Although there’s debate over whether one can truly indulge in “too much of a good thing,” the stats revealing the undeniable success of Arizona’s Angel Investment Tax Credit show that investors and Arizona start-up companies haven’t had nearly enough of this pro-business, economy boosting program.
Fortunately for the business community, the Arizona Legislature has the ability to renew this popular tool right now, by voting yes on HB2191, which reopens the doors to investors looking to fuel Arizona businesses, many of which will or are creating high-wage, high-growth jobs.
The program encourages investment in start-ups and other higher-risk ventures by enabling a certified angel investor to claim a tax credit equal to 30 percent of the investment made in a certified business. The credit jumps to 35 percent for investments in bioscience or rural companies.
By any measure, the initial Angel Investment Tax Credit program has been a resounding success, working exactly how it was intended. Pinnacle Transplant Technologies doubled its workforce and pays an average salary near $55,000 plus full benefits and a 401(k) match and has plans to add more positions to its workforce after benefitting from investments spurred by the initial program.
The more than 200 unique companies certified to participate in the Angel Investment program employed 4.5 employees and paid an average of $61,900 per employee per year, according to data from the Arizona Commerce Authority. Overall, certified businesses employed more than 1,000 employees at their certification times and had a combined payroll of approximately $65 million.
Unfortunately, a lack of reinvestment in the program resulted in a drastic slowing of economic activity in recent years. The Legislature established the Small Business Capital Investment Incentive program in 2005, authorizing issuance of up to $20 million in tax credits. By July 2015, the entire amount had been authorized and allocated, leaving zero dollars to spur further investments. Angel investments have dropped significantly since this cap has been reached. Leaving this program unfunded also impedes investment from people who benefited from the prior program and are now looking to invest in the next wave of new companies created in Arizona.
We ask members of the Legislature who are dedicated to growing the economy and seeding innovation to vote yes on HB2191 to authorize a common-sense continuation of this successful, small-business entrepreneur-supporting program.
The estimated combined economic impact to Arizona since the program’s inception is $1.3 billion. That’s an astounding return on a $20 million investment. Let’s keep this economy-growing winning streak alive by supporting HB2191 and the program, because investors and the companies they support are waiting eagerly for a reinstated Angel Investment Tax Credit.
– Russ Yelton is CEO of Pinnacle Transplant Technologies
– Robert Bowser, Ph.D., is chairman of the Division of Neurobiology at Barrow Neurological Institute and president of Iron Horse Diagnostics, Inc.
The authors are members of the Greater Phoenix Chamber of Commerce Phoenix Forward Bioscience Leadership Council.