Minnesota Tax Credit Spurs Investment, Job Growth
In this economy, everyone is looking for a plan to create more jobs.
Right here in Minnesota there's a state program that gives a tax credit to people who invest in small businesses. It's called the Angel Tax Credit, and gives people a 25 percent tax credit on whatever they invest in a startup.
"Raising capital is always a challenge for any startup company, but in this market it's much more difficult," said Daryoush Allaei, CEO of Sheer Wind in Chaska.
As of July 2, his company had received $337,000 this year from investments made through the program. Allaei says 90 percent of the people who have invested in Sheer wind have done so through the Angel Tax Credit Program.
Tom Kieffer is CEO of tech company Virteva and pushed for the program to be created because he says Minnesota was behind in helping startups.
"I think it's put more sunlight, if you will, on the opportunity of startups here in Minnesota," said Kieffer. "It's kind of put us in the game."
Two years since it started giving out credits, it's doing very well. The state allotted $12 million in credits for 2012, but the program is so popular it's expected to run out by the end of the summer. Money is set aside for the credit through 2014. By then, the state says close to $236 million of private money will have been invested in Minnesota companies because of the program.
"If there are a hundred companies in the state that are trying to create jobs and grow, if two of them become Medtronics or 3Ms of the future, it pays for itself and more," said Allaei.