The Angel Investor Tax Credit program, which NJTechWeekly.com covered here, will finally launch on July 1, 2013, according to a statement from the New Jersey Economic Development Authority (EDA) on June 11, 2013.
Approved on June 11 by the EDA board, the program is a result of the New Jersey Angel Investor Tax Credit Act, which Gov. Chris Christie signed into law in January 2013. The program’s stated objective is to spur job creation and growth in the state’s current and next generation of high-skill, high-wage emerging technology industries.
The Angel Investor Tax Credit program will provide credits against N.J. corporation business tax or gross income tax for 10 percent of a qualified investment in an emerging technology business with a physical presence in New Jersey that conducts research, manufacturing or technology commercialization in the state.
The program, which will be administered by the EDA in consultation with the N.J. Department of the Treasury, will be available to taxpayers who have invested or will invest in an emerging technology business in calendar year 2012 or thereafter.
To qualify, the tech businesses in which the angel invests must employ fewer than 225 employees, 75 percent of whom must work in New Jersey. Businesses must also do at least one of the following in New Jersey: incur qualified research expenses, conduct pilot-scale manufacturing and commercialize an eligible technology.
Eligible technologies include advanced computing, advanced materials, biotechnology, electronic devices, information technology, life sciences, medical devices, mobile communications and renewable energy technology.
Credits will be capped at $500,000 per tax year for each qualified investment.
In the program details, the EDA notes that “up to $25 million of Angel Investor Tax Credit may be allocated per calendar year. If the cumulative credits claimed by taxpayers exceed the amount available in a given year, then credits will be applied in the order in which applications are received and deemed complete, starting on the first day of the succeeding calendar year in which Angel Investor Tax Credits do not exceed the amount of credits available.” Applications will be available July 1, 2013, and particulars of the application process will be released then.
Other program details can be found here.
Reaction to the EDA’s announcement was swift and mostly positive, although some in the investor community NJTechWeekly.com spoke with, on background, complained about rumored exorbitant fees and paperwork associated with the application process, which has not yet been set.
And several investors said they believed the tax break does not go far enough to really stimulate investment in N.J. Some said they believed the tax credit, if proved successful, could be expanded.
Hopeful for the success of the program, Katherine O’Neill, speaking for Jumpstart New Jersey Angel Network told NJTechWeekly.com, “Jumpstart as an angel investment group is very, very happy that the state has an Angel Investment Tax Credit program and we are hoping it can be expanded in future years to reflect the risk in this particular space. Anything the state does to encourage further investment in young companies is well worth it. We look forward to spending this money.”
David Sorin, managing partner at SorinRand (East Brunswick), a N.J. law firm with many emerging tech companies as clients, viewed the program in a positive light.
Sorin stated, “The Angel Investor Tax Credit program is one in a series of high-profile initiatives of the New Jersey Economic Development Authority intended to promote investment in innovative and entrepreneurial enterprises in N.J. — the very companies that provide high-value, high-paying jobs, create new wealth, increase productivity and advance the standard and quality of life through [the] development and delivery of new products and services.”
Mario Casabona, angel investor and founder of the accelerator TechLaunch (Montclair) noted that this program, in addition to others such as the EDA Edison Innovation Funds, continues to “give our science and technology community the acknowledgment and attention needed.
“Angel investors are the highest risk takers in the funding ecosystem, and thus a tax credit such as this may ease some of the financial risk and pain. We are now among the few states that provide this opportunity. I expect this act will incentivize investors, whether angels or venture capitalists, to invest in seed and early-stage science and technology small businesses in New Jersey,” added Casabona.
Speaking from the point of view of the entrepreneurial community, Carlos Abad of Financial Principles (Fairfield), one of the organizers of the recently established Madison Tech Meetup said, “It is great to see N.J. create some incentives that can help entrepreneurs. Universities are creating or expanding entrepreneurial programs, tech meetups are rapidly growing throughout the state and there are many other signs that show a blossoming N.J. entrepreneurial community. N.J., the home of Edison and Bell Labs, should be part of the national entrepreneurial conversation. Hopefully these incentives can help accelerate this process.”