Minnesota to award funding for new startups

The Minnesota Angel Tax Credit Program has $15 million available for high-tech and other business startups in the state for 2016. Half of this amount will be reserved for investors or investment groups funding minority-owned and managed businesses, start-ups that are owned or managed by women or businesses located in Minnesota. The deadline for this program is September 30, 2016.

The Angel program was created in 2009 as an incentive for equity capital investment in high-tech startups and medical device and biotechnology businesses that need capital, but which were considered too risky for conventional bank lending. This financing program has been expanded to businesses developing new proprietary products or services in agriculture, tourism, forestry, mining, transportation or manufacturing.

Qualified investors receive a state credit of 25 percent for investing in businesses qualified under the program. Because every $1 dollar in tax credits awarded to private investors generates $4 million for startup businesses, there will be an estimated $60 million in investment for startups in Minnesota in 2016.

Businesses receiving this funding must be headquartered in Minnesota and certified to participate in the Angel Program. They must employ less than 25 workers and 51 percent of the workers and total payroll has to be based in Minnesota. Eligible businesses must have been operating for no longer than 10 years and may not have received previous equity investments over $4 million.

The program has reportedly attracted more than $300 million in private investment for hundreds of high-tech start-ups and hundreds of jobs in the state since it began. It has supported $76.9 in investments so far this year. In 2015, the Angel Tax Credit Program has supported investment in 183 businesses certified or in the certification process, 24 Tax Credit-certified women-owned business, 21 minority-owned businesses and 26 businesses in Greater Minnesota.

Seeking these grants, credits and other corporate financing may be complex and governed by new laws and requirements. Getting the right information about the legal process may be vital when receiving this financing.

Source: Brainerd dispatch, “Funding available for greater Minnesota businesses,” Nov. 9, 2015

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