Hartford Business Journal

6 Hartford Business Journal • July 15, 2019 • www.HartfordBusiness.com FOCUS: Banking & Finance By Matt Pilon mpilon@hartfordbusiness.com C onnecticut lawmakers have sent a confident message to the state's startup ecosystem, according to some of the speculators who help fund it. Angel investors are cheering the five- year extension of a tax credit they say makes it more attractive for them to make early stage bets on area startup companies, in turn giving those emerg- ing firms a better shot of growing here. Tucked into the state budget that Gov. Ned Lamont signed late last month is the third extension of the an- gel investor tax credit program, which lawmakers created in 2010. Notably, it's the longest extension in the program's history (previously it was renewed for only two or three years), and it raises the annual cap on the cred- its issued from $3 million to $5 million, the largest threshold since 2014. "What's really great about that is it shows a commitment to the startup community," said Mary Anne Rooke, president of the Connecticut Angel Investor Forum, which has approxi- mately 45 accredited-investor mem- bers, mostly Connecticut residents. The forum receives about 300 funding applications annually and chooses a handful of startups to pitch its mem- bers at monthly meetings. The tax credit provides Connecti- cut a competitive edge, Rooke said. It helps grow the number of angel investors who are active locally, and also helps attract outside angel invest- ment, giving local startups a wider funding base. "Without this tax credit, it's hard to break into other angel money," she said. "It helps us build their businesses and the ecosys- tem." Just over half of U.S. states have something simi- lar to an angel in- vestor tax credit, according to the U.S. Angel Capital Association. Another per- ceived benefit of the longer exten- sion period is it gives more certainty to investors and companies. It might even make the dif- ference between a company moving to the state or not, Rooke said. Craig Mullet, a Guilford resident who is also a board member of the angel forum, told lawmakers in March that it's a small investment of public dollars that makes a real difference for start- ups' ability to raise money. "The tax credit's proportionally small potential … cost has a disproportionate impact in helping early stage Connecti- cut companies launch and grow," Mul- lett wrote. "I have presented on angel investing ecosystems around the world and have pointed to the tax credit as a way that Connecticut encourages angels to back local startups." Extending the tax credit for a longer period of time could open up the invest- ment floodgates to some extent, said Matt McCooe, CEO of Connecticut Innovations (CI), the quasi-public state entity that ad- Startup Capital CT angel investors get a boost from state budget CT angel investor tax credits issued IMAGE | PIXABAY Connecticut Innovations CEO Matt McCooe said the state's angel investor tax credit gives the state a competitive edge. PHOTO | HBJ FILE Source: Connecticut Innovations 2011 2012 2013 2014 2015 2016 2017 2018 2019 $0 $0.5 $1 $1.5 $2 $2.5 $3 $3.5 Tax credits issued (in millions of dollars) $1,036,623 $2,540,899 $3,415,399 $1,690,764 $2,186,995 $1,393,971 $2,375,417 $1,755,750 $2,458,545 $1,036,623 $2,540,899 $3,415,399 $1,690,764 $2,186,995 $1,393,971 $2,375,417 $1,755,750 $2,458,545

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