NJPRO Research Inspires Recent Law
Contact: Steve Wilson, 609-858-9495
TRENTON, NJ – On February 1, 2013, Governor Christie signed into law the Angel Investor Tax Credit Bill, which provides a tax credit for investments in New Jersey based technology.
In 2010 a NJPRO report, Building Bridges between Academic Institutions, Business and Government to Bring Innovation to the Marketplace, aimed to offer a path towards economic recovery that capitalizes on new partnerships among New Jersey businesses, research universities and state government. It found that New Jersey’s economy has relied heavily on high-technology businesses such as pharmaceuticals and communications. However, as markets and capital have retrenched, the funding of new startups must also change.
The report by NJPRO offers recommendations that “establish tax credits for angel investors.” Building Bridges makes the case that a “healthy community of venture capitalist and angel networks can provide bridge funding to small startups coming out of universities. [They] often suffer from a common foe: matching dollars,” as startups commonly lack substantial equity to qualify for existing incentives.
Overall the NJPRO’s Building Bridges report called to “provide an institutional structure with financial and policy incentives within which companies, universities, national laboratories and research institutes can cooperate to accelerate the development of promising technologies.” Industries involved with biotechnology, advanced computing, mobile communications, renewable energy technology often need additional financial support to not only progress in their research, but also help companies grow in New Jersey.
New Jersey is ranked 18th in the nation in total university research and development expenditures behind neighboring states such as New York, Pennsylvania, Maryland, Massachusetts and North Carolina. As such, the report aimed to highlight the existing models and best practices of collaboration from leading universities around the country, as well as the current practices within New Jersey. The need for this credit was evident because providing the resources to support early stages of technology is key and many of these entrepreneurs are incubated within the university system. The New Jersey Angel Investor Tax Credit can be applied to purchases for the company, assistance in production costs, research agreements, rights to use of technology and other day to day needs a startup may have.
New Jersey will be in a better position to support and attract the types of high-tech companies that will provide economic development and jobs in the future. The tax credit is up to $500,000 per qualified investment to companies or individuals who invest in a technology company. The law is focused towards smaller tech companies, as it applies to businesses with fewer than 225 employees. These companies must also have a majority of its roots in New Jersey, as at least 75% of the company must work in New Jersey. Particularly companies can either do research, conduct pilot manufacturing, or technology commercializing in the State.
The New Jersey Policy Research Organization aims to provide quality research on behalf of New Jersey employers. The research in Building Bridges builds on our prior research to grow New Jersey jobs and its economy through increased partnerships.