News Summary
Missouri lawmakers are pushing for the introduction of an angel investor tax credit to boost early-stage business growth. Advocates argue this measure will support local startups and investment, as current legislature discussions show significant progress. Despite some hesitance, the tax credit could incentivize investments, foster innovation, and help Missouri keep pace with neighboring states that already offer similar programs.
Jefferson City, Missouri: Legislators Advocate for Angel Investor Tax Credit to Spur Startup Growth
As Missouri’s legislative session approaches its conclusion, lawmakers are being urged to pass a bill introducing a state angel investor tax credit. This initiative, championed by business advocates at NEXT Missouri, aims to boost early-stage business growth within the state and retain local entrepreneurial talent and capital investment.
The proposed angel investor tax credit is being prioritized by several key figures within the legislative session, with Jason Wiens, founder of Rise Policy, emphasizing its importance. The initiative seeks to provide financial incentives to private investors who support Missouri-based startups, effectively minimizing investment risks and stimulating innovation within the region.
Current legislation in the form of Bills HB 235 and SB 461 has already been discussed in hearings and approved by committees in both the House and Senate, demonstrating notable progress toward implementation. Should the bills be passed, qualifying investors would have the opportunity to claim a state income tax credit of 40% on their investments in eligible businesses. This percentage is set to increase to 50% for investments in startups based in rural counties. Investors could claim up to $300,000 in credits annually, with a maximum of $75,000 cap applicable to individual businesses.
Despite legislative support, some lawmakers remain hesitant regarding the approval of new tax credits, primarily due to philosophical concerns. However, proponents of the measure argue that nearly four out of every five new jobs in Missouri are created by new businesses, highlighting the critical need for a thriving startup ecosystem.
Current data indicates that Missouri falls short compared to its neighboring states regarding angel investment incentives. Of the eight states bordering Missouri, five already offer similar tax credits to potential investors. The Missouri Technology Corporation (MTC), a public-private partnership that fosters entrepreneurship throughout the state, may potentially face funding cuts in FY2026, according to recent Senate Budget Conference Committee decisions. A conversation regarding these funding cuts is scheduled for June 10.
The MTC is poised to administer the newly proposed angel investment incentive program, responsible for certifying eligible companies without favoring specific businesses. Furthermore, the proposed legislation includes a $6 million annual credit cap for the years 2026 and 2027, with the possibility of a 20% annual increase should the credits reach full utilization. There is also a sunset clause included that will prompt the Missouri General Assembly to assess the long-term impact of the legislation by 2032.
Advocates anticipate that this tax credit could motivate investors who have experienced success to reinvest in Missouri-based companies, thereby creating a self-sustaining cycle of investment and innovation. Regional equity distribution for the first half of the year is also part of the proposal, allowing any unused credits to become available statewide in the second half of the year.
Support for angel investor tax credits is gaining momentum as stakeholders recognize their importance in nurturing high-growth businesses. Darcy Howe of KCRise Fund indicates that these credits are essential for cultivating successful companies in Kansas City and recalls instances where previous tax credits prompted companies to relocate for better funding opportunities. In addition, Ben Johnson of BioSTL stresses that Missouri is in dire need of a robust angel investor tax credit, highlighting substantial local investments already garnered through initiatives like BioGenerator.
Overall, the introduction of angel investor tax credits is viewed as a crucial step towards retaining local startups and fostering a more dynamic innovation ecosystem within Missouri, especially in the face of stiff competition from states such as Kansas and Arkansas, which have already implemented similar programs.
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Additional Resources
- Startland News: Missouri Angel Tax Credit
- JPMorgan: Startup Fundraising Guide
- Crunchbase: Gateway to Startup Success in Missouri
- Business Insider: Top Gen Z VCs
- Fierce Healthcare: Fundraising Tracker
- Wikipedia: Angel Investor
- Google Search: Angel Investments in Missouri
- Google Scholar: Angel Investor Tax Credit Missouri
- Encyclopedia Britannica: Startup
- Google News: Missouri Angel Investor Tax Credit
