DULUTH, Minn. (AP) — John Foucault looked long and hard to find "angel investors" to help take his Duluth software development company to the next level.
He needed capital to develop new products that would make Points North not just a regional player, but a national one. And getting a loan through traditional financing is unlikely for software firms whose product is intellectual, not tangible.
"Banks are not interested," he said.
Moreover, the lack of a formal system made finding these anonymous angel investors difficult. But by word-of-mouth, Foucault eventually found a local "angel" who came on board. And that has made all the difference.
"The capital allowed me to build these products which got the attention of a wider audience," said Foucault, Points North's CEO/president. "It allowed us to increase our sales 25 to 30 percent with national customers as opposed to regional customers."
But the formation of the Minnesota Angel Network, announced recently, will make it easier for promising young businesses like Points North to hook up with anonymous investors who help them get off the ground. The statewide web-based portal is hosted by the BioBusiness Alliance of Minnesota.
And it has gotten those involved in fostering business development in the Twin Ports region excited.
"Angel investing is a huge tool that we need in this region," said CEO Rob West of Area Partnership for Economic Expansion. "The entire Northland has suffered because we haven't had access to early-stage capital. And this network provides this opportunity. And that is huge."
Eighty percent of all new jobs are in businesses that did not exist five years ago, he noted.
"So spawning new businesses and entrepreneurs is absolutely critical to the growth of our region," he said. "Having this network is a huge opportunity and a step forward to access capital and create jobs in our region."
The network, which goes live July 1, already has 350 accredited investors listed, West said. Its formation comes on the heels of the state Legislature's passage last year of an angel investment tax credit of up to 20 percent.
"It goes a long ways to encourage people to put money into early stage businesses," West said.