2014 Bills Tackle Crowdfunding, Tax Credits, Startup Capital and More

Several bills aimed at supporting startups, advancing research and improving the workforce have been introduced with the start of the 2014 sessions. Some of the proposed legislation offers a glimpse into the investment priorities of governors and lawmakers in the wake of economic recovery. Providing innovative companies with access to startup funds is a continued theme from previous years. Some states are seeking to expand tax credits for angel investors or offer new tax credits to encourage emerging industries. Other bills focus on generating more skilled workers quickly and positioning universities to enhance regional economic competitiveness.

Two More States Introduce Crowdfunding Bills

Lawmakers in Alabama and Maine hope to make it easier for startup companies to raise money through crowdfunding platforms with legislation to amend state securities laws. In Alabama, the Senate unanimously approved SB 44, allowing individuals to invest up to $5,000 in a venture. Small businesses are limited to raising $1 million through crowdfunding websites. Legislators in Maine will consider LD 1512, An Act to Increase Funding for Startups. Similar to the Alabama bill, investments are capped at $5,000 and entrepreneurs would be restricted to a $1 million fundraising goal. Businesses also would be required to set a deadline for fundraising, and if unsuccessful in reaching their goal, the money would be returned to investors, reports the Bangor Daily News. At least five other states, including Georgia, Kansas, Michigan, North Carolina and Wisconsin have enacted similar laws.

Missouri Seeks $9M for Startup Grants

A two-year old program that provides grants to entrepreneurs and was initially funded by corporate donations and state and local economic development groups may get a more permanent funding source from Missouri lawmakers. The St. Louis Post-Dispatch reports on a bill (HB 1495) moving through the House that would provide $9 million to six early stage business development corporations that provide grants to winners of a national or international competition for early stage businesses. The legislation does not specifically mention the group Arch Grants, but according to the article, they would be eligible for the funds, and could potentially receive up to $6 million. Funding would be distributed by the Missouri Technology Corporation, and the groups would have to raise private funds. Arch Grants selects promising startups to receive $50,000 in first-round funding and provides an opportunity to secure up to $100,000 in a second round of funding with access to area angel investors. As of last spring, the group raised about $3 million, the article states.

Tax Credits for Emerging Industries and Worker Training

A measure aimed at generating more support for career training was introduced in Alabama. HB 384 would provide up to $5 million in income tax credits for individuals and businesses who donate to the state’s Career-Technical Dual Enrollment program. The program allows high school students to enroll in college-level career technical education courses in high-demand areas offered through community colleges. A tax credit equal to 50 percent of a total contribution, not exceeding $500,000 may be claimed.  

A bill (HB 14-1012) in Colorado would repeal the innovation investment tax credit and replace it with the advanced industry investment tax credit. The tax credit would be available to qualified investors who make an equity investment in a small business defined as an advanced industry by the state. This includes advanced manufacturing, aerospace, bioscience, electronics, energy and natural resources, information technology, and infrastructure engineering. The tax credit is equal to 25 percent of the investment, or 30 percent if the business is located in a rural or economically distressed area. A single tax credit would be capped at $50,000 with a $2 million cap for the calendar year. Supporters of the bill say it would encourage more high-net-worth individuals to become angel investors and increase the amount of money active angel investors are willing to put into startups, reports Xconomy.

A bill (HB 94) to expand New Mexico’s Angel Investment Tax Credit would allow investors to invest in more companies and increase the cap from $750,000 to $2 million.

West Virginia lawmakers will try again to pass legislation that provides tax credits for businesses that create jobs in economically distressed areas designated as launch pads. Under the bill, the governor would authorize up to 10 locations for businesses involved in emerging technologies, which include biotechnology, nanotechnology and advanced manufacturing, among others, to locate or expand. Businesses would be exempt from sales taxes, personal income taxes, corporate net and business franchise taxes and would be eligible to receive tax credits for each new job created. HB 4343 passed in the House last week and awaits action in the Senate. A similar version was introduced last year, but failed to gain enough legislative support.

Higher Education Merger and Degree Completion

A bill (SB 850) introduced in California would establish a pilot program for community colleges to offer bachelor’s degrees in high-demand fields. Each college could only offer one four-year degree and the program would be piloted on a limited number of campuses over eight years. The legislation also stipulates that programs would not duplicate those offered by nearby universities and notes that 21 other states allow community colleges to offer baccalaureate degrees.

Supporters of HB 4632 say the bill to merge the College of Charleston and the Medical University of South Carolina and establish a comprehensive research university would better serve state and regional business needs, reports The Post and Courier. Because it is not a research university, the school cannot award doctoral degrees. Advocates say the college should be allowed to offer more master’s and doctoral programs directly related to the region’s economic development needs, according to the article. The school would be named Charleston University.