The Minnesota Angel Tax Credit issued over $7 million dollars in tax credits for new investments, yet only created 47 jobs according to the state legislature early in March, tension between whether or no these numbers equal success .
"47 jobs may not seem like a lot," but the program is a "long-term investment." said Minnesota Department of Employment and Economic Development spokesman Monte Hanson to Minneapolis/St. Paul Business Journal.
The program that started in 2010 have already lead to large returns for new companies, and companies that are starting new investments. According to the Pioneer Press, 67 companies raised $28 million using the tax credit.
Many may think this is a large amount of money, but it doesn't compare to the amount made by large companies. The tax credits are essentially used to help entrepreneurs to help pitch business ideas to investors in hope to getting contracts within Minnesota, and therefore creating new jobs.
However with 47 jobs created, $7 million dollars seems a hefty price to pay. The BioBusiness Alliance told MinnPost that the numbers show that companies are getting bigger but the credits are not creating enough new companies. The alliance also told MinnPost that large firms may be purchasing startups in other countries and are likely to keep expanding there rather than in Minnesota.
This could mean that the tax credits are not making as big an impact in Minnesota as intended, but many business owners stand by the credits as benificial.
The tax credit "brings people to the game. That's the most important thing," said Steve Mercil, CEO of Rain Source Capital, a St. Paul-based firm that runs angel investor funds and helps connect new companies and investors told Pioneer Press
Time will only tell if these tax credits will create more jobs in the coming years, however it may be the savior for many new companies
The venture capital firms "can't afford to take the risks they used to," Mercil said to the Pioneer Press. "That's why states have been driven to offer credits (to angels) -- because the gap has gotten bigger."