Technology Start-Ups and Federal Tax Cut
Angel investors will get a federal tax cut for investing in government-funded technology Start-ups under proposed legislation. Five members of Congress %26ndash; including Jared Polis, the founder of Proflowers.com and Bluemountain.com and a first-term Democrat from Colorado %26ndash; are proposing a new tax break that would provide a 25 percent credit for an equity investment in a company that has already qualified for a federal research and development grant program for small businesses. Under the legislation, introduced July 15 by Rep. Chris Van Hollen, a Maryland Democrat, the credit’s value would be limited to half the size of the Small Business Innovation Research award. (The nearly 30-year-old SBIR spreads federal research largess to small businesses, requiring federal departments and agencies that spend more than $100 million in grants for outside research to set aside 2.5 percent of that for small businesses. Initial grants usually equal about $100,000 to assess the feasibility of an idea and then, at the next stage, grants of $750,000 are provided for research and development.) The bill, called the Innovation Technologies Investment Incentive Act, is the latest in a string of local, state, and federal incentives to funnel private money toward technology ventures. It’s modeled partly on Van Hollen’s home state of Maryland’s biotech tax credit, which offers investors a tax break valued at 50 percent of the eligible investment. (The state says the credit has helped it leverage $50 million in investment for biotech companies that are less than 12 years old and have fewer than 50 employees.) The proposed program will be capped at $500 million nationally. The other 3 members of Congress who joined Hollen and Polis in introducing the bill: Maryland Rep. Dutch Ruppersberger, Pennsylvania Rep. Allyson Schwartz, and Minnesota Rep. Betty McCollum, all Democrats. The bill is pending in the House Ways %26 Means Committee. How would the legislation help Start-ups? “If I get an immediate tax credit, I get an immediate return. I know I would increase my investing if there was a tax credit,” angel investor Stephen Spinelli, co-founder of Jiffy Lube, told Inc. earlier this year.Don Rainey, a general partner with Grotech Ventures, a venture capital firm based in Vienna, Virginia, told the Washington Business Journal that linking the tax break to the SBIR award is a shrewd move. “It takes all those federal dollars that will be spent anyway, and causes more private dollars to complement that investment,” he said. He added: “Start-ups tend to create more Start-ups, particularly successful ones. People go into a Start-up, see its success, learn what you need to do and they start companies.”
Venture capital – Small business – Grotech Ventures – Don Rainey – Business
If the job market doesn’t turn around soon, many recently laid-off workers are prepared to take matters into their own hands. According to a new CareerBuilder survey, more than a quarter of workers laid off in the past six months said they are considering starting a business of their own.The survey of nearly 4,500 workers also revealed that 96 percent of those who started their own small business in the last year have another job besides their Start-up. A sample of the businesses ranged from bakeries and board game design to scented candles and sports camps for kids.”The intellectual capital that companies were forced to lay off over the last 18-24 months was substantial and it is not surprising that many individuals are using their business skills to create their own opportunities,” said Brent Rasmussen, president of CareerBuilder North America, in a press release.The same survey %26ndash; which also included some 1,400 hiring managers %26ndash; showed many small businesses plan to hire new employees during the second half of 2010.Nearly a third of small businesses with 500 employees or fewer are planning to add to their staff before the end of the year. Twenty-one percent plan to add full-time positions and 11 percent expect to add part-time help. Another 6 percent will bring on private contractors.Among small businesses with fewer than 50 employees, nearly a quarter (24 percent) plan to hire in the second half of 2010.Small businesses have accounted for 64 percent of new jobs in the U.S. over the past 15 years, according to the U.S. Small Business Administration. Small firms currently employ more than half the country’s entire workforce, says the SBA.Small business hiring can be seen as a sign of economic recovery. Meanwhile, a separate %26ndash; and global %26ndash; study shows small business confidence around the world is rising. What HSBC calls the “index of confidence” at small and medium-sized businesses in 21 markets rose to 118 in the second quarter from 111 in the fourth quarter of 2009. In North America specifically, the index jumped from 107 to 119.
Small business – Business – United States – Small Business Administration – Employment
