Random Thoughts on the Heels of Another Cold and Snowy Winter Day…

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Is it just me, or has the financing activity for early stage companies picked up recently? I don’t have any empirical data to support that observation, just some anecdotal evidence. We are working on several financing transactions right now, including a later round preferred offering (where the largest investor is reinvesting and committing significant new capital), two series A financings, two convertible debt financings, and several other private financings, all of which (fingers crossed) will probably close in the next few weeks. 

I haven’t noticed any particular trends with this activity. From an industry standpoint, the companies raising money are fairly diverse (clean tech, medical device, nanotechnology, health care IT, health and wellness, financial services and others). The investors in these deals are also fairly diverse, including a large public company, venture capitalists, angel groups, individual angel investors and friends and family. The Minnesota angel tax credit is being used in connection with some of these offerings, although not for all of them. That could be playing a key part in this recent uptick in activity, as investors and companies try to close deals while the angel tax credit is still available.

Speaking of the angel tax credit, as of last week only $5.4 million in credits remain for 2014.  If you’ll recall, the legislature allocated $12.2 million for tax credits this year, but as of February 14th, $6.8 million had already been allocated to qualified investments. At that rate, all tax credits will be fully allocated by the end of March. Some of the early allocations are likely attributable to investments that otherwise would have been completed at the end of last year and were postponed to take advantage of this year’s available credits (last year’s credits expired in early May). Obviously, if you are hoping to take advantage of the angel tax credit this year, you should plan to have your investment completed in the next few weeks.

Nice obituary in Sunday's StarTribune about the life of legendary entrepreneur Horst Rechelbacher, founder of Aveda and Intelligent Nutrients. I find rags-to-riches stories such as his inspirational. His life should provide good lessons to all aspiring entrepreneurs.  

The Star Tribune also ran a nice story about the Abdo family in Monday’s paper. The Abdos have had several successful businesses and are well known in the local entrepreneurial community. As a professional who sometimes struggles to balance work and family life, it’s warming to read a story about a family that is doing it right.  

Finally, if you’re like me and just a little tired of this winter, there is some good news on the horizon. The Twins pitchers and catchers are reporting today (in presumably a snowless Fort Myers), with the rest of the team scheduled to start spring training at the end of the week.  Baseball and warm weather will be here before we know it!

 

Topics:  Angel Investors, Startups, Tax Credits, Venture Funding

Published In: Business Organization Updates, General Business Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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