Released today were the transactional details of the 2nd quarter 2010 PricewaterhouseCoopers & National Venture Capital Association MoneyTree Report (PWCNVCAMTR), based on data by Thomson Reuters.
While innumerable opinions were cast about the fate of Venture Capital back in July when the initial Q2 press release went out, we stayed calm and quiet since there wasn’t any relevancy around Minnesota tech startups at the time.
But — what can we learn from the new data revealed?
Looking at the defined North Central region (Minnesota, Iowa, Wisconsin, North Dakota, South Dakota, and Nebraska) shows an aggregate total of $147,431,900 invested amongst 16 deals with $133m, or 90% in Biotech & Med device (nothing new here). Minnesota tech startups (software, electronics, computers, digital media, etc.) captured 3 of those deals and $1.5m*:
- mPay Gateway raised $1m from Appian Ventures, GRP Partners and “other individuals”.
- Hardcore Computer raised $500k from Capital Midwest Fund, L.P. .
- Bloom Health Corporation raised an unknown amount from Sandbox Industries and an “undisclosed investor”. No record of this found in Q2…was it was closure on this round which began in Q4 2009?
While the Mpay Gateway & Hardcore Computer deals were previously known/announced, it is always interesting (and equally valuable to entrepreneurs) to know more about who’s actually investing in early-stage Minnesota tech.
In these specific cases, we saw capital coming from Denver (Appian Ventures), LA (GRP Partners), Milwaukee (Capital Midwest Fund) and Chicago (Sandbox Industries).
You read that correctly: according to the PricewaterhouseCoopers & National Venture Capital Association MoneyTree Report (PWCNVCAMTR), based on data by Thomson Reuters, 0% of capital for Minnesota tech startups came directly from Minnesota sources.
Of course, it’s true that (a) there are more tech deals happening than revealed in this report and (b) that these deals, while out-of-state, do likely involve local individuals to one degree or another. For example, both the mPay & Bloom fundings refer to “other individuals” and “undisclosed investors”; sometimes, it’s through these quiet local angel liaisons that deals find greater (and smarter) money through larger syndicate networks.
What a positive sign that regional — even national — investors are seeing real potential in what Minnesota tech has to offer. Perhaps local tech entrepreneurs seeking capital can benefit by aggressively expanding their fundraising prospects beyond the border? It’s worth a reminder that “natural persons” (and funds of 3 or more natural people) are eligible for a 25% discount (regardless of home state — no MN tax liability necessary) on qualified Minnesota startups, thanks to the Minnesota Angel Tax Credit.
*the $1.5m does not include the unreported figure from Bloom Health.