Invest Georgia

It’s been a while since I have posted on this blog, but I kept it alive for occasions such as this…

2006 An initial draft of a Georgia Angel Tax Credit bill is created. The bill is drafted by researching and reviewing active laws, in particular North Carolina and Virginia.

 2007 A tax credit bill is dropped in the Georgia House of representatives during the 2007 General Legislative Session by Representative Chuck Martin and becomes House Bill 435. It is a “stand alone” tax credit bill and is sent to the House Ways and Means Committee within the House of Representatives. It remains in the House Ways and Means committee for the remainder of the 2007 Legislative Session.

2008 The Georgia Angel Tax Credit bill remains on the books for the 2008 Legislative Session,  but the emphasis within the Atlanta community in 2008 is the Alternative Pension fund bill (SB 80 at the time, I believe). However, House Bill 1196 is quietly passed into law which gives a 25% tax credit only to limited partners within the Georgia Research Alliance Fund. The GRA fund is also seeded with taxpayer funds of between $7,000,000 and $10,000,000, I believe.

 2010 A “stand alone” bill is dropped in the House of Representatives during the 2010 Legislative Session by Representative Chuck Martin and becomes House Bill 1001. House Bill 1001 is a bill solely for the passage of a Georgia Angel Tax Credit . It is sent to the House Income Tax Subcommittee within the House of Representatives. Also during the Session, Angel Tax Credit language is added to House Bill 1023, sponsored by Representative Tom Graves.  Separately during the 2010 Legislative Session, House Bill 1219, sponsored by Representative David Knight, is introduced. House Bill 1219 is a “stand alone” bill that would eliminate the low income tax credit. Subsequently, House Bill 1023 is passed by the House and the Senate. House Bill 1001 remains in the House Income Tax Committee and does not pass out of the House of Representatives. During the last days of the 2010 Legislative Session, the Senate asks that the original Angel Tax Credit language be added to House Bill 1069. House Bill 1069, sponsored by House representative Joe Wilkinson is a tax credit bill related to energy and water appliances. Separately, the House asks that the language of House Bill 1219 be added to House Bill 1069 in order to pass the language before Sine Die. (The language of House Bill 1219 was not added to House Bill 1069 to offset the angel tax credits. Any suggestion or implication that this was done so is erroneous and false.) Additionally, other language regarding a municipal option sales tax is added to House Bill 1069 at the request of the City of Atlanta. House Bill 1023 is vetoed by the governor after the end of the Session. House Bill 1069 passes both the House and the Senate, is signed by Governor and becomes law on June 4, 2010.

Georgia has a long and successful history of angel investors and angel investments. From Imlay Investments to the Communications Group to the Atlanta Technology Angels—angels have been active in the state of Georgia for two decades. I would encourage the communities of Georgia to focus on helping make the angel investors, and the Georgia companies they help fund, successful.

Some Supporters of the Georgia Angel Tax Credit (Section 2 of HB 1069)

Senate Majority Leader Chip Rogers and Lieutenant Governor Casey Cagle

Karen Handel

Georgia Chamber of Commerce

Metro (Atlanta) Chamber of Commerce

Gwinnett Chamber of Commerce

Georgia Public Policy Foundation

Georgia Game Developers Association

Georgia Economic Developers Association

Technology Association of Georgia

TechAmerica

The National Federation of Independent Business

…and hundreds, if not thousands, of entrepreneurs and local investors that took time to send their support to the state government during the legislative session.

Thank you!

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The people have spoken. Your voices were heard. Many thanks to the many of you who wrote to legislators in support of this.

We’re very pleased to share with you that today our bill, HB 1001 The Angel Investor Tax Credit Bill, was submitted to House Rules Committee. This House Committee conducts a final vetting of the bill and determines if the bill will make it to the floor of the House of Representatives in time for a full House vote before Crossover Day (the day approved bills leave the House and go to the Senate).

However,  we have only two General Session days to accomplish getting the bill to the House Floor. It is doable, but we once again need your help to achieve this.

The Rules Committee will meet today (Thursday, March 25) starting at 2:00 PM  during which time our bill can be heard. We need for you to send the same notes you sent over the weekend, but now to key members of the House Rules Committee and also most certainly to those members of this Committee who represent your respective towns/cities or those near you. A voice mail works just as well. And leveraging personal relationships is best. We also ask that those of you are leaders of organizations and groups throughout the State please forward this information to your constituents.

