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What our members have to say...
"Well, you do not get any more sceptical than me, especially after being 'burnt' by a couple of fund finding pretenders as well as no responses from Business Angels of Melbourne Australia in over 6 months. But in just the time it took to approve my posting and send the confirming email to me, I had 2 replies from interested parties in what I have to invest in and be a part of. The fees are also pretty reasonable and if the responses are genuine and or ongoing then the money is 'cheep at twice the price! "
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Dean Richardson - PNG Alluvial |
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Iowa tax credit aims to rev up early investors
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Iowa entrepreneurs could attract as much as $10 million each year in investment under a bill that proposes making $2 million in tax credits available annually for early-stage investors.
House File 688 calls for providing investors with a 20 percent tax credit, based on their investment in startups or community-based seed funds.
Bill supporters would like to boost the tax credit amount by $10 million annually, so an additional $50 million could be available for early-stage investment.
The tax credits would come from the Iowa Department of Economic Development's existing pool of $120 million annually.
The amendment, not yet filed, could boost efforts to begin a large statewide seed fund, state leaders say.
The Iowa Innovation Council, a group of business, university and state leaders, has said it hopes to create a seed fund with as much as $100 million from private investors to help startups and existing companies develop new, innovative products. The tax credits would help attract investors to the fund, leaders say.
Economic development leaders seek to spark innovation-driven companies in Iowa, along with traditional efforts to grow existing businesses. The startups typically are fast-growing, adding high-wage, highly skilled jobs.
Iowa ranked 38th in the nation last year in innovation, bumping up from its dismal 42nd place in 2009, according to the Kauffman Foundation. It also ranks low in attracting venture capital.
Leann Jacobson, president of the Technology Association of Iowa, said the bill's $2 million in tax credits could help a lot of struggling Iowa startups.
"The bill is critically important to entrepreneurs and innovators in attracting angel investors," said Jacobson. "Finding early-stage funding is a challenge for a lot of companies in Iowa."
Early-stage companies, those just developing products, typically look to "friends, families, individual angel investors and angel investor groups" for financing, she said. "They're just getting off the ground. It's discovery, proof of concept, product design."
It's typically easier for companies that have moved onto producing products and developing customer networks to attract venture capital investment.
While venture capital markets in Iowa have improved somewhat over the past five years, Jacobson said, "there's still really a gap in financing for those early-stage companies." Iowa Innovation Council leaders call that financing gap the "valley of death" for startups and hope to help close it with the statewide seed fund.
The tax credits reduce some of the risk to angel investors, Jacobson said.
Iowa had a tax credit program for startup investment in 2002, Jacobson said, but the program ran out of money in 2007.
She said the struggle to find financing can result in slow development of new products or push companies out of Iowa.
The tax credit proposal comes as Iowa is seeing a "growing momentum of startups," thanks to business incubators and accelerators, Jacobson said. "This tool has never been more important in Iowa to help develop those companies."
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