-up of panelists who will discuss the recently enacted 25% tax credit for angel investors who invest in Minnesota high tech start-up companies.”

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Since April 1st, many entrepreneurs and investors alike have been asking all the right questions: what exactly does the passing of the Angel Tax Credit imply from the tax & accounting perspective? And what happens next? What does it really mean for Minnesota?

Updated 4/19/10: added – MOJO Gude to AITC

Updated July: DEED/Angel site goes live!

Join us for a behind the scenes perspective on the experiences from one Minnesota Angel Investor who has been advocating Minnesota Angel Tax Credits for the past 9 years.  Learn about the nuances of the bill and the vision moving forward from of Minnesota’s most public Angel Investors, John Alexander. Mr. Alexander is Chairman and Founder of Twin Cities Angels and President at Business Development Advisors, Inc. (no website).

What it means on paper, technically: The Minnesota Department of Employment and Economic Development (DEED)  has a solid primer on the parameters that entrepreneurs and investors need to know about HF 2695.3 (see: Small Business Investment Tax Credit Statute - section II).   Those interested in taking advantage of Minnesota’s Angel Investor Tax Credit should consult with their respective counsel.

What’s next? From the sounds of things, DEED will have their official application site up and running between June 1st and August 1st.   Qualifying as a business and/or an investor is the next step.

What does it really mean for Minnesota? Well, that’s the big question;  ultimately, it’s up to both the entrepreneurs and those with a financial interest in the tech community to determine how they want to capitalize on this this win.  Only time will tell where and to what extent the passage of this bill impacts the early stage markets (and so on). Stay tuned…

By Thomas Lee, MedCity News

“The $50 million angel tax credit passed by the Minnesota legislature Monday will no doubt provide much-needed early stage capital for young start-ups. But the law’s biggest benefit may not be dollars and cents, but rather how outsiders see Minnesota and how Minnesota sees itself.

By passing the bill quickly in the legislative year and with such overwhelming bipartisan support in the face of a $2 billion budget gap, lawmakers have instantly established Minnesota as a credible place to innovate and embrace risk, investors and entrepreneurs say. That’s quite a departure from the traditional rap on Minnesota, a high tax state whose 19 Fortune 500 companies had made its residents and leaders complacent and timid.”

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By Thomas Lee, MedCity News

“The Minnesota House and Senate Monday overwhelmingly approved a five year, $50 million tax credit designed to spur early stage investment in high tech start-ups, including biotechnology and medical devices.

Minutes after the House passed a job bill, which included the angel credits, 112-20, the Senate followed suit 58-3. The lopsided vote capped an epic, seven year struggle to make Minnesota more competitive with neighboring states like Wisconsin, whose generous angel credits had lured homegrown start-ups across the border.”

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What will the Angel Investment Tax Credit do?

According to sources familiar with the matter (MOJO MN), there may still be amendments, however here is the gist of it:

The Angel Investor Tax Credit has been discussed and debated for years at the Capitol, but is finally on its way to becoming law.  The bill provides for a 25% tax credit for Angel Investment, to a maximum of $125,000 in tax credits per year/per investor.  The bill budgets $11 million in credits for 2010, with $12 million in credits for 2011 through 2014.  This tax credit is scheduled to sunset in 2015.  The R&D tax credit increased from 5% to 10% of the first $2.5 million in R&D investment.  In addition, the R&D credit is now expanded beyond “C” corporations to partnerships and “S” corporations.  The R&D tax credit is refundable if a business’s tax liability is less than its credit due.  The tax credits in the bill were offset by an elimination of a low-income motor fuels tax.  This tax was part of the 2008 transportation bill containing the gas tax increase.  The state has not yet issued any refunds under this program.

MOJO/Minnesota is “a collective agitating for innovation and biz revolution in Minnesota.”  The 11 person group,  facilitated by Ernest Grumbles III & Brad Lehrman, has released their statement on the Angel Tax Credit. For a thorough background and context on the SBITC/Saltzman Bill/Angel Tax Credit situation, see our previous coverage here and here.

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