Minnesota’s Angel Investment Tax Credit, which was re-instated earlier this year by the legislature and Governor Walz, has $350,000 remaining in available tax credits for 2019. Following a year without the Angel Investment Tax Credit—for the first time in a decade—the Minnesota High Tech Association, along with other stakeholders, advocated strongly during the 2019 Legislative Session for re-instating the Angel Investment Tax Credit program. Thanks to partners in the legislature and Governor Walz’s administration, this effort was successful.

The program, which is administered by the Department of Employment and Economic Development, provides investors with a 25% tax credit on qualified investments in Minnesota-based technology startups. These investments help to invigorate innovative companies that have the potential grow right here in Minnesota.

Since the start of the Angel Tax Credit program in 2010, $421 million of private investment in Minnesota companies has been tied to the credit. In 2017 alone—the last year the credit was available—101 Minnesota startups benefited from the Angel Tax Credit. That’s 101 businesses—from biotech to medical devices to software—that have the potential to grow and create high-paying jobs in Minnesota. The program supports companies in high-paying industries like technology, with average annual wages of nearly $98,000—which is more than 75% higher than the average wage in Minnesota of $55,390.

The Angel Tax Credit is a successful tool for helping emerging companies raise the capital they need to grow. For example, according to data from PwC and MoneyTree, in the eight years before the Angel Tax Credit was established, Minnesota-based companies raised $328.6 million in seed- or early-stage funding rounds—funding rounds most likely to be tied to the Angel Tax Credit. In the eight years following enactment of the Angel Tax Credit, Minnesota-based companies raised $608.5 million in seed- or early-stage funding rounds.

There is a gap in program funding, however, for 2020. The legislature funded the Angel Investment Tax Credit program at $10 million for 2019 and $10 million for 2021, but did not fund the program for 2020. As the legislature reconvenes in February 2020, we encourage the legislature and governor to recommit funding to the Angel Investment Tax Credit program for 2020.