Three of the Key Members of the House Rules Committee were on the list from this past weekend. If you haven’t yet written them please do so. These are:

House Rules Committee Chairman: Bill Hembree-Winston/Douglas

bill.hembree@house.ga.gov

hembrew@nationwide.com

404.656.5141 (Capitol)

770.942.1656 (Cell)

Jan Jones-Alpharetta

janjones38@bellsouth.net

jan.jones@house.ga.gov

404.656.5072 Capitol)

Jerry Keen-St. Simons

jerry.keen@house.ga.gov

404.656.5052 (Capitol)

912.634.3773 (District Office)

If any of the following represent your respective district/town/city we ask that you contact these as well and ensure that you note that you live in the district/town they represent:

Mark Burkhalter-Johns Creek

mark.burkhalter@house.ga.gov

404.656.5058 (Capitol)

770.418.9098 (District Office)

Howard Mosby-Atlanta

Howard.mosby@house.ga.gov

404.656.0287 (Capitol)

Fran Millar-Dunwoody

franmillar@wellsfargo.com

404.656.0254 (Capitol)

404.487.7329 (District Office)

Judy Manning-Marietta

judy.manning@house.ga.gov

404.656.7868 (Capitol)

Tom Rice-Norcross

tom.rice@house.ga.gov

404.656.5912 (Capitol)

Ron Stephen-Savannah

quickrxdrugs@yahoo.com

404.656.5099 (Capitol)

912.966.5665 (District Office)

Butch Parrish-Statesboro

butch.parrish@house.ga.gov

404.463.2247 (Capitol)

Earl Earhart-Marietta

earl@ehrhart.4emm.com

404.463.2247

Wendell Willard-Sandy Springs

wendell.willard@house.ga.gov

404.656.5125 (Capitol)

770.481.7100 (Office)

David Casas-Lilburn

david.casas@house.ga.gov

404.656.0254 (Capitol)

770.931.8033 (District Office)

Jill Chambers-Atlanta/DeKalb

jill.chambers@house.ga.gov

404.656.3949 (Capitol)

Mike Coan-Lawrenceville

repcoan@charter.net

404.656.3949 (Capitol)

For those of who have not written or called, key talking/writing points are:

-I’m (one of the voters/constituents in your district) calling/writing to voice my support for House Bill 1001, The Angel Investor Tax Credit Bill. Georgia needs his economic development tool TODAY.

-Many promising start-up companies in Georgia, most of which have been created by graduates of Georgia colleges and universities, are at risk in today’s challenging financial environment.

-The primary sources of capital for these businesses are angel investors: private individuals who take personal financial risk to enhance business and job creation in our state

-HB 1001 will incentivize angel investors to further engage to help these promising young companies get started, create jobs in our state, stay in our state and stimulate economic development

-22 other states have been utilizing these incentives for years and those states have benefitted from new business creation, new jobs and new revenue

-HB 1001 will make Georgia competitive with 22 other leading edge states, including North Carolina

-Add personal comments 

-I encourage you to support HB 1001

Thank for your time to discuss/read this.

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As noted above, time is of the essence here. Hopefully you can get your correspondence before you leave work today or sometime tonight. 

Many Thanks again for your help, as we will all benefit from passage of this bill.  We’ll keep you apprised of developments.

We need your help on an urgent matter.

A number of you are aware that certain of us have been working hard for the past several months to gain passage of a particular bill in the current Session of this year’s Georgia General Assembly. This bill, House Bill 1001, is The Angel Investor Tax Credit Bill. This bill aims at helping entrepreneurs in our state have a better chance of obtaining early stage capital, by providing an incentive for active angel investors to become more active and for those angel investors who are the sidelines to get back into game. All of which will lead to business and job creation which in turn will help revive economic development in our state. The net results are that the state, the entrepreneurs and the investors all benefit from passage of this bill. Many of you are aware that 22 other states have such incentives in place and it is time for Georgia to step up.

This bill was introduced by TAG (Technology Association of Georgia) and has the support of the Georgia Chamber of Commerce, The National Federation of Independent Business and The Georgia Public Policy Foundation.

