Arizona’s Angel Investment Tax Credit program has proven to be extremely successful with a track record of more than a 2.3 to 1 return on investment. More than $420 million in financing is attributable to this program, in addition to the $62 million raised through the credits for investments. That combined ROI is 1,750% making the total economic impact to the Arizona’s economy an estimated $1.3 billion. This program is an essential instrument in Arizona’s economic development tool box and we cannot afford to lose it.
Cancer Prevention Pharmaceuticals is just one of the companies that have grown strong thanks to the Arizona Angel Investor Tax Credit. An IPO is expected in 2016.
Since its beginning in 2006, the program has been administered by the Arizona Commerce Authority. On June 16, 2015, ACA certified an allotment of tax credits that caused the initial $20 million angel tax credit cap to become fully subscribed. That means ACA is unable to certify further investments for angel tax credits.
- Arizona Angel Investor Tax Credit is officially called the “Small Business Capital Investment Incentive program”
- How it works: A certified investor could claim a tax credit equal to 30 percent of the investment made. If the certified small business was a rural or bioscience business, the credit would be equal to 35 percent of the investment. These tax credits have been authorized by the ACA on a first-come, first-served basis.
- From its inception through 2014, 120 small businesses received approximately $58 million in certified investments. (Source: Arizona Commerce Authority, Feb.2015)
- > $340 million in seed capital, venture capital and other sources of financing had been raised by 94 of the 120 certified businesses besides the original investments received through the program.
- Direct ROI = 2.3:1
- Economic Impact:
- since inception- approximately $1.3 billion.
- The economic impact projected in was 2015 $332.7 million.
- 213 unique companies certified since inception
- Certified businesses employed nearly 1,000 employees at the time of certification and had a payroll of approximately $59 million. All positions were quality jobs, generating an average job multiplier effect of approximately 2.3 on the state’s economy.
The Arizona Commerce Authority lists the current companies that qualify under the Angel Investor Tax Credit Program here: https://d35uq38u77mscr.cloudfront.net/media/1115002/angel-certified-businesses.pdf)
Here are a few examples of how companies in the Life Science Category are working to develop life changing and potentially life-saving innovations that hold promise for improving the lives of Arizonans as well as supporting growth in our future economy:
- Cancer Prevention Pharmaceuticals (CPP) (Tucson) is a biopharmaceutical company developing cancer prevention therapies to reduce the risk of cancer for people with elevated risk. The Company is initially focused on colon cancer; however, CPP has therapeutic prevention approaches for skin cancer, neuroblastoma, breast cancer, and prostate cancers which will be developed together with the National Cancer Institute (NCI) and multiple academic partners.
- ITel Companies (Scottsdale) is in the business of computer software development and sales. Specifically, iTel is developing a secure, certified HIPAA compliant video conferencing software application for use in healthcare practices.
- iNanoBio (Tempe) is developing an ultrafast sensor device capable of sequencing the whole genome within 15 minutes for only $100, by combining nanopore technology with field effect transistor (FET) sensor technology. The company is also developing tools for drug discovery.
- Lattice Biologics (Scottsdale) Lattice Biologics Inc. (Lattice Biologics) is an emerging leader in the field of cellular therapies and tissue engineering, with a focus on bone, skin, and cartilage regeneration, Lattice Biologics develops, manufactures, and market biologic products to domestic and international markets from its facilities in Arizona. Lattice Biologics Ltd. is now traded on the TSX Venture Exchange as TSX-V:LBL
- MSDx, Inc. (Tucson) is focused on commercializing In Vitro diagnostic (IVD) blood test products for MS. The company discovered a novel source of biomarkers that reflect the disease activity of a Multiple Sclerosis (MS) patient. These biomarkers provide meaningful information that aid in motoring disease progression and response to drug therapy, predict an impending relapse, and facilitate drug development.
Angel Investor Tax Credits are a key component of the economic development tool kits of Arizona and 23 other states.
Reference – Page 9 – BIOSCIENCE ECONOMIC DEVELOPMENT IN THE STATES: LEGISLATION AND JOB CREATION BEST PRACTICES https://www.bio.org/sites/default/files/Bioscience%20Economic%20Development%20Report_Final_6-5-15.pdf Published June 2015
How our region compares to others in this area
Reference: HALO Report – 2Q 2015, page 12 http://www.angelcapitalassociation.org/data/HaloGeoReportFinal2015Q2.pdf