New SE Minnesota Angel Fund Breaks Million-Dollar Mark
When a new angel investment fund focusing on southeastern Minnesota was launched in August, its organizers said they were a bit short of their goal of raising $1 million.
The Southern Minnesota Initiative Foundation (SMIF), a regional development and philanthropic group established in 1986, announced last week it has become a financial backer of the Southeast Minnesota Capital Fund, pushing the new fund’s total capitalization to $1 million.
The amount of the investment wasn’t specified, but the angel fund’s treasurer told TCB in August it launched at a level of $900,000 pooled from a group of 25 angel investors.
The fund was created through the efforts of Rochester Area Economic Development Inc. (RAEDI), a local nonprofit devoted to growing new businesses in the city, and by the Journey to Growth Partnership, a five-year economic development plan spearheaded by RAEDI seeking to diversify Rochester’s economic growth into the surrounding counties of southeastern Minnesota.
“It is an honor to announce that SMIF has joined the investors in the Southeast Minnesota Capital Fund,” RAEDI’s Xavier Frigola said in an issued statement. “We are also thrilled that their investment is putting the fund over the $1 million mark.”
In addition to serving as the angel fund’s treasurer, Frigola is also director of the Mayo Clinic Business Accelerator, which is a collaborative effort between the clinic and RAEDI to spin off Mayo-developed medical technology into new locally based businesses.
SMIF President and CEO Tim Penny said the decision to back the angel fund is a natural extension of the foundation’s existing efforts to invest in startups with its own seed and equity funds. By taking part in the Southeast Minnesota Capital Fund, he added, SMIF can expand its impact and offer its services to the entrepreneurs receiving funding.
“SMIF has long seen the need for additional equity dollars to help new businesses start and grow here in our region and that is why we created our own equity fund a couple years ago,” Penny said in the statement. “We are pleased to now contribute to the Southeast Minnesota Capital Fund and look forward to future opportunities to partner on equity investments.”
The establishment of the new fund comes despite the loss of Minnesota’s angel investor tax credit, which backers in the state’s technology community have called essential in spurring new startups at a time when early-stage venture financing remains scarce. The law enabling the tax credit was allowed to “sunset” during the past legislative session.
Frigola said the angel fund’s investments will likely be in the $50,000-per-company range, with a realistic goal of funding stakes in a total of about 15 startups. Most, but not necessarily all, of the companies chosen will be in southeastern Minnesota.