State angel, venture tax credits go unclaimed

BYLINE: Jennifer Batog

p class="c8">Two state of Wisconsin tax credit programs created to encourage investment in fledgling firms have a total of nearly $3 million credits unclaimed from 2006.

The Wisconsin Department of Commerce created the tax credit programs, one for angel investors and the other for venture capital funds, to give credits to investors in companies the department certified as qualified new business ventures.

The angel program sets aside $3 million in tax credits each year. Investors can receive a state income tax credit of 25 percent of their investment over two years. Eligible investments are limited to those under $500,000.

In comparison, the venture capital program sets aside $3.5 million in tax credits each year. Funds receive state income tax credit on 25 percent of their investment up to $2 million.

For 2006, venture funds claimed $1.4 million in tax credits, while angel investors claimed $2.3 million. All of the angel tax credits for 2005 were claimed, but investors only claimed $200,000 in venture credits that year.

State officials said the amount of investments that qualified for tax credits under both programs increased 28 percent in 2006 to $15.4 million from $12 million in 2005, the programs' first year.

"We think the program is continuing to grow," said Aaron Olver, deputy commerce secretary. "It shows that early stage investing is up in Wisconsin."

There are several reasons tax credits could be unclaimed for 2006, he said. Investors may be late filing their returns or their investments were too high to qualify for the credits.

The department is trying to increase the investment limits on investors and on how much companies can receive from investors. Currently, companies that are qualified new businesses can raise up to $1 million from angel investors and $4 million from venture funds under the program.

There are 68 companies which are certified qualified new business ventures, which means they are developing a new product or business process or involved in research and development. The department has certified nine venture capital funds as eligible for the program, including several of Baird Venture Partners funds. Baird Venture Partners is affiliated with Robert W. Baird & Co. Inc., Milwaukee.