A Carefully Targeted Tax Break to Boost Innovation Could Be Worthwhile
Clarence Odbody, the great-hearted but bumbling angel who saves George Bailey from himself in the post-war Christmas classic It’s a Wonderful Life, counted on Jimmy Stewart’s character to earn Clarence his “wings.” Angel investors, those wealthy individuals who bankroll the innovative entrepreneurs at the earliest stages of company creation, don’t drop from heaven like Clarence, but they do save entrepreneurs struggling to turn their new ideas into successful companies and in turn count on the entrepreneurs they support financially to get past the nearly suicidal hours required to create explosive new companies—think Google or Genentech—which create the majority of new and well-paying jobs in the United States.
Angel investors aren’t in this game to earn their wings, of course. Wealth is the goal, but so too is job creation for these mostly local serial entrepreneurs who thrive on the thrill of building companies that help their communities grow and prosper. Problem is, these and other very early-stage investors in innovation companies—including the inventors and founders of these new companies and their friends and family who put up their first rounds of cash—often don’t reap the rewards of their early risk taking. The reason: Once a young company reaches a certain point of success it usually stumbles as it tries to bring its new product or service to market—at the very time it needs lots more money to grow.
Original Article: Angels Sometimes Need Help, Too