Thursday, January 18, 2007
Michael Shore, MEDC
Aim to Stimulate Private Investment in Technology-Based Startups
Governor Jennifer M. Granholm and Michigan Economic Development Corporation President and CEO James C. Epolito today announced a new Angel Investment Incentive program designed to stimulate the creation and growth of early stage technology companies in Michigan.
"This program will help researchers and entrepreneurs raise the capital they need to build new businesses and create high-paying jobs for Michigan workers," Granholm said.
Angel investors are typically high-net-worth individuals interested in contributing to the growth of promising companies. They pool resources to provide companies with necessary funding, usually from $250,000 to $2 million, to provide a bridge to the next stage of growth. Many angel investors also provide mentorship and crucial management support.
Part of the 21st Century Jobs Fund, the Angel Investment Incentive program provides a tax deduction for individual investors when the basis plus all or some portion of the profits from an initial qualified investment are rolled over into a subsequent investment in a second qualified technology company. The initial investment of at least $100,000 must be made between January 1, 2007 and December 31, 2009. To qualify, both companies must be certified by the Michigan Strategic Fund (MSF) board at the time of investment.
"Entrepreneurs typically have a hard time finding the financing they need to take that first step toward successful growth," said Epolito, who also serves as president and chairman of the MSF board. "Angel investors help fill the gap at this critical stage in a company's development. This program complements the other components of the 21st Century Jobs Fund which have committed nearly $400 million to help emerging businesses commercialize new technologies and create an infrastructure and business climate conducive for high-tech growth in Michigan."
The new incentive is welcome news to Michigan's angel investor community.
"In creating this incentive, the state has recognized a serious need in the business community and demonstrated a commitment to the growth of early stage technology companies," said Jody Vanderwel, president of the West Michigan-based Grand Angels. "This type of program will lead to increased funding opportunities for young businesses most in need of financial assistance."
The Michigan Economic Development Corporation, a partnership between the state and local communities, promotes smart economic growth by developing strategies and providing services to create and retain good jobs and a high quality of life. For more information on the Angel Investment Incentive and other MEDC initiatives and programs, visit the Web site atwww.michigan.org/angels.
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