Pennsylvania To Invest $100M in Tech Startups

According to the Philadelphia Business Journal, Pennsylvania Gov. Tom Corbett has signed off on the creation of a new program, InnovatePA, which will auction off $100 million in tax credits to generate state revenue that will be invested in the funding of tech and biotech startups.

The state auction will sell off deferred insurance-premium tax credits to insurance companies that pay Pennsylvania's insurance-premium tax. The sale is expected to generate at least $75 million in funds, with credits not being sold below 70 percent of their face value.

Insurance companies that purchase the credits would be able to claim up to $20 million annually beginning in 2017, with unused credits expiring in 2026. The annual cap will limit state spending while making up-front investments in high-tech businesses that create jobs and boost regional economic development.

Of these auction proceeds, $37.5 million, or roughly 50 percent, would go towards funding Ben Franklin Technology Partners, which provides funding and support for tech and biotech companies across the state. Another $33.75 million, or roughly 45 percent, would support the Ben Franklin Technology Development Authority's Venture Investment Program, which provides loans to in-state venture capital and angel firms. The remaining $3.75 million, or 5 percent, would be split between Pennsylvania's regional biotech centers, the Life Sciences Greenhouses.

In recent years, the Ben Franklin Technology Development Partners have helped create or retain 9,000 high-paying jobs through 145 companies. The Life Sciences Greenhouses have helped grow more than 225 new companies, which have directly or indirectly created over 20,000 jobs. According to the bill's sponsors, the initiative is expected to generate $2.37 for every dollar invisted by the state and distribute benefits evenly across the state.

The legislation (HB 465) is modeled after a similar program in Maryland that raised $84 million for $100 million in deferred tax credits to be serviced between 2014-2022.