Jul 26, 2014
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Finn Bill would Entice Angel Investors with Tax Benefits

Under current law, investors can get state tax benefits for investing in startups, but only if they are part of “certified venture capital partnerships” consisting of three or more partners.

Finn Bill would Entice Angel Investors with Tax Benefits

Rep. Linda Finn has introduced legislation to encourage “angel investors” to put their money into Rhode Island businesses.

Representative Finn’s legislation would add angel investors – individuals other than the entrepreneurs running a company who invest their money in that company to help it develop – to a statute that allows venture capital groups to receive tax benefits.

“At a time when our state desperately needs successful businesses that will grow and add jobs, we should encourage anyone who wants to put their own money into a business to do so. It shouldn’t matter to us whether the investor is an individual or a group, if they want to invest here in Rhode Island, we welcome them,” Finn (D-Dist. 72, Middletown, Portsmouth) said.

Under current law, investors can get state tax benefits for investing in startups, but only if they are part of “certified venture capital partnerships” consisting of three or more partners.

Finn’s legislation ( 2014-H 7812) would open up the tax breaks to individuals who are accredited investors and wish to be angel investors. The bill also would also update the requirements for investors, most of which date back to the law’s original enactment in 1987.

The legislation is meant to encourage investors to put their money into helping new Rhode Island companies succeed. It would increase access to capital available for Rhode Island startups, and make it easier for Rhode Island entrepreneurs to turn their ideas into real companies with products, profits and employees. The state would then benefit through increased tax revenues and greater employment.

“Being an angel investor involves some serious risk, but the tax incentives make the benefits more attractive. If we can make them available to more investors, it could make a very positive impact on the up-and-coming sectors that are the brightest spots in our state’s economic horizon,” Finn said.

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