“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)”
Resources:
- Final legislation text
- MOJO guide
- DEED’s overview (application window said to open before 8/1)
“Investors rejoiced when Minnesota finally passed a five year, $50 million angel tax credit. Only one problem: the state’s largest angel group will be largely shut out.
Under a last minute provision inserted into the bill, investors participating in angel deals through individual retirement accounts and family trusts will not be eligible for the tax credit this year. That spells bad news for Rain Source Capital in St. Paul, where most of its funds list an IRA or trust as a member.”
“Fresh from passing a landmark angel investor tax credit, Minnesota lawmakers are advancing a bill that would, in time, radically alter high-tech economic development in the state by concentrating authority in a single public-private entity.
The proposed Minnesota Science and Technology Authority, modeled after programs like Third Frontier in Ohio and The Ben Franklin Technology Partners in Pennsylvania, will craft a long-term science and technology strategy. More importantly, it would also oversee economic development efforts, including money to retain locally grown companies and attract out of state ones.”
“Aside from sharing the same first letter, “Mojo” and “Minnesota” are words that don’t seem to carry a lot in common, though that may soon change. The state is home to 19 Fortune 500 companies, a world class hospital and research center in Rochester, and Spam-what else do you need?-but the land of 10,000 lakes has long lacked competitive fire, the kind of risk hungry entrepreneur and investor that not only tolerates failure but embraces it.
Mindful of this, a group of entrepreneurs, lawyers, and investors have formed MOJO/minnesota, a grass roots group that wants to restore the state’s taste for risk and innovation. From advocating for the angel investment tax credit to finding the local Steve Jobs MOJO/minnesota hopes light a spark under the state’s proverbial rear end.”
“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.”
“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.”
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.
“Passing an angel investment tax credit in Minnesota is not important just for the dollar amount but to signal to investors in the Midwest, and indeed the rest of the country, that our state is a serious place to do business; that we are ready to embrace (finally) a commonly accepted way to spur investment in promising high tech start-ups.
So in other words, something is better than nothing. We need to start somewhere. I need to remind myself this after reviewing the latest version of the bill emerging from the House.”
“MINNEAPOLIS, Minnesota– Despite its name, Pedal Brain LLC’s ambitions far exceed mere bicycles. In fact, just replace “Pedal” with “Health” and you start to better understand what this angel-backed start-up wants to do.
The company recently struck a deal with HED Cycling Products USA in Shoreview to sell a software system that records real time data like speed, power, and heart rate from bike-mounted sensors and view the information on an iPhone or website. Pedal Brain has already raised $250,000 from angel investors, about half of its Series A round.”
Listen to the TECHdotMN podcast with Matt Bauer, Founder, Pedal Brain LLC
By Thomas Lee, Med City News
“ST. PAUL, Minnesota– I’ll say this about Rep. Ann Lenczewski: she certainly makes Minnesota politics interesting.
The powerful chairwoman of the House Tax Committee, a long time opponent of tax credits for angel investors, has finally embraced the idea, just not the bill actually supported by angel investors like Twin Cities Angels and Rain Source Capital and other groups like the Minnesota High Tech Association, LifeScience Alley, and the University of Minnesota.“
By Matt Lee, Via Med City News
EDEN PRAIRIE, MINNESOTA – Norwest Equity Partners (NEP), Minnesota’s largest private equity firm, and Split Rock Partners have purchased a controlling stake in Amcom Software. Financial terms were not disclosed.
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