I recently sat in on a great panel about doing business in China hosted by the Manufacturer’s Association of Central New York (MACNY) put on by a client of mine, Tech Bridge International, Inc. Tech Bridge is an international business development and quality consulting company. It provides consulting services, connections and introductions to Chinese businesses and government officials for companies seeking to do business there (it also operates in Japan).
The conference was interesting for many reasons, but mainly because of the discussion regarding the industrial, science & technology parks in China and the innovation they were driving there. I had intended to write a post on this a while back, and that’s why I was pleasantly surprised to hear Governor Cuomo’s Tax Free NY proposal yesterday, which he announced in a few Upstate New York cities (Albany, Buffalo, Syracuse). Read more
I’ve been following a bill proposed by New York Assembly member Kellner for a while now. It is an Angel Investor Tax Credit, available to investors in “qualifying businesses”. New York Bill No. A09958. Investors would receive a credit based on 25% of their investment, but the maximum investment you can obtain the credit for is capped at $250,000.
A qualifying business is one that:
- has gross revenue of less than $1M for the year before the investment;
- has no more than 20 full time employees (60% must reside in NY State);
- has operated in the State of NY for no more than seven consecutive years; and
- has received no more than $2M in investments (eligible for the credit from one or more angel investors)
To be eligible for the credit, the angel investor must be an accredited investor as defined in Rule 501 of Regulation D, except for those that either 1. control fifty percent or more of the company being invested in, or 2. any company whose normal business activities include venture capital investment.
First, the idea is noteworthy. A number of other states have passed similar credits to encourage angel investing. In Wisconsin, they passed such a credit and angel investments increase from $30M in 2005 to $180M in 2010. That’s staggering. I would prefer to see that the credit be available for seed/angel and venture capital companies, however. I think excluding them is a bad idea.
There are some critics of state angel investor tax credits. They are usually out of state VC funds and investors. They say that these types of credits would discourage interstate investing, such as Boston based VC’s investing in New York startups, and other such situations. I don’t know if those critiques are warranted, however, as out-of-state investors aren’t penalized in any way other than having more competition in New York State. As investors in-state are now sure they will at least recoup 25% of their investment in the year after they invest, as well as having the possibility for large returns (i.e. the home run) down the road.
The bill was referred to the ways and means committee in April and held for consideration there in June. There hasn’t been much action on it since then and won’t be until at least 2013. It is something to keep in mind however as any incentive that can be put on the table to get the economy moving, especially the startup community is a good idea. Access to capital is a big issue for many young companies.
A power purchase agreement is an arrangment between usually two parties – the host and a services provider – whereby the host allows the provider to install a renewable energy system on its property and agrees to purchase the power generated by the system for a specific time frame, usually around 20 years. The host does not own the system. PPAs are used for solar and wind installations, with solar being the most prevalant by far. I have heard that geothermal transaction of this type was is in the works, if not done already. The power created by the system is used by the host, who has the right to sell any excess power created above and beyond the host’s needs to the local utility.
Obviously using renewable energy sources, such as solar, is a worthy sustainable practice. Although, installing solar panels may be worth it from a financial standpoint now. Really. If you have the up front money to cover the installation for your industrial, commercial, non-profit or residential use, you look to save a good deal of money over the next couple of years – generally an installation will “pay” for itself over a seven year timespan.