Angels with a Deadline
Tags: Angel Investors, Entrepreneur, innovation, Investors, technology
As reported recently by the Angel Capital Association, Entrepreneurs and investors have been energized by a provision of the Small Business Jobs Act that became law in September 2010. It provides a 100% exemption for gains made by investing in qualified small business stock. This provision is an obvious boon to early-stage investors but also to the entrepreneurs who depend on angels for that high-risk start-up capital.
The law is focused on the right target. A July 2010 report from the Kauffman Foundation concludes that start-up companies create most new jobs in the U.S. economy. Not only millions of jobs every year … but high-paying jobs. John Huston, manager of Ohio TechAngels in Columbus Ohio reports that jobs in their portfolio companies pay an average salary of $83,000.
So what’s the problem? The catch is that the tax exemption applies only to investments made between September 27 and December 31, 2010 forcing investors and entrepreneurs to complete negotiations and due diligence under a tight deadline … not the ideal situation for thoughtful decision-making. Hopefully, this law is one of those good ideas that will become a permanent fixture in the entrepreneurial landscape.
About the Author: Michael Kurek, PhD, MBA, focuses on commercialization challenges facing early stage entrepreneurs. In his role as BBC Partner he assists clients with projects ranging from developing SBIR/STTR commercialization plans and fully integrated business plans to providing interim management to start-up life science companies.