no.angelinvestors0099.021217 bf

As sawdust flies, a bat is hand sanded during the process Friday Feb. 10, 2017. Story is about the state's Angel Investor Tax Credit Program, which is set to expire in July. Marucci Sports was one of the top participants in the program, which provides 25 cents back for every dollar that accredited investors make in state-certified businesses.

ADVOCATE STAFF PHOTO BY BILL FEIG

Regarding "Taxpayers assuming some of the risk for Louisiana's angel investors: smart move or giveaway?": Louisiana hasn't been an easy place to start a business because entrepreneurs haven't had much access to startup capital. Entrepreneurs left Louisiana to secure needed capital and established companies in other states. Relocation is often part of the deal terms of the out-of-state capital. As such, the state of Louisiana and local vendors missed out on leading-edge, job-creating businesses —and their taxes. That dynamic has begun to change. The Louisiana Angel Investor Tax Credit Program is an integral part of that change. This credit is also strategically important to changing the negative perception of Louisiana among investors and entrepreneurs — locally and nationally— and has made Louisiana competitive with the other 22 states nationally that have Angel Tax Credit Programs. Since the NO/LA Angel Network made its first investment in September of 2014, its member investors have invested $5 million in 17 Rounds of financing in Louisiana start-ups, including Mobile Qubes, Cyber Reef and Servato. The Angel Investor Tax Credit was a key incentive that spurred investment in these companies. As a statewide incentive, the tax credit also helped spur the formation of other angel investing groups around Louisiana, which allows for syndication and funding of larger deals statewide — creating, for the first time, a substantial local investing ecosystem to support Louisiana entrepreneurial start-ups, which in turn can diversify the state economy, create jobs and increase the state's tax base. The entire Angel Investor Tax Credit Program is capped at $3.6 million annually and is not a material factor in the state's budget. Yet from 2011 through 2014, the Angel Investor Tax Credit Program incentivized $38,892,701 (actual dollars raised by companies throughout Louisiana under the Tax Credit Program) in direct private investment into 72 Louisiana companies. This is a 4-to-1 ratio of capital invested versus tax credits awarded — a great deal and ratio for our state. And yes, some of these companies may fail, and we investors will lose our money, but Louisiana still benefits from the taxes on goods, services and salaries. Local vendors benefit as well, since the start-ups pay them for their products and services.The chance to fund a start-up that becomes successful, creates jobs, and enhances local economic development is worth the risk to Angel Investors and to the state. The Angel Investor Tax Credit helps incentivize investors to look at, mentor and take the extra risk of investing in early-stage companies that most often have no other source of capital.The Angel Investor Tax Credit is working for our state and its future prosperity.

Michael Eckert

chairman, NO/LA Angel Network

New Orleans