The popular Angel Tax Credit Program – which has attracted over $377 million for hundreds of high-tech startups in Minnesota since 2010 – will continue to focus much of its efforts on helping businesses owned by women and members of minority groups and for businesses located in Greater Minnesota.

Half of the over $40 million in investments the program hopes to attract over the next year will be reserved for those businesses. Any leftover tax credits not tapped for investments in those businesses by the September 30 deadline will be available for investments in businesses outside those groups.

In addition, the types of businesses eligible for the program have also expanded. When the Angel Tax Credit Program was created, its focus was to provide an incentive for making equity capital investments in high-tech startups – software, medical device and biotechnology businesses. In 2015, the program expanded beyond high-tech to include businesses developing new proprietary products or services in agriculture, tourism, forestry, mining, manufacturing, or transportation.

Under the program, qualified private investors receive a state tax credit of 25 percent for investing in qualified businesses. Of the $10.7 million in tax credits allocated for 2017, $5.5 million remain available for investments in general businesses, and $4.7 million for targeted businesses.

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, and all employees must earn at least $20.44 per hour. The business also must have been operating for no more than 10 years and cannot have received previous equity investments exceeding $4 million.

New for 2017

Investors interested in the Angel Tax Credit Program can participate through the new MNvest crowd sourcing program. Businesses utilizing service contracts must meet the requirement that 51% of the value of such contracts be performed in Minnesota.