It’s been a tough slog for early stage capital, lately.
Affinity Capital Management and Triathlon Medical Ventures have suspended efforts to raise a $10 million seed fund in Minnesota. And the $1 billion fund biotech investor Steve Burill promised to raise for the Elk Run BioBusiness Park two years ago has yet to materialize. (Burrill has reportedly lowered his goal to $250 million, which is still a lot of money.)
But alas, there is some good news (for a change)! The state Department of Employment and Economic Development (DEED) has awarded $573,000 in tax credits during the first full month of Minnesota’s shiny new angel investment tax program.
That doesn’t sound like a whole lot when you consider the total pool of credits for 2010 stands at $11 million. But since the program only launched in late July, $573,000 represents a 12 month run rate of $6 million, more than half the pool.
“That’s pretty good,” said Pete Birkeland, vice president of Rainsource Capital, an angel investment network based in St. Paul. “I’m surprised.”
Remember, the state awards the credits only to investors whose money actually ends up in the bank accounts of startups. In other words, the credit is succeeding in pushing investors to write checks — a rarity these days. Since the state grants a 25 percent tax credit, $573,000 theoretically means investors collectively spent about $2.3 million.
What’s more, the credits seems to be encouraging the creation of new angel investors. Take a look at the list of funds DEED has certified, and you will see, other than Twin Cities Angels, two new groups: Ninety-Seven Twenty-Three LLC and Wildwood Investors.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Of the 36 individual investors DEED has certified, I recognized only one: Andrew LaFrence, a board member of the University Enterprise Laboratories in St. Paul.
Bottom line: for a brand new initiative, the angel credit program is performing exceedingly well, which is more than I can say for the early stage environment in Minnesota.
