DEED: Angel Tax Credit fuels job growth and new investment to Minnesota
Angel tax credit fuels job growth and new investment to Minnesota
Independent report credits program for new jobs and $107 million in investment
ST. PAUL — The Angel Tax Credit leveraged more than $107 million of private investment in Minnesota technology based startup companies and supported more than 500 jobs from 2010 to 2012, according to an independent evaluation of the program by the Economic Development Research Group (EDRG).
The Minnesota Department of Employment and Economic Development officially launched Minnesota’s Small Business Investment Tax Credit (“Angel Tax Credit”) in July 2010, which was designed to encourage early stage investment technology-based businesses in the state. Statute required the Minnesota Department of Revenue to contract with an independent consultant to complete an evaluation of the program after three years.
“The Angel Tax Credit program has a proven track record of success in assisting promising startups in their early stages of development,” said DEED Commissioner Katie Clark Sieben in a news release. “This independent study highlights a number of positive ways the Angel Tax Credit is impacting Minnesota’s small business community.”
The independent evaluation measured investment attributable to the Angel Tax Credit and found from 2010-2012, there was a link from the tax credit to 512 jobs. The study forecast for 2013-2020 anticipates the impact will grow to an estimated 635 jobs supported by the Angel Tax Credit.
Impact on investor knowledge and behavior:
The Economic Development Research Group (EDRG) also found that the Angel Tax Credit’s had a positive impact on investor knowledge. Thirty-four percent of investors responded in the survey that without the Angel Tax Credit, they would have made a smaller investment. Forty-eight percent responded that they would have made no investment without the Angel Tax Credit.
New investment in Minnesota:
Participation in the Angel Tax Credit program also exposed new investment opportunities in Minnesota. Among qualified investors responding to the survey, 68 percent reported that the program increased their awareness of investment opportunities in the state, and 29 percent reported an increase in awareness of investment opportunities in Greater Minnesota.
According to DEED, from July 2010 through January 2014, the Angel Tax Credit program has certified 767 businesses, 2,160 investors, 82 funds, and generated $52 million in tax credits distributed, which leveraged a total of $208 million of investment in certified businesses. Of the program’s $12.2 million in credits available for 2014, $6.5 million have been allocated.