This is an updated version of a report originally published on June 24, correcting details of Senate Bill 3655.
NEW YORK (GenomeWeb News) – Illinois Gov. Pat Quinn today signed into law a measure that will offer tax credits to angel investors in life sciences startups.
The measure sets aside $10 million in tax credits to assist state-based angel investors in startup companies that commercialize new technologies. The angel tax credit was included as part of Senate Bill 2093, which passed both the state House and state Senate on May 27.
The measure also calls for awarding angel investors tax credits equal to 25 percent of their investment, up to a maximum $2 million, made directly in life-science companies and other "qualified" new business ventures.
"Particularly in this economic climate, it's a tremendous step forward for Illinois," David Miller, president and CEO of the Illinois Biotechnology Industry Organization, or iBIO, told GenomeWeb Daily News. "We generally have not been competitive with other states, so this is huge. And this is probably the program which most precisely targets the 'Valley of Death.' This is a huge step forward."
iBIO led Illinois life sciences leaders over the past three years in lobbying for passage of the angel tax credits for startups, as well as a program awarding tax credits for venture capital investments in later stages. That lobbying paid off last month when state lawmakers approved SB 2093 and another bill containing identical language establishing the angel tax credit.
Approving both bills was a hedge against the possibility that Quinn would veto SB 2093 because it includes a provision allowing a developer to finance a Marion, Ill., retail/entertainment plan through bonds backed by sales taxes. The governor vetoed an earlier version of that provision in another bill.
Miller and iBIO have contended that the angel tax credit will help Illinois catch up to neighboring states in supporting life-science startups. That gap prompted some life-science startups to move out of Illinois, he said, despite advantages that include basic research at universities, available space at research parks, and the presence of pharmaceutical giants as potential partners.
Illinois also hopes to catch up by doubling from 1 percent to 2 percent the amount of pension funds state Treasurer Alexi Giannoulias can invest in Illinois-based venture capital funds that invest in life-science and other tech startups. Expansion of the Illinois' Technology Development Account was the original intent of SB 3655, but the version of the bill signed into law by Quinn on Wednesday instead simply extended the state's R&D tax credit, to the benefit of larger life-sci employers.
Miller told GWDN iBIO will work going forward to expand the technology development account as well as win support for adding Illinois to the list of states that match the federal Small Business Innovation Research and Shared Technology Transfer Program commercialization grants won by life-science startups.
He cited Kentucky, which in January credited the 80 matching grants totaling $17.7 million it had issued since 2007 with helping keep its 46 SBIR/STTP grant winners in the Bluegrass State, while attracting to it another eight life-science and other tech businesses. This year, Kentucky raised the amount of money it set aside for the program from $6 million to $9.5 million.
"I am not, and the technology community is not, going to try to make Illinois incentive packages the biggest and the grandest and the most expensive packages in the United States," Miller said. "There are so many advantages to being here that all we really need to do is get a competitive set of packages, and this angel tax credit is a big step in that direction."
Given the task this year of plugging a $13 billion budget deficit, lawmakers were hard-pressed to approve a lot of new spending, in economic development or other priorities.
Yet Illinois joined two other Midwestern states in enhancing their tax credit programs this year. Minnesota Gov. Tim Pawlenty signed into law measures that create a 25 percent angel investment tax credit and expand the types of companies eligible for the state's R&D tax credit.
And in Wisconsin, Gov. Jim Doyle signed into law the Connecting Opportunity Research Entrepreneurship, or CORE, Jobs Act. The measure, also called 2009 Wisconsin Act 265 raises the total amount of angel tax credits available to Wisconsin tech startups from $5.5 million to $6.5 million this tax year, and $20 million in 2011 and each subsequent tax year.
The Wisconsin measure also adds funding to the Early Stage Seed Credit program, from $6 million to $8 million in 2010, and $20.5 million in 2011 and each tax year after. It also allows investors to take the 25 percent tax credit over a single year, rather than divide the benefit over two years.