A group was also formed to fund the lobbying efforts associated with this bill. This group is the GAIC (Georgia Angel Investors Coalition).  A number of you are members of this group and we appreciate your support.

We are pleased to share that the bill has been successfully progressing through various committees of the House of Representatives (the House originally deals with bills related to taxes) following which the bill will go to the Senate. This coming week is a very important week for the bill and this is where we seek your help. There are two very important committees which will review the bill and then the bill will go to the floor of the House for a full vote, all this coming week. Gaining support of the leadership of the House will go a long way in helping the bill successfully emerge this process in a timely fashion. We need for you to contact any/some of the people listed below, express your support for HB 1001, and encourage them to support it. Their contact info is noted below.  If any these members of the House are located in your respective districts or towns we ask that you contact these for sure. Ideally if you know any of these people personally, a quick personal phone call and email would be great. Most certainly we want the Speaker of The House to learn of the widespread support for the bill. Whatever you can do we ask that it be done as soon as possible (Monday/Tuesday) as next week’s activities will have a major influence on the success or failure of the passage of the bill.

Here is the list of contacts:

Speaker of the House; David Ralston:-Blue Ridge

dralston1@etcmail.com

404.656.5020 (Office at Capitol)

706.632.2221 (District Office)

Chief of Staff: Spiro Amburn

spiro.amburn@house.ga.gov

Assistant: Gina McKinney,

ginny.mckinney@house.ga,gov

Speaker ProTem: Jan Jones-Alpharetta

janjones38@bellsouth.net

jan.jones@house.ga.gov

404.656.5072 (Capitol)

Assistant: Beth Green,

beth.green@house.ga,gov

Majority Leader: Jerry Keen-St. Simons

jerry.keen@house.ga.gov

404.656.5052 (Capitol)

912.634.3773 (District Office)

Chief of Staff: Clelila Davis

clelia.davis@nouse.ga.gov

Assistant: Misty Crockett

misty.crockett@house.ga.gov

Majority Whip: Ed Lindsey-Atlanta/Buckhead

edward.lindsey@house.ga.gov

404.656.5024 (Capitol)

404.920.4155 (District Office)

Assistant: Debbie Lynn

Debbbie.lynn@house.ga.gov

Majority Caucus Chair: Donna Sheldon-Dacula Gwinnett

donna.sheldon@house.ga.gov

404.656.5025 (Capitol)

770.963.5472 (Home)

Assistant: Linda Nations

lynda.nations@house.ga.gov

Majority Caucus Vice Chair: Jeff May-Monroe

jeff.may@house.ga.gov

404.656.5025 (Capitol)

770.318.1491 (Cell)

Assistant: Linda Nations

Lynda.nations@house.ga.gov

House Rules Chairman: Bill Hembree-Winston-Douglas

bill.hembree@house.ga.gov

hembrew@nationwide.com

404.656.5141 (Capitol)

770.942.1656 (Cell)

Assistant: Donna Woodham

dona.woodham@house.ga.gov

Listed below are talking points that can be utilized in your phone calls or emails:

–I’m calling/writing to voice my support for House Bull 1001, The Angel Investor Tax Credit Bill. Georgia needs this economic development tool TODAY.

–Many promising start-up companies in Georgia, most of which have been created by graduates of Georgia colleges and universities, are at risk in today’s challenging economic environment.

–The primary source of capital for these businesses are angel investors. Angel Investors are private individuals who take personal financial risk to enhance business and job creation in the state

–HB 1001 will incentivize angel investors to further engage to help these promising young companies get started and create jobs in our state and to stay in our state.

–22 other states have utilizing these investment incentives for years and those states have benefitted from new business creation, new jobs and new revenue

–Competing states also benefit from Georgia innovation as we’ve seen entrepreneur-graduates of our schools leave our state in pursuit of capital in other states. HB 1001 will help to address this.

–Add any personal comments

–I encourage you to support HB 1001

–Thank You for your time to discuss/read this

We’ve learned that feedback/input from voters/constituents DOES influence policy makers. In some way many if not all of us on the distribution list of this email will benefit from passage of this bill.

Thanks in advance for your help and participation.

Where are the best places to learn about angel investing? Here are the ones I use—national, regional and local.

