Governor Malloy signed a bill into law that supports small business growth in Connecticut by allowing investments in additional types of businesses to qualify for the state’s angel investor tax credit program. The new law opens up the program beyond specified technology industries, making it easier for small businesses to attract investments.
Danbury state Representative David Arconti says it basically incentivizes accredited investors to consult and mentor prospective small business owners. The investors contribute to a fund meant to establish support toward the growth of small businesses.
Arconti says getting the capital to start a small business is often difficult, because banks are still not lending at levels they did before the recession. He says the angel investment tax credit program bolsters other initiatives, like the Small Business Express Program.
In Connecticut, angel investors who invest at least $25,000 in approved businesses are eligible for a personal income tax credit equal to 25 percent of their investment, up to $250,000. A business must apply to Connecticut Innovations for approval to receive credit-eligible investments.
The new law does not have a fiscal impact because it does not increase the cap on the total amount of credits available under the current program.
Startups funded by angel investors are nearly 25 percent more likely to survive, and on average grow employment by 40 percent over non-angel funded startups, according to a study from Josh Lerner of Harvard Business School and Antoinette Schoar of the MIT Sloan School of Management.