Rep. Crawford successfully added an interesting amendment to HB 1008. The introduced bill basically raised the maximum venture capital investment tax credit from $500,000 to $1,000,000. Rep. Crawford’s amendment makes that increase contingent on the economic development commission studying and producing a report on the number and characteristics of jobs that have been created before July 1, 2011, because of the credit.
The amendment was mostly, but by no means exclusively, supported by Democrats. The venture capital investment tax credit chapter, IC 6-3.1-24, gives the Indiana Economic Development Commission a lot of leeway in determining what constitutes an Indiana business qualified for the credit. There are a few types of business that are specifically excluded from eligibility; but otherwise, if it brings capital into Indiana, creates jobs, or “otherwise significantly promotes the purposes of the chapter,” the commission can give its blessing. I would think there has to be a major concern that this may just be giving well connected businesses a way to avoid tax liability without necessarily doing a lot to enhance Indiana’s economy. Rep. Crawford’s amendment addresses that concern to some extent.
This doesn’t make much sense to me. So, a company makes an investment, partially due to a tax credit, and then the State says: “Well, you invested money, but not enough jobs were created, so we aren’t giving you the full credit.” If I were an investor of serious money, that scenario, where an investor’s tax credit is subject to the whim of unelected bureaucrats, would scare the crap out of me, making the increased credit almost worthless (and therefore a waste of money).
Am I understanding this procedure correctly?
The way I understand this legislation, it doesn’t change that aspect of things. The potential amount of the credit goes from $500,000 to $1M. But that increase only happens if the economic development corporation files its report. (Doesn’t seem to be much in there to ensure the quality of that report.) As for the way the credit works already, there has to be some approval from the economic development commission that you’re a “qualified business.” It may be that that approval can take place in advance.
For 5 years I have invested many hours, my own money and done all this without any VC. I think we place too much credit on the behalf of the investor, especially those that are myopic.
As a small business owner I have realize that its not the size of the company, but the size of the economy that makes every company tick. We are now realizing a healthy growth in the right direction. The three major industries are, Food, Water, Housing and there is a fourth, but that is a given, energy, with out it we can not survive. We are part of all these industries. Our technology is advanced and we did it all with-out VC.
So the question I have, why do we have VC in the first place? and what is to become of the VC when all the money becomes worthless? Well, here is advise from someone who sees the future. Learn what you don’t know, apply what you do know and grow with wisdom of the things you need to know.
In closing, 5 years in business without a VC. It helps if you know how to manage your pennies and relationships.