This year, once again, legislation has been prefiled that would establish an angel investor tax credit program for individuals who invest in certain small businesses.
The Greater Owensboro Economic Development Corp. has supported the legislation in years past, and EDC officials are hoping the bill will gain traction this year. It could help Owensboro’s efforts to nurture and retain high tech and life sciences start-up companies that require a lot of capital on the front end, local EDC officials said.
“We’ve been supportive of this for several years,” said Madison Silvert, vice president for entrepreneurship and high tech development at the Greater Owensboro Economic Development Corp. “It would provide incentives for qualified investors to invest in Kentucky start-up companies.”
The state incentives already are available for groups such as Lexington’s Blue Angels and Louisville’s Enterprise Angels and Louisville Angels.
This legislation, however, would provide the same incentives to individuals, and that is important for Owensboro and more rural areas of the state where there are no groups in place, Silvert said.
Generally, angel investors supply venture capital to companies that show high-growth prospects or fit well with their own business or are competing in the sector in which they made their mark.
In recent months, Daviess County showed up at No. 9 among 20 counties nationwide on web magazine BusinessInsider.com’s list of counties identified as potentially the next Silicon Valley.
Two areas the online magazine found in fleshing out the counties were broadband availability rates near 100 percent and unemployment rates beating their peers and the nation.
Silvert said recently that having a culture of entrepreneurial investment is a crucial next step for the Owensboro region in attracting and retaining high tech companies.
The EDC and its partners are providing some breaks for several high tech and life sciences companies within the framework of Emerging Ventures, an innovation center/business incubator and the office and lab space offered in the Centre for Business and Research at 1010 Allen St.
“What we hope people understand is that high tech and life sciences companies require large amounts of capital for start-up, but the jobs they create are high quality and high paying,” Silvert said. “And it’s cheaper to incentivize these companies at the start than to try to relocate a mature company.”
The legislation is important for Owensboro, said Nick Brake, the president of the Greater Owensboro EDC.
“We have a healthy interest in the high tech, biotech and food safety companies we have churning here, and this legislation could turn that interest into investment,” Brake said. “It’s a matter of legislators seeing this as a viable option.”
Brake said he thinks getting a bill passed for angel investor tax credits is a learning process to educate people about how it can help.
Rep. Arnold Simpson’s legislation is prefiled as BR322. If it is filed when the Kentucky General Assembly convenes and becomes law, it would direct the Kentucky Economic Development Finance Authority to establish the application process for small businesses to participate.Angel investors who qualified could tap into the Kentucky Investment Fund Act tax credits that would be capped at $40 million.Simpson is a Covington Democrat.
The KEDFA would have to maintain a website listing all businesses and investors and the tax credits awarded. The prefiled bill also would require the small businesses to provide an annual report, and it would allow for tax credit recapture under some circumstances.