All $12M in 2012 Angel Tax Credits Is Allocated
All $12 million in angel tax credits made available by the state this year has already been allocated, the Minnesota Department of Employment and Economic Development (DEED) said Thursday.
DEED said the credits “ran out earlier than expected because of the strong response to the program . . .”
Two-and-a-half weeks ago, $3.3 million in credits remained—and DEED predicted at the time that the money would be gone by summer’s end.
The Angel Tax Credit Program gives a 25 percent tax break to individuals and investment funds that provide between $10,000 and $4 million in seed money to businesses focused on high technology or new proprietary technology.
The Minnesota Angel Network, a BioBusiness Alliance of Minnesota-led initiative that aims to connect angel investors and entrepreneurs in the state, sent an e-mail to various stakeholders on Thursday, alerting them about the tax credits having run out.
In the letter, written by Executive Director Todd Leonard, the organization said that timing is critical for start-up technology companies seeking funding, and “we encourage new and seasoned investors to continue to look at deals and make investments in companies with high-growth potential throughout the remainder of 2012.”
The letter also said: “If you are disappointed that there are not more funds available to spur investment in our high-tech start-up economy, we encourage you to contact your state legislator and voice your concern.”
Since the Angel Tax Credit Program was launched in July 2010, it has attracted more than $140 million in private investments for small and emerging companies in the state, according to DEED. This year alone, 100-plus businesses have received funding from more than 300 investors and 15 angel funds.
The state will fund $12 million in angel tax credits annually through 2014, and credits cannot exceed $125,000 per person per year. In November, DEED will begin accepting applications for the $12 million in credits that will be available next year.
The angel tax credit is available to investors and investment funds that funnel money into start-ups that are less than 10 years old, have fewer than 25 employees, and have less than $4 million in previous equity investments. The businesses also must be headquartered in Minnesota and have at least 51 percent of their workers and their full payroll based within the state.