Developing Funding Opportunities in Montana

Most people who are already making angel investments would gladly accept a tax cut for doing deals they would have done anyway. The problem is, this bill is not good public policy.

Advocates for more Wisconsin-sponsored venture funds, however, say the biggest risk is failing to create them at all.

The Rural Microbusiness Investment Credit (RMIC) is designed to generate investment in both startup and expanding rural microbusinesses by providing a federal tax incentive, in the form of a 35 percent tax credit, to entrepreneurs who invest in their businesses.

A unique fund giving both private and institutional investors the opportunity to access diversified, early-stage, game-changing entrepreneurial company investments that would otherwise be available only to experienced angel investors.

The new tax credit, signed into law on April 1, gives a 25 percent tax break to individuals and investment funds that provide as much as $4 million in seed money to businesses focused on high technology or new proprietary technology.

A program in New Mexico provides a model for other states that would like to grow their local investment communities.

"I’m impressed with what they do as a group, they are wonderful to work with," said Patel. "Most are successful business people and the expertise they bring to the table is as important as their financial backing."

Essentially, the state would target the insurance premium tax for the investment program. Johansson said insurance companies would pay their tax liability for future years up front and receive a credit in later years. The tax credit would not have an impact on the state’s budget until 2015.

“Today we’re announcing an administrative and legislative initiative we call InvestMaryland, aimed at creating a public-private partnership to fuel venture capital investment in our Innovation Economy, such as Maryland bioscience companies,” said Governor O’Malley. “We believe this initiative can spur the creation of thousands of jobs and secure $100 million in venture capital to unlock hundreds of millions and perhaps billions in economic activity.”

For example, an investor who sinks $100,000 into a tech startup would receive a $25,000 credit on his or her state taxes the following year. If the credit exceeds the investor’s tax liability for that year, it can be carried over to later years.