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Connecticut angel investor threshold lower with Maynard plan
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State Sen. Andrew Maynard, D-Stonington, is attempting once more to lower the minimum threshold for an "angel investor" tax credit in Connecticut to $25,000 per investment from $100,000 in hopes of helping more startup companies grow and create jobs.
"It's just another tool in the toolbox to try to get a sluggish economy in gear," Maynard said Friday.
The state senator said he has heard from several angel investors and business people that the current threshold is too high and deters people from making smaller investments that young businesses could still use.
Maynard first proposed lowering the threshold in January, but that bill did not make it out of the legislature's commerce committee. He is now asking Gov. Dannel P. Malloy and other legislators to reconsider the proposal during the General Assembly's special sessions on jobs in late October.
"There's a lot of investors who would like to do this but just don't have 100 grand," he said.
Angel investors are typically wealthy individuals who invest in startup companies in exchange for some type of equity in that business.
Connecticut's angel investor tax credit was created in 2010. It provides the investor with an income tax credit equal to 25 percent of their cash investment, up to a maximum of $250,000.
The beneficiary startup must be in the business of either bioscience, advanced materials, photonics, information technology or clean technology.
To date, $4.7 million in total investments have been made to 16 companies through the program, and $1.16 million have been issued in tax credits, according to Connecticut Innovations Inc., a quasi-public authority that administers the angel investor tax credit program and charges startups $250 to apply to become a beneficiary.
Maynard said the Malloy administration preferred to see the angel investor program complete a full year at the current $100,000 threshold before trying to lower it through his legislative bill. A year has now passed.
Malloy's spokeswoman, Colleen Flanagan, issued the following statement Friday in response to Maynard's latest proposal: "The Governor has been talking to members of both parties about their ideas to help spur job creation and get our economy moving again and thanks Senator Maynard for his suggestion."
Joe DeMartino, chairman of the Connecticut Angel Investor Forum, said in a statement that his group's members typically write checks that range in size from $10,000 to $25,000 and must bundle the money together to qualify for the Connecticut program, adding more legal and accounting costs.
"A lower threshold would see more deals get done," DeMartino said.
The beneficiary companies are also required to have their principle place of business in Connecticut, employ fewer than 25 people and have annual gross revenues below $1 million.
At least 75 percent of the employees must live in state.
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