Promising young businesses would have a bigger carrot to offer Wisconsin investors under provisions of Gov. Walker’s proposed 2015-17 state budget.
The plan would allow more tax credits for investments in eligible companies. Currently, up to $8 million invested in a qualified business is available for state tax credits. The budget would increase that amount to $12 million per qualified company.
Wisconsin investors can receive tax credits for 25 percent of the funds they provide.
“I think it would have a significant impact for a number of companies that, right now, might be at the limit,” said Tom Still, president of the Wisconsin Technology Council. “These are companies that are a little farther along (but are) still raising capital and probably still need to get over the hump.”
To offer investors the tax credits, companies must be certified by the Wisconsin Economic Development Corp. as Qualified New Business Ventures. Conditions include having Wisconsin headquarters; at least 51 percent of employees in Wisconsin; operating for no more than 10 years; and having a technological focus. The program began in 2005.
Through 2013, 180 companies had been approved. In 2013, they drew $34.3 million in qualified investments which resulted in $8.6 million in tax credits, Still said.
EatStreet, a Madison online restaurant ordering business, is one of the qualified companies. It has raised $12.7 million, and the $8 million cap is not a problem so far, chief executive Matt Howard said.
“A lot of our investment is coming from outside the state,” said Howard. But he said the cap “could definitely” become a problem if the limit is not raised.
Walker also is proposing expanding the types of businesses that can be considered for the Qualified New Business Venture program, combining the funding pools for angel and early-stage investment credits, and letting unused angel and early-stage credits be reallocated to the business development tax credit.