Private investors are crucial to the success of high-growth startups that create jobs and tax revenue. Kay Koplovitz describes a new way to encourage them
While Washington wrestles with a jobs bill and a bill to nurture small businesses with tax credits, hiring incentives, and the like, it is neglecting to address the fundamental engine for economic growth: private investment in early-stage companies with big potential.
I propose that the federal government tag along on the tax incentive programs already in place in 30 states meant to stimulate this kind of investment. These programs' purpose is to encourage the development of high-growth business, create jobs, and ultimately return greater tax revenues to the states. The federal version would do the same but increase the scale.
There are 225,000 angel and seed-capital investors in this country, according to Angel Capital Assn. They, not government, will drive the creation of innovative industries that need capital before revenue and certainly before profitability. No bank will lend to these pioneering entrepreneurs, no proposed tax-credit program will help them, as these early-stage companies have losses on the bottom line and no profitability on which to take the small business incentives now proposed.
To read the full, original article click on this link: A Federal Tax Credit for Startup Investors - BusinessWeek
Author: Kay Koplovitz
