Angel investor bill has startups paying attention to Annapolis
Monday, February 29, 2016
Posted by: Megan Mann
When opening a businesses, entrepreneurs pick a location based largely on three factors: access to capital, access to good talent and quality of life in and around the city.
Deb Tillett, executive director of Emerging Technology Centers incubator in Baltimore, calls them the “absolute top three reasons.”
Access to capital can be influenced by decisions made in the General Assembly. Enter House Bill 471 and Senate Bill 622, otherwise known as the Angel Investor Tax Credit Program, which would give tax credits to angel investors who give money to certain new businesses.
Normally, new entrepreneurs aren’t paying a lot of attention to the legislative process in Annapolis. “It’s just not on their radar,” said Tillett.But there are signs that may be changing — at least for some.
Earlier this month, several people representing the startup community in Maryland testified in favor of the bill at a hearing in front of the House Ways and Means Committee. Tillett was among them.
“We’re rewarding the people who desperately need those resources,” she said about the bill in an interview with The Daily Record.
If passed, the tax credit will be a three-year pilot project that creates a tax credit against the state income tax for angel investors, who are wealthy individual investors who provide capital for startups.
Brian Razzaque, CEO of SocialToaster, a Baltimore-based marketing startup, testified in Annapolis for the first time during the House Ways and Means hearing to speak in favor of the bill.
Razzaque, who has started several businesses over the years, admitted that he was not paying attention to state or federal policies when he was starting out. “With all of the mechanics associated with getting a business off the ground, it’s very easy to lose sight of the big-picture elements,” he said.
But with the introduction of the angel investor tax credit bill, Razzaque started paying attention after he was approached by the Greater Baltimore Committee.
The committee saw the need for the tax credit bill after talking to various startups and brought in angel investors to go through the specifics of the bill along with sponsors, Baltimore Democrats Del. Brooke Lierman and Sen. Catherine Pugh, said Greater Baltimore Committee CEO Donald Fry. “There’s been a good exchange face-to-face about this particular piece of legislation,” said Fry.
Razzaque had firsthand experience with the difficulties of getting funding for SocialToaster and knew he had to speak up.
“Having gone through the experience and having personally sought state resources it became very evident how that impacted me and where there may be some deficiencies,” he said.
Even though he got involved, Razzaque didn’t think his testimony was that effective.
“Some of the questions and responses seemed to indicate that I was not being heard,” he said, “Overall, I am not optimistic that we made the progress that we wanted, although obviously I hope that I’m proven wrong.”
But Razzaque is far from discouraged. Instead, he said his experience made him realize that a gap exists between elected officials and the business community.
“People like me need to be more involved and more proactive so we can be heard,” he said, “We need to be louder.”
Tillett, whose incubator includes 104 businesses, has seen an increased effort from the state Department of Commerce to reach out to the startup community.
“That’s a nice step toward having businesses understand that there is a legislature,” she said. “They’re making more of a connection.”
Given that they’re busy running their companies, startups and the business community use organization such as the Greater Baltimore Committee to pay attention to business issues in the legislature.
“As an entrepreneur, I am very dependent on these organizations to help act as the conduit for that communication,” said Razzaque.
Fry said, “The legislative process hasn’t been a significant part of their work to date and that’s where we’re able to help bridge that situation for them.”
This article was originally published in The Daily Record by Anamika Roy