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PROVIDENCE – A state representative has introduced legislation aimed at encouraging so-called “angel” investors to give backing to Rhode Island businesses.
Rep. Linda Finn, D-Middletown, submitted legislation that would add angel investors – individuals other than the entrepreneurs running a company who invest their money in that company to help it develop – to an existing statute that allows venture-capital groups to receive tax benefits.
Under current law, investors can get state tax benefits for investing in startups, but only if they are part of “certified venture-capital partnerships” consisting of three or more partners, according to a news release. Finn’s legislation would open up the tax breaks to individuals who are accredited investors and wish to be angel investors. The bill also would update the requirements for investors, most of which date back to the law’s original enactment in 1987.
Finn said in a statement that the legislation is meant to encourage investors to put their money into helping new Rhode Island companies succeed. It would increase access to capital available for Rhode Island startups, and make it easier for entrepreneurs to turn their ideas into real companies with products, profits and employees. Finn said the state would then benefit through increased tax revenue and greater employment.
“At a time when our state desperately needs successful businesses that will grow and add jobs, we should encourage anyone who wants to put their own money into a business to do so. It shouldn’t matter to us whether the investor is an individual or a group, if they want to invest here in Rhode Island, we welcome them,” she said. •