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Minnesota Angel Tax Credit Program available for state startups

MINNESOTA — The Minnesota Angel Tax Credit Program now has $15 million in credits available for state tech startups and is accepting applications for 2016. Of the $15 million in credits, $7.5 million is reserved for investors or investment groups funding minority-owned and -managed businesses, women-owned and -managed businesses or businesses located in Greater Minnesota.

“The Angel Tax Credit helps Minnesota high-tech startup companies raise investment capital during the early stages of company growth,” said Lt. Gov. Tina Smith. “The Angel Tax Credit not only helps startup companies, it also has attracted more than $300 million in private investment to Minnesota over the last six years, and added hundreds of jobs to our economy.”

The Angel Tax Credit Program was created six years ago to provide an incentive for making equity capital investments in high-tech startups – software, medical device and biotechnology businesses that need cash but are considered too risky for conventional bank loans. The program has expanded beyond high tech. Now businesses developing new proprietary products or services in the fields of agriculture, tourism, forestry, mining, manufacturing or transportation are also eligible to participate.

Under the program, qualified investors receive a state tax credit of 25 percent for investing in qualified businesses. As every $1 in tax credits awarded to private investors generates $4 in investments for startup businesses, this translates into $60 million in investment in Minnesota startups.

Businesses that receive angel funding must be headquartered in Minnesota and certified to participate in the program. They must have fewer than 25 employees, with at least 51 percent of the workers and total payroll based in the state. They also must have been operating for no more than 10 years and cannot have received previous equity investments exceeding $4 million.

Source: Minnesota DEED

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