National Resources:

 - Angel Capital Association

 - Angel Capital Education Foundation

- Frank Peters Show

- Dave Berkus

 - Tech Coast Angels

Local Resources:

- Atlanta TechnologyAngels

Regional Resources:

- Piedmont Angel Network

- Upstate Carolina Angel Network

- Nashville Capital Network

@secretsig

A couple folks asked me recently to give an update on angel investing both in Georgia and nationwide as I see it. The last post I did on this topic was in February, 2009. My, how time flies. I’ve recently left my position as managing director at the Atlanta Technology Angels but I still remain on the Board of Directors at both the Atlanta Technology Angels and the  Angel Capital Association. I continue to speak to angel investors all across the USA (and hear from UK, much of Europe and New Zealand and Australia) so my information should remain timely and up to date. In this post, I’ll probably talk Georgia-specific but also mention some national trends.

Please note that all thoughts and comments on this blog are mine and do not reflect the thoughts or comments of any outside organization.

1.) Current Investing

Much of the current investing activity in Georgia is going towards companies previously funded in the 2005-2008 timeframe. Very few new companies are getting funded by angels in late 2009. I know of a couple of new term sheets out to new companies in ATL and I know of a few companies that have just completed long term financing rounds, but I hear the “raise” for new companies is taking more time and is a source of frustration. Here’s why I think this is happening:

- Angel investors, depending on the individual and/or entity,  have had a reduction of assets/liquidity due to the equity crash of September, 2008. This reduction may be 5%-15% or it may be 50%. The 5%-15% ‘ers are still looking, the 50% ‘ers are gone from the market. However, the 5%-15% ‘ers are still cautious (despite the 60% reflation of the S&P/Dow) for another downturn. So, many angels are protecting their current early stage investments by reinvesting into current portfolio companies to make sure these companies can last another 12-18 months. On a national basis, I’m seeing this same tactic across the board. The only exceptions to this are angel groups that have raised funds($2m-$5M) or groups in very active markets such as San Francisco, Los Angeles, or a very few NE markets. (More on angel funds later.)

- The angel market is in a state of flux in Georgia. New leadership at the Atlanta Technology Angels, the gradual withdrawal of Imlay Investments from the market, the addition of a Y-Combinator play (Shotput Ventures), the slips and slides of creating new angel groups in other Georgia markets, and  Angel Lounge trying to find its voice all have combined to make life both exciting but somewhat confusing for entrepreneurs looking for funding.

-No Exits. I’ve been saying for a couple of years now that if there are no positive exits (or conversely, failures/bankruptcies) for current angel investors, the angels cannot recycle the previously invested cash they receive from a postive sale, M&A or IPO. And, no exits mean no “new” angels (or very few). If there are no exits, no recycled capital and no new angels, a stagnant economy is unintentionally created. Sound familiar? Yep, look around you at the economy. All the new money is from the Fed. How to help this situation? See #3 and #5.

-The era of Free Money……is over. See #2.

2.) Valuations

Valuations seem to have gone way off course.  They are at stubbornly high 2007 levels–and have seen an increase in last 3-6 months. It seems as if there is no in between for the companies raising cash.  Believe me, this is as frustrating for the angel investors as it is for the entrepreneurs.

3.) Angel Group Syndication

If you need to know what angel group syndication is, you’d better learn. If you don’t know that there are angel groups in other states willing to listen to GA companies, you’d better learn.

4.) Deal Flow

Deal flow has lessoned considerably this (3rd) quarter. However, there is a backlog of new companies that many angel groups are working through. I imagine that with the release of Capventure companies Tuesday night, Atlanta will see an uptick in dealflow for the short term.

5.) Tax Credits for Georgia Angel groups

Many of you know that a tax credit for Georgia early stage investors has been a long term project of mine for 5 years. Let me tell you, it hasn’t gotten any less important for me or for the State of Georgia. The reason North Carolina/RTP is cleaning our clock in funding young tech companies? Tax Credits. North Carolina has had tax credits since 1996 and now has two NEW angel funds of $5M each–all due to tax credits. As soon as GA politicians and GA old boy networks learn that tax credits aren’t just for the favored few, the better off Atlanta/GA is going to be.

That’s all for now. Happy to answer questions, if any. More posts later in October.

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