This past week, Governor Christie signed into law S. 581, entitled the “New Jersey Angel Investor Tax Credit Act.” The new law is designed to stimulate investment in New Jersey’s high tech start ups by providing investment incentives for “angel investors.”
The law provides credits against corporation, business and gross income taxes for investing in New Jersey’s emerging technology businesses, including: advanced computing; advanced materials; biotechnology; electronic devices; information technology; life sciences; and mobile communications, among others. Angel investors in these start-ups will be eligible for tax credits equal to 10 percent of their investments, up to a maximum allowed credit of $500,000 for the tax year. Other criteria for the start-ups require that they employ fewer than 225 employees, 75 percent of whom must work in New Jersey. The overall program has an annual cap of $25 million.
As the comments to the new law recognize: “[A]ngel investors can play a vital part in New Jersey’s economic recovery…. [According to a 2010 research paper], start-up firms receiving angel capital have a significantly higher rate of survival, faster growth, and superior access to fundraising outside the angel group than early-stage firms devoid of angel financing.”
This latest initiative follows in step with a 2011 Jones Lang LaSalle report, which we reported last year, ranking New Jersey second for biotechnology strength among U.S. states.