Published Feb 14, 2014
More than two dozen qualified startup businesses reported having raised $20 million in investment, $7 million of which could qualify for a 35% state income tax credit for the person who invested the capital, according to a release by the S.C. Secretary of State's office.
Last June, the High Growth Small Business Access to Capital Act was signed into law in order to encourage angel investors to invest in early-stage, high-growth businesses.
The law passed 94-10 in the S.C. House of Representatives before being sent to the Governor’s Office.
Under the law, an angel investor may be granted a tax credit of 35% of their qualified investments in qualified businesses.
Of the 26 businesses currently registered as qualified businesses in the state, 14 are in Greenville County, and two are in Spartanburg.
The 26 businesses applied with the S.C. Secretary of State’s office, but the applicants only listed amounts they thought they qualified for.
There is an annual cap of $100,000 per investor and $5 million in aggregate. Investors must meet the U.S. Securities and Exchange Commission's definition of an accredited investor, and no brokerage fees or commissions are allowed.
For businesses to qualify for investments under the bill, they must be headquartered in the state; started within the last five years; employ fewer than 25 people; and accrue annual revenues of less than $2 million.
The S.C. Secretary of State’s report includes the counties in which the businesses are located, types of businesses, amount of total capital raised, amount of qualified investment raised, number of jobs created by the businesses and average wages paid by those jobs.
About 25 other states have passed similar legislation, including Georgia and North Carolina, and have provided data to demonstrate that these programs are effective in attracting capital, creating jobs and economic growth, and revenue for the state, according to a news release.