INDIANAPOLIS (August 30, 2022) — A new program launched by TechPoint is aimed at assisting investors in Indiana startups from out-of-state to assign or sell up to $1 million in venture capital investment (VCI) tax credits which they can earn but can’t use. The Indiana VCI Marketplace is a free program to better connect investors who have earned VCI tax credits and Hoosier investors who want to buy them.
The Indiana Venture Capital Investment (VCI) Tax Credit was enacted in 2003 but applied only to Hoosier investors who could use it to lessen their tax liability. Since out-of-state investors don’t pay Indiana taxes, the benefit didn’t apply to them. That changed in 2020 after the Indiana General Assembly updated the legislation to allow those investors to sell the credits they earned.
The benefit applies to qualified capital investments in Qualified Indiana Businesses. Qualified Indiana Businesses are limited to an allocation of up to $1 million, up to $1.5 million for certain businesses, of tax credits, which may be awarded to investors to provide qualified capital investments to the company. Investors interested in selling their awarded credits may sell all or a portion of their award but must sell a minimum of $10,000 of credits earned by a single investment.
“The VCI tax credit transferability is a benefit aimed at attracting more out-of-state investors across-the-board,” said TechPoint President and CEO Ting Gootee. “We hope to help our entire startup community to realize their full potential by providing an efficient avenue for their out-of-state investors to realize the benefit from the tax credit. Our marketplace will help drive more innovation and entrepreneurship throughout the state and in every sector. We see this kind of program as key to our mission.”
The VCI tax credit process is implemented by the Indiana Economic Development Corporation (IEDC.)
David Roberts, executive vice president of entrepreneurship and innovation at IEDC, said the VCI initiative is designed to help tax credit holders more easily monetize their credit.
“In an already thriving entrepreneurial ecosystem, this tool will help more small businesses raise much-needed capital from out-of-state sources and make it more user-friendly for national and global investors to put money to work in Indiana,” he said.
Jennifer Hallowell, executive director of the Indiana Technology & Innovation Association, which lobbied the Indiana General Assembly to make the legislative change, said the Indiana VCI Marketplace will be a great help to Hoosier entrepreneurs.
“The Venture Capital Investment Tax Credit is a tremendous asset to Indiana startups seeking investment and allowing for the transferability of that credit was critical to attracting more out-of-state investors,” she said. “We’ve heard from entrepreneurs, tech companies and investors about the need for a marketplace to help facilitate the transfer of these credits. We’re excited that TechPoint is taking up this effort and believe it will help encourage more investment into Indiana companies from both in-state and out-of-state investors.”
Hoosier investors who want to buy them – will need to visit the marketplace on the TechPoint website to register. Shuman will evaluate the submissions and provide introductions based on the best matches.
“Twenty Hoosier taxpayers have already expressed interest in buying the credits,” said Shuman. “There’s clearly interest when people understand the opportunity and know there’s a reliable and credible organization ready to help them through it while protecting participants’ privacy. In the past, they’ve had to figure this out themselves.”
About TechPoint: TechPoint is the nonprofit, industry-led growth initiative for Indiana’s technology companies and overall tech ecosystem. The team is focused on attracting talent, accelerating scale-up companies, activating the community and amplifying stories of success. For more information, please visit www.techpoint.org