TECHdotMN: News about Minnesota Startups

By Thomas Lee, MedCity News

“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.”

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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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By Thomas Lee, MedCity News

“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.”

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Part I

Part II

By Eric Kelsey, Twin Cities Business

“In his annual State of the State address, Governor Tim Pawlenty on Thursday urged the Minnesota Legislature to approve an angel investor tax credit.

In his speech, Pawlenty did not provide details about the angel investor tax credit, but he indicated that the tax credit would be one of the six priorities of his proposed “jobs creation” bill.”

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By Thomas Lee, MedCity News

“ST. PAUL, Minnesota– In a packed State Building Office hearing room Tuesday, witness after witness rose to speak in support of H.F. 2750, a bill that would grant $32 million in tax credits over three years to angel investors who fund risky, high tech start-up companies. Entrepreneurs, investors, university officials, industry groups warned lawmakers that the lack of early stage capital meant innovative start-ups in Minnesota would either die or move to another state.”

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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.

Mojo Draft

Pete Birkeland is Chief Financial Officer of Rain Source Capital.  He is responsible for managing the financial reporting and accounting for RAIN Source Capital and coordinating the support functions to the RAIN Funds. He also works on due diligence tasks for for the various fund investments. Although Pete is not a VC, we consider him highly relevant to the topics at hand and use the acronym VC as a blanked label to describe those, like Rain Source, who operate in the private equity arena.

RAIN Source Capital is a multi-state network of RAIN funds that works with angel investors who are interested in supporting growing companies. They help bring together like-minded angel investors to form individual RAIN funds and then provides these funds with a process for due diligence, legal templates, management support, access to deal flow and other resources.

RAIN funds share expertise, deals and experience between and among their multi-state network to support growing companies throughout the areas they serve: 23 funds located in Minnesota, Iowa, North Dakota, South Dakota, Montana, Idaho, Washington, Oregon and other areas.

Starting off the conversation is a bit about the upcoming Small Business Investment Tax Credit/Angel Investment Tax Credit/Saltzman Bill. You can show your support for this bill on behalf of Minnesota Technology Startups through a form located here and also learn about the upcoming hearing on Feb 9th at the state capital.

Update IV (2/4/10-2:15pm) – Statement from House Taxes Committee & the House Bioscience and Workforce Development Division:
Angel Investor Credit – House Comm. Press Release

Update III (2/4/10-2:00pm) -Mojo/MN makes a move: http://tech.mn/news/2010/02/04/mojo-minnesota-makes-a-move/

Update II (2/3/10-11:00pm) - Hearing details:

JOINT COMMITTEE: TAXES AND BIOSCIENCE AND WORKFORCE DEVELOPMENT POLICY AND OVERSIGHT DIVISION
TUESDAY, February 9, 2010
10:30 AM
Room: 200 State Office Building – (100 Rev. Dr. Martin Luther King Jr. Blvd. Saint Paul, MN 55155)
Chairs: Rep. Ann Lenczewski, Rep. Tim Mahoney
Agenda: Angel Investor and other Venture Capital Investment Bills

Update I (1/28/10 – 10:30am) – Thanks to those who have indicated their support, so far we’ve received approx. 20 names…way to go! Please continue to spread the good word and don’t hesitate to ask any questions

We’ve been following this topic closely as a result of the need for more exposure and awareness amongst the startup community. This is something that impacts us all, directly or indirectly.

For a thorough background (and what’s at stake), we’ve aggregated a multitude of relevant links, a copy of the draft bill and a call to action from John Alexander (Chairman & Founder of Twin Cities Angels Funds) here.

If you feel that tax incentives can be helpful in generating early stage tech investments (as 29 other states do), speak up here.