Start-up companies might have a new place to turn for seed money if a state lawmaker has his way.
State Senator John Blake (D-Lackawanna) has proposed the "Innovate in Pennsylvania Program," which he says would provide a predictable source of funding for early stage venture capital investment.
Blake wants to auction off future tax credits and then use that pool of money to invest in start-ups. The senator says $140 would be made available to start-up businesses through the Ben Franklin Technology Development Authority.
"The way in which we would do this is by allowing insurance companies to essentially put up cash through an auction — literally bid on tax credits from the commonwealth," Blake said. "They would essentially put up money now for the benefit of tax credits that would not be awarded until 2016 or beyond."
He believes this would give the state enough time to recoup the money it provides to start-up businesses from the taxes paid by the companies and their employees. The tax revenue would offset state money offered in the tax credits to insurance companies.
Blake said the biggest obstacle start-up companies are faced with is obtaining the money to get them off the ground because of a tight credit environment.
"We're trying to break that log jam loose a little bit and try to take the companies that are out there who have good business plans and who, if we had the money right now, could be in process of deploying those business plans and creating jobs," Blake said.
Companies that would benefit from this program include energy, bio-tech, life sciences, and medical research businesses.
Blake said his proposal has the support of the Insurance Federation of Pennsylvania and bipartisan backing. With only eight voting days remaining in this legislative session, he said if his bill is not considered in the fall, he will reintroduce it at the beginning of the new two-year session in January.