HARTORD: Connecticut’s “angel” investment tax credit was expanded as of July 1 to more business types beyond technology, effectively allowing any industry to participate if the other qualifications are met.
While Governor Dannel Malloy did sign the bill, before it can be implemented Connecticut’s budget must be passed, according to officials at Connecticut Innovations.
“This new law promotes investments that provide Connecticut startups with the capital necessary to create jobs, grow, and thrive right here at home,” said Brett Broesder, co-founder and vice president of the Campaign for Tomorrow’s Jobs. “Expanding eligibility under the state’s angel investor tax credit program not only helps startups attract additional investments, but it also increases a young company’s chances of survival and growth. That’s a win-win.”
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.
The credit doesn’t apply to any investor in a company however, the investment must come from an accredited angel investor “as defined by the Securities and Exchange Commission, or network of accredited investors who review new or proposed businesses for potential investment and who may seek active involvement, such as consulting and mentoring.”
Additionally, an "angel investor" does not include a person controlling fifty per cent or more of the Connecticut business invested in by the angel investor, a venture capital company, or any bank, bank and trust company, insurance company, trust company, national bank, savings association or building and loan association for activities that are a part of its normal course of business.”
A business must apply to Connecticut Innovations (CI) for approval to receive credit-eligible investments. CI then certifies that the company meets the applicable criteria (e.g., is principally located in the state, has been in operation less than seven years, and has less than $1 million in annual revenue).