New KY Bill Helps Angel Investors Support Startup Companies

 

Startup companies face many challenges. One of the primary concerns most startups face is access to capital. On July 23, Kentucky Governor Steve Beshear visited Covington-based business accelerator program, UpTech, and signed a bill that will increase access to private capital for startup companies.

Under the new legislation, individuals known as “angel investors” who provide private capital to startups may be eligible for significant tax credits. If the individual invests in a company located in a high unemployment county, the tax credit can be as high as fifty percent. If the individual invests in a company located elsewhere in Kentucky, the credit can be as high as forty percent. Previously, angel investors were only eligible for a tax credit if they worked with a fund manager. This legislation was an important step in fostering Kentucky’s startup community, especially in areas such as Northern Kentucky, where more competitive tax environments such as Cincinnati held a competitive advantage.

The legislation may also help attract out-of-state investment. Out-of-state investors are also eligible for the tax credit, even though they are unlikely to have Kentucky tax liability. Nonetheless, a Kentucky taxpayer can purchase the tax credit, which will allow the out-of-state investor to recoup a portion of the investment. The bill, an expansion of the Kentucky Investment Fund Act, will go into effect in 2015.

“Angel investors play a key role in fostering the successful businesses of tomorrow. With this added incentive, Kentucky should see an increase in startups and startup investment. Startups and investors interested in taking advantage of this new opportunity should consult closely with experienced legal counsel,” said Strauss Troy attorney Kris Brandenburg.

Click here to read an article from the Cincinnati Business Courier for more information about the bill.