The angel investor tax credit spurred $28 million in funding for 67 Minnesota companies in 2010-and those 67 companies collectively created 47 jobs last year, according to a report that the Minnesota Department of Employment and Economic Development (DEED) recently submitted to the Minnesota Legislature.

Angel investors collected just over $7 million in credits from the state in 2010. Because $11 million in angel investor credits was available in 2010, almost $4 million in remaining funding will roll over into 2011-bringing the total available to nearly $16 million this year.

Jeff Nelson, the angel tax credit's program coordinator, anticipates that all of the funding available this year will be used up by the end of 2011 as the program picks up steam, adding that he was pleased with the 2010 results. The tax credit program was signed into law on April 1, 2010 but didn't kick off until July.

“Given that we only had half a year to work with, I think the program was very successful,” he told Twin Cities Business Thursday morning, adding that activity within the program increased “exponentially” over the course of the six-month period. November and December were very busy, he said-and things haven't slowed down during the first quarter of 2011.

In terms of the number of jobs created, Nelson said, “I think everyone needs to realize that this is sort of a long-term program. What we're doing is laying the groundwork for businesses to start forming.”

Since a large portion of the program's activity occurred during the last two months of 2010 and companies' year-end reports were used to calculate job creation, businesses that received investments last year didn't have much time to do hiring, Nelson said. He added that many of the businesses that got investments are start-ups with no or very few employees-so “even if they hire a couple people . . . that's a success.”

The tax credit program gives a 25 percent tax break to individuals and investment funds that provide as much as $4 million in seed money to businesses focused on high technology or new proprietary technology.

The tax credit is available to investors and investment funds that funnel money into startups that are less than 10 years old, have fewer than 25 employees, and have less than $2 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. The state will fund $12 million in credits through 2014, and credits cannot exceed $125,000 per person per year.

Organizations must apply and be certified by DEED in order to participate in the angel tax credit program-either as a business, investor, or fund-and participants must re-register each year they want to take part in the program. A total of 112 businesses were certified in 2010, and 67 of them secured investments from 258 certified individual investors and 32 certified investment funds.

More than $2.5 million of the nearly $16 million available in 2011 has already been distributed, according to Nelson. Additionally, more than 115 investors and close to 70 businesses have already been certified this year.

Of the angel tax credits distributed in 2010, the largest portion of the funding went to investors that funneled money into businesses in the biotechnology ($1.42 million), medical devices and equipment ($1.34 million), software ($1.33 million), and clean technology ($1.07 million) sectors.

The report noted that the distribution of investment funding was uneven throughout the state. Among businesses that received an investment that qualified for the credit, only six of the 67 were located in Greater Minnesota.

“This lack of participation in Greater Minnesota is a concern, so DEED has begun actively working with Minnesota's angel community to identify ways to increase angel activity in Greater Minnesota,” the report said.