The Arizona Legislature passed a bill it hopes will entice angel investors to buy in to early-stage technology companies in the state. The angel-investment bill, now on the governor’s desk, would offer a tax credit to individuals who invest $25,000 to $250,000 in qualified companies.
Individuals who chose to invest in tech companies would be eligible for a 30 percent credit on state taxes over a period of three years. Those choosing a biotech or rural company would receive a credit for 35 percent.
Todd Bankofier, president of the Arizona Technology Council, told the Arizona Republic that the bill is “a big win for the entrepreneurial community.”
To be eligible, early-stage companies must have no more than $2 million in assets, and must have an office in Arizona with at least two full-time employees. The bill stipulates that the angel tax credits would be awarded on a first-come basis and capped at $20 million over a five-year period.
Restaurant, retail, real estate companies, as well as those that furnish other health and personal services are excluded from eligibility.
The Arizona Commerce Department will be given charge for overseeing the tax-credit program, and the Arizona Technology Council will seek to educate potential investors and companies about it.
The legislation was originally recommended in late 2003 by the capital formation committees of both Arizona’s Bioscience Roadmap and the Governor’s Council on Innovation and Technology. Similar legislation introduced during the 2004 session was defeated.
For more information:
“Start-ups may win big,” Arizona Republic, 05/10/2005