ST. PAUL, MN – After unveiling a comprehensive Job Creation Bill last week, the
Minnesota House is getting to work immediately on one of the package’s signature
provisions – an Angel Investor Tax Credit aimed at funneling start-up capital to high-tech
entrepreneurs. The House Taxes Committee and the House Bioscience and Workforce
Development Division will take up the proposal at a joint hearing Tuesday, February 9 at
10:30am in Room 200 of the State Office Building.

“This legislation is a crucial tool for jump-starting Minnesota’s economic recovery,” said
the bill’s author, state Rep. Jim Davnie (DFL – Minneapolis). “For decades Minnesota
has been a leader in science and technology innovation. But Minnesota’s ability to
generate new business ventures has fallen off dramatically in recent years because our
commitment to encouraging entrepreneurship has waned. This bill builds on Minnesota’s
historic strengths and readies our state to create new, innovative business partnerships
that will grow jobs for our future.”

The need to pass Davnie’s bill is clear. The medical technology industry – one of the
state’s signature strengths – is growing at a rate of 15 percent per year nationally, but
Minnesota is barely participating in that growth. While Minnesota ranks 2nd nationally in
the number of medical device companies, a 2006 statewide assessment of Minnesota’s
biobusiness industry found that Minnesota is lagging behind other states in the number of
biotechnology startup companies. Minnesota is now 48th in new company formation and
15th in venture capital investments.

“While we’ve been talking about putting Angel Investor incentives in place to encourage
high-tech business development that will create good-paying jobs, other states have
actually been doing it,” said state Rep. Tim Mahoney (DFL – St. Paul), chair of the
Bioscience and Workforce Development Committee. “With the economy in deep
recession, states that take forward-thinking, responsible action now will be the ones that
get to compete in a 21st Century economy – everyone else will just be stuck in the back
seat. It’s time to pass this bill and get Minnesota back in the driver’s seat.”

In the last decade, Wisconsin and Ohio enacted Angel Investor Tax Credits. Both states
combined had half the number of venture deals in 2003 than Minnesota. But by 2008,
venture capital deals in those states had increased 50 percent over Minnesota. Since then
their venture deals have grown more than 210 percent, while similar venture capital
activity decreased 5 percent in Minnesota.

Rep. Davnie says this is an initiative both parties and Governor Pawlenty can support. A
new bipartisan Small Business Caucus made up of House Democrats and Republicans
have already endorsed the bill and will push for its passage this session.