DEED: Angel Tax Credit Fueled 102 New Jobs in ’11

The state's angel investment tax credit program spurred the creation of more than 100 jobs last year, as investors collected about $15.8 million in credits.

In 2011, Minnesota's angel investor tax credit program fueled $63.2 million in funding for 113 companies that collectively added 102 jobs, according to a report that the Minnesota Department of Employment and Economic Development (DEED) recently submitted to the Minnesota Legislature.

The angel tax credit program was signed into law in April 2010 and launched by DEED three months later. In 2010, the program spurred $28 million in funding for 67 Minnesota companies, which together created 60 jobs. (That number was revised upward from the previously reported 47 jobs.)

The tax credit is available to investors and investment funds that invest in start-ups that are less than 10 years old, have fewer than 25 employees, and have less than $4 million in previous equity investments-up from the previous cap of $2 million. 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 program gives a 25 percent tax break to individuals and investment funds that provide seed money to businesses focused on high technology or new proprietary technology. Credits cannot exceed $125,000 per person annually.

Angel investors collected about $15.8 million in credits from the state in 2011-a figure that included $4 million that rolled over from 2010, when just over $7 million in credits was distributed.

“The granting of these credits supports the success of Minnesota's entrepreneurs and the growth of emerging businesses, leading to job creation within Minnesota,” DEED wrote in its report.

The DEED report shows that during 2011, businesses that received investment only in 2011 added a total of 118 jobs, but those that received funds only in 2010 or in both 2010 and 2011 actually shed 16 jobs during the year. Accounting for the 60 jobs added during 2010, the program has resulted in a cumulative growth of 162 jobs to date, according to DEED.

A total of 29 companies in the medical devices and equipment industry received investments through the program-the most of any industry. Software companies followed, with 26 investments.

The bulk of companies that received investments through the program-102 of 113-are located in the seven-county Twin Cities metro area.