Old Capitol Annex
300 West Broadway
Frankfort, KY 40601
Governor Ceremonially Signs Bill to Encourage Angel Investing
Bill encourages more individuals to invest in small businesses
COVINGTON, Ky. (July 23, 2014) – Angel investors now have another reason to invest in Kentucky’s small and startup companies – tax credits.
Gov. Steve Beshear joined state lawmakers, community leaders and angel investors today to ceremonially sign House Bill 445. The legislation expands the Kentucky Investment Fund Act (KIFA) so that individual angel investors – people who provide capital for startup companies – can receive tax credits. Currently, only groups of angel investors (with fund managers) can take advantage of the credits. The signing took place at UpTech, a small business incubator in Covington.
The expansion is designed to encourage more investment in Kentucky’s small businesses. The expanded credit, in turn, is expected to spark more innovation, business creation and jobs.
“Private investment is a critical component of a thriving innovation ecosystem,” said Gov. Beshear. “This legislation will provide great incentive for angel investors to support entrepreneurs and small businesses across the Commonwealth and to invest in Kentucky’s future.”
Starting next year, individual angel investors can receive a tax credit of up to 50 percent of their investment in counties with high unemployment rates, or enhanced counties, and 40 percent in all other counties.
Out-of-state investors can take advantage of the credit too. Though out-of-state investors may not have any Kentucky tax liability, they can transfer that tax credit to someone else within the Commonwealth. If a Kentucky taxpayer is willing to purchase the credit, the investor will recover some portion of the investment.
Rep. Arnold Simpson, of Covington, and Rep. Rick Rand, of Bedford, sponsored the bill. The Kentucky Innovation Network office in Covington, in conjunction with network offices across the state, also worked diligently to support the legislation.
“There are so many talented and hardworking Kentuckians who have the skill and know-how to start their own businesses who are just waiting for someone to provide that initial financial support,” said Rep. Simpson. “By making Kentucky a more appealing place to provide angel investments we’re going to see real results in the number of people who are able to take their ideas and turn them into reality, providing new jobs for Kentuckians along the way. I’m glad to see this bill signed into law and thank Gov. Beshear for helping make it happen.”
“I hope this legislation encourages investors to take notice that our Commonwealth is serious about helping new businesses grow,” said Rep. Rand. “But even more importantly, I hope this encourages some Kentuckians who may have been on the fence about striking out on their own to get out there, find an investor and realize their dreams of starting their own business.”
This legislation is Gov. Beshear’s latest step to encourage angel investing in the Commonwealth. Last year, he successfully launched the Kentucky Angels Network (Kentucky Angels). Kentucky Angels brings new ventures and accredited investors together via monthly online meetings, providing investors access to deals and partnerships with entrepreneurs statewide. Membership is open to those accredited investors in and outside the state who are passionate about investing in Kentucky companies. To learn more about Kentucky Angels, visit www.kyangels.net.
The Kentucky Cabinet for Economic Development, along with the Kentucky Innovation Network, also is hosting a series of entrepreneur pitch competitions throughout the state. Similar to the hit television show “Shark Tank,” these competitions feature Kentucky entrepreneurs presenting their business ideas to a group of local angel investors. Winners receive cash prizes and the opportunity to present their businesses to the Kentucky Angels in Frankfort this fall.
The angel tax credit is operated through the Office of Entrepreneurship within the Kentucky Cabinet for Economic Development.