Gov. John Carney on Thursday signed bill establishing a refundable tax credit for angel investors who support innovative startups.
“We should do everything we can to support Delaware’s innovators and entrepreneurs who are leading Delaware’s new economy, and this law will help connect our most talented entrepreneurs with the resources they need to be successful,” said Governor Carney. “Delaware is already a hub of innovation, and this tax credit will help to encourage investments in innovative, Delaware-based small businesses.”
The Angel Investor Job Creation and Innovation Act creates a tax credit worth up to 25 percent of investments in a qualified startup or small business based in Delaware. The Delaware BioScience Association, a life sciences industry group, has spoken out in support of the law.
“We believe that keeping innovation created in Delaware in the state is a key component of future success for the life sciences industry,” said Helen Stimson, president and CEO of Delaware Bio. “We are delighted to have this new Angel Investor Tax Credit program to entice investors to support our startup companies. This benefit coupled with Delaware’s attractive R&D tax credit program provides key benefits needed to keep our innovators in the state.”
To meet the guidelines, companies must employ fewer than 25 employees, pay annual wages greater than 175 percent of the federal poverty line, and work in “innovation” as its primary business activity.
- Using proprietary technology to add value to a product, process, or service in a qualified high-technology field
- Researching or developing a proprietary product, process, or service in a qualified high-technology field
- Researching, developing, or producing a proprietary product, process, or service in the fields of agriculture, manufacturing, wildlife preservation, environmental science, financial technology, or transportation
- Researching, developing, or producing a new proprietary technology for use in the fields of agriculture, manufacturing, financial technology, or transportation
The bill caps the total value of the tax credit at $5 million per year. Individuals would be eligible for up to $125,000 in tax credits. The limit for a single business would be $500,000 in investment.
“By encouraging investment in technology startups, Delaware is making another strategic move to enhance its economic competitiveness. It is painstaking and difficult work to advance a startup and this new program will provide an infusion of capital to businesses at a critical time,” said Rep. Bryon Short. “These resources will foster innovation in our state and support entrepreneurs growing their businesses.”