Startups getting financial help
by John CallegariPublished: May 25, 2012Local investors and state legislators are at work on a pair of programs that would boost investment inLong Island startups needing a financial leg up.Which, of course, is most of them.The initiatives come as venture capital investment in New York state waned in the first three monthsof the year, posting a 40 percent dollar drop over the fourth quarter of 2011, despite an increasednumber of deals.While New York state edged out Massachusetts to become the country’s No. 2 tech capital duringthat period – after, and well behind, Silicon Valley – most of that growth has stemmed from New YorkCity.One initiative, by theLong Island Angel Network, seeks to raise $1 million from the group’s 17-member board, which includesCA Technologiesfounder Russ Artzt, Steve Winick ofTopSpin
Partnersand Jove Equity Partners CEO David Calone. That money would be leveraged with fundsfrom other investors to aid as many as 20 local startups.The group expects to have the fund up and running by September, according to Michael Faltischek,the group’s chairman.That’s good timing: The Angel Network fielded pitches from almost a dozen startups at its most recentmeeting, including a company with organic hair care products and a software firm that hopes to helptravelers negotiate foreign cuisines.
A proposal in Albany seeks to bolster investment by offering tax incentives to those who optto invest their money in New York ventures.The bill, backed by Assemblyman Micah Kellner, D-Manhattan, and Sen. Joseph Robach, R-Rochester, would provide a tax credit worth 25 percent of investments between $25,000 and$1 million. Eligible investments must be made in a startup company with revenue of less than$1 million and no more than 25 employees – 60 percent of whom work in-state.The startup also must be in New York for fewer than seven years. If the amount to be writtenoff exceeds the total taxable income in any given year, the remainder can be spread acrossthree subsequent years. Under the legislation, the tax credit would apply to tax yearsbeginning Jan. 1, 2013.The credits would serve as a cushion against risk for investors like Calone of Jove Equity,who said he would increase funding for New York state and Long Island-based startups if thebill makes its way into law.