It’s unusual that I find legislation in my state of residence that I put my support behind, but its timing fits into my recent blog posts about building an “innovation ecosystem.” This recent article shows how a Georgia state legislator is trying to leverage the tax code much as I outlined in a previous post about “building a sustainable innovation ecosystem.” While I will not formally support the entire bill so as not to appear “partisan” in any way, Georgia state representative Tom Graves wants to create a $10 million annual angel investment tax credit pool. While the $ amount is not nearly sufficient to fund many startups, it’s a start, and it should be explored and hopefully, enacted in some shape and form. Early-stage investors would receive an income tax credit of up to 50 percent (capped at $50,000) of an investment made in companies with 20 or fewer employees. The tax credits would be available after two years of investment.
One of the key ingredients to a healthy ecosystem is how to incentivize investors to fund startups in “socially responsible” areas whose profit fundamentals may be less mature than other established industries. If we wish to innovate in education, then we need to spur investment from both established players and emerging entrants. It’s the latter that will force established players to innovate, and we should use every tool in the toolkit to make that happen.