An online portal will soon help Minnesota angel investors and entrepreneurs connect with one another.
The Minnesota Angel Network, scheduled to launch this July, is an attempt to increase the activity from early-stage investors nationwide into Minnesota-based companies. The website would also serve startups by connecting the businesses with mentors to help fine tune their companies.
Eventually, the Minnesota Angel Network would join a network that includes five other states including Wisconsin to spur more investment, said Todd Leonard, executive director of the network. Leonard has most recently worked with cleantech companies, but also served in business development with Corval Group construction and was for six years president of the medical device company ProUroCare.
The site is more evidence of a push to improve the angel investing environment in Minnesota. The state last year passed an angel investment tax credit to encourage more early-stage investments. And with a new MoneyTree Report out showing that venture investing dropped 48 percent in Minnesota last year, it’s a reminder of how critical early-stage capital can be in supporting new businesses.
The Minnesota Angel Network wants to do deals as large as $4.5 million, although the typical angel investment is around $500,000, according to research from the Angel Capital Association (PDF). That latter figure is nowhere near enough to take a company into a clinical trial or Food & Drug Administration approval process. But it can maintain a startup as it gets its product into a proof-of-concept stage and ready for a larger investment.
The portal will serve companies from any industry, though most of the state’s dealflow comes from the medical device sector. Plus, while there’s some evidence that institutional investors are less interested in device than previous years, angel investors prefer funding medical devices and software companies, according to the Angel Capital Association.
The issue of stoking angel investing is important enough that the BioBusiness Alliance of Minnesota, for the first time, has backed an initiative that isn’t purely focused on biobusiness, said Jeremy Lenz, the group’s chief operations officer. The BioBusiness Alliance is hosting the Minnesota Angel Network’s site.
Much like the funding they hope to cultivate, the Minnesota Angel Network is in its early stages. Leonard couldn’t say how much angel capital would be available through the site and declined to outline the five-state network the group would be a part of. It’s also unclear whether startup companies will have to pay to use any of the services on the site, such as the mentor program.
The Minnesota Angel Network, which is a non-profit organization, won’t seek state dollars but instead wants donors to help maintain the project. It has the endorsement of of groups including Minnesota Initiative Foundations and the Minnesota Department of Employment and Economic Development.
There’s currently a one-page website up explaining the network. By mid-February there will be a more comprehensive site, Leonard said. A series of pre-selected businesses from across all industries will be using the site in these early months as part of the beta-testing process.
Angel investors nationwide would be welcome to take part, although — at least at first — companies will be limited to those in the North Star State.
“We’re trying to be a catalyst for the state,” Leonard said. “Minnesota needs some assistance in the area of seed capital and startups. Our focus and our commitment is to Minnesota-based companies.”