The New Jersey Economic Development Authority said it approved 161 businesses last year looking to invest dollars in 32 startups via the Angel Investor Tax Credit program—an incentive aimed at enticing financiers to invest into otherwise potentially risky New Jersey enterprises.
All told, in 2019 Angel Investors pumped $33.1 million into these technology, life sciences and research and development companies.
Under the program, which was expanded to $25 million on Jan. 1, an investor can sell their tax credit for up to 20 percent of what they put into certain technology startups in the state, or 25 percent for investments into low-income communities, federal opportunity zones or businesses owned by women or people of color. In both cases, the total amount is capped at $500,000, and the money received for selling the tax break is a guaranteed amount they will get back in the event the investment fails or yields lackluster returns.
Proponents argue the program will help investors recoup some of the financial loss they might incur while contributing to technology startups.
Under the Angel Investor program, the investment must be made into a company with no more than 225 employees.
“We anticipate increased interest in the Angel Investor Tax Credit Program in 2020, as investors realize the benefits these impactful program enhancements have on their investments into emerging New Jersey companies,” Tim Sullivan, who heads the EDA, said Tuesday in a statement.
Some of the companies which started taking part in the program as 2019 drew to a close were eCommerce startup Radius8, Inc. in Princeton and Deliveright Logistics, Inc. in Bayonne; human resources firm Fusion Recruiting Labs in Red Bank; and recruitment software companies FATj.com, FindaNursingJob.com, and Talenize.
A similarly-natured program, the state’s 21-year-old Net-Operating Loss credit program, is aimed at helping companies offset many of the financial losses that come with research and development. Technology and life sciences businesses can acquire R&D tax breaks, under the program, which can be sold for at least 80 percent of their value, capped at $15 million per business.