Maybe Minnesota is doing better than we thought in attracting venture capital.

Minnesota has always lagged California and Massachusetts -- the nation's two venture capital powerhouses. But there was a nagging sense that Minnesota lagged some of its Midwestern neighbors, too.

Apparently not so. Now comes Jay Hare, a partner at PricewaterhouseCoopers who focuses on early-stage venture investment deals, to say we may be better than we think.

Minnesota has been gaining on Michigan, Ohio, and Wisconsin in recent years among Great Lakes states when it comes to the number of venture capital-funded deals and the number of dollars invested, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association.

"What we found was a bit of a surprise to me when we took the data down to a per-capita basis," Hare said. "Minnesota held a very strong position across the 15-year period." Specifically:

•Minnesota has been No. 1 out of the eight Great Lakes states in venture capital raised per capita in 14 of the past 15 years, including the first two quarters of 2009.

•Since 1995, Minnesota has remained in the top four of the Great Lakes states, based on amount of venture capital funding received, the number of deals and the number of companies invested in on a yearly basis. For these purposes, the Great Lakes region includes Minnesota, Illinois, Pennsylvania, Michigan, Ohio, Iowa, Wisconsin and Indiana.

"We didn't want to go coastal," said Hare. "We could have thrown in New York, but we stuck to ... the Midwest and a few other states to the east."

Minnesota has about 5.2 million citizens, according to the U.S. Census. That makes us the seventh-largest state, ahead of only Iowa with 3 million, among the eight states. Illinois is the largest, with 12.9 million people, followed by Pennsylvania with 12.4 million.

Wisconsin, our nemesis that's lured several promising start-ups across the border with its aggressive angel tax credits, is the sixth-largest in the group, with 5.6 million residents.

However, when the venture capital invested per state is divided by the number of citizens, Minnesota has taken the cake each year since 1995 except for 2000, when Minnesota attracted $158 per resident, topped only by Pennsylvania, which raked in $168.

In 2008, Minnesota start-up companies attracted $433 million in venture capital, or $83 per resident. By comparison, Indiana took in $42, Wisconsin took in $11 and Iowa took in $7.

In 2000, the biggest year for venture capital funding, when $5.7 billion went to start-up firms nationally, Pennsylvania got $168 per resident to be No. 1 among Great Lakes states per capita. Minnesota was second with $158 and Illinois was third with $116. Wisconsin was sixth at $21.

The good news: The stock market is up this year and venture capital investing, anecdotally, is picking up after an anemic first half. Venture investors in the Great Lakes states parted with only $916 million during the first six months of the year.

We should be in for a bigger 2010 and 2011 if past is precedent, following recessions and downswings.

That said, Minnesota is still living largely off its success in life sciences and medical technology, rooted in the big medical device makers like Medtronic and St. Jude.

"The Twin Cities is still one of the three markets in the country, along with California and Massachusetts, for med tech," Hare said. "And med tech is probably 40 to 50 percent of Minnesota venture investing over last 15 years."

Mercanti merges

Imperial Capital, a Los Angeles investment bank, has acquired Minneapolis-based Mercanti Group, which focuses on mergers and acquisitions. Terms were not disclosed.

"Imperial Capital provides us the ability to greatly expand our client offerings with the firm's significant investment banking, capital markets, institutional research and sales and trading capabilities," said Jim D'Aquila, who founded Mercanti in 2001.

In addition to D'Aquila, a veteran investment banker in Minneapolis and Los Angeles for 25 years, most of the 13 Mercanti professionals are expected to join Imperial's Twin Cities operation, including Minneapolis-based managing directors Randy Bort, Tom Clerkin, Brian Wood and senior vice president Dave Remick.

With the acquisition, Imperial Capital will have about 170 employees in Los Angeles, New York, San Francisco, Houston, Boston and Minneapolis.

Jason Reese, Imperial Capital's chairman and CEO, said "the Mercanti Group will add significant depth to Imperial Capital's investment banking group ... particularly in the Consumer sector."

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com