Bill would alter economic development tools for startups

Nebraska would increase assistance available to startup companies through the state Department of Economic Development under a bill heard March 13 by the Appropriations Committee.

LB334, introduced by Gering Sen. John Stinner, would eliminate the Angel Investment Tax Credit and appropriate the $4 million cost savings to the DED to fund programs under the Business Innovation Act. The Angel Investment Tax Credit was scheduled to terminate in 2022.

Stinner said the Business Innovation Act funds five grant and loan programs that encourage innovation and startup businesses in Nebraska. The programs focus on early-stage businesses that need assistance raising capital to get their enterprises off the ground, he said, adding that Nebraska ranked last in the nation in the availability of venture capital in a 2010 study.

“It’s essential that the Legislature invest in Nebraska’s continual economic growth,” Stinner said. “In order to do so, we need to address the lack of capital to help high-growth businesses—especially technology related businesses—get started in Nebraska.”

He said DED programs would be a better use of state funds than the Angel Investment Tax Credit, which has not been utilized fully in recent years.

DED director Dave Rippe testified in support of the bill, saying the investment tax credit has “reached the end of its useful life.” Programs under the Business Innovation Act have proven more successful at encouraging investment and creating high-wage jobs, he said.

Research has shown that every dollar invested by the state in the programs generates $6.91 of economic activity, Rippe said.

Also testifying in support was Erica Wassinger of The StartUp Collaborative. Speaking on behalf of the Greater Omaha Chamber of Commerce, the Lincoln Chamber of Commerce and the Nebraska State Chamber of Commerce and Industry, Wassinger said the collaborate has worked with more than 200 entrepreneurs in the last two years.

Startups have an annual economic impact in Nebraska of $284 million, she said.

“We know that it is difficult to get a venture off the ground,” Wassinger said. “The Business Innovation Act has proven to be successful in doing just that.”

No one testified in opposition and the committee took no immediate action on LB334.