Illinois Angel Investment Credit Program

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Creating an Incentivized Environment

The Illinois Angel Investment Tax Credit Program encourages investment in innovative, early-stage companies to help them obtain the working capital needed to further their growth in Illinois. Investors in companies certified as Qualified New Business Ventures (QNBVs) can receive a state tax credit equal to 25% of their investment (up to $2 million). 

Tax Incentive Allocations

A total of $10 million in Angel Investment tax credits will be allocated in 2019.  Funds will be allocated by quarter, on a first-come first-served basis (see Allocation Schedule, under Program Documents below).  Once tax incentive funding for a particular quarter is exhausted, no further funds can be allocated until the subsequent quarter.

Program Documents

 

Businesses must register for each taxable year in which they desire to be a qualified new business venture (QNBV).  All previously certified QNBV's MUST apply as a new applicant each year. QNBV applications are reviewed by a committee on a rolling basis throughout the calendar year.

Businesses seeking eligibility with the program must satisfy the following requirements:

  1. Must be principally engaged in innovation

  2. Must have fewer than 100 employees upon submitting application

  3. At least 51% of employees must be located in Illinois

  4. The principal place of business must be in Illinois

  5. Must have been in operation in Illinois for no more than 10 consecutive years prior to certification

  6. Must have the potential to create jobs or capital investments, or both

  7. Cannot have received more than $10 million in aggregate private equity investments, or $4 million in investments that qualified for tax credits

  8. Must be registered in good standing with the Illinois Secretary of State’s Office to transact business in Illinois

  9. If approved and an investment into a QNBV business results in the issuance of a tax credit, the QNBV is required to submit annual reports for three years following the issue date of tax credit

QNBV Forms

  • 2019 Qualified New Business Venture Application Documents (QNBV applications are reviewed by a committee on a rolling basis throughout the calendar year)

QNBV Set-Asides

The 2018 Angel legislation created two specific set-asides.  The Registration Notice provided to each QNBV upon certification indicates which, if any, apply. 

  1. $500,000 in tax credits are set-aside for investments made in QNBVs which are “minority owned businesses", "$500,000 in tax credits are reserved for investments made in QNBVs which are “minority owned businesses", "women owned businesses", or "businesses owned by a person with a disability." The legislation specifies that these terms be defined as they are used in the Business Enterprise for Minorities, owned businesses", or "businesses owned by a person with a disability." The legislation specifies that these terms be defined as they are used in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act.  More information on that Act can be found at http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=550&

  2. $500,000 in tax credits are set-aside for investments made in QNBVs with their principal place of business in counties with a population of not more than 250,000. 

  

The Illinois Angel Investment Tax Credit Program offers tax credits to qualifying claimants in an amount equal to 25% of the claimant’s investment made directly in a qualified new business venture.  While the tax credit may not exceed the taxpayer's Illinois income tax liability for the taxable year, the credit may be carried forward for up to 5 years following the excess credit year. 

 Angel investors must adhere to the following requirements: 

  1. Investments must be made in a registered qualified new business venture (QNBV).

  2. Investments must be made on or after the date the QNBV was certified in the program.

  3. Investments from previous years are ineligible.

  4. Investments must be given at a risk of loss and in consideration for an equity interest of the QNBV. For the purposes of this definition, an investment is at risk of loss if its repayment depends entirely upon the success of the business operations of the qualified new business venture.

  5. $10,000 is the minimum amount an applicant must invest in any single QNBV to be eligible for a credit.

  6. $2,000,000 is the maximum amount an applicant may invest in a single QNBV to be used as the basis for a credit.

  7. Investments must remain in the QNBV for at least 3 years and attestation must be submitted on the first, second and third anniversary of investment. Attestation forms will be accepted within 30 days prior to the anniversary of the investment.

  8. Tax credits cannot be sold or otherwise transferred to another person or entity.

  9. Only equity investments are eligible for tax credits.

  10. The Department may accept a Simple Agreement for Future Equity (SAFE agreement) as an eligible investment if the agreement has certain provisions that keep a SAFE investor in more or less the same position as a non-SAFE equity investor in terms of risk exposure. The SAFE must convert within three calendar years.

  11. Investors must submit proof that funds were transferred to QNBV, documentation from the QNBV that investment was made (documentation states type of equity investment) and proof that funds were received by the QNBV. Department may request additional documentation as needed.

Investor Application and Forms

 

When your Angel QNBV is featured in the media, let us know so we can share the good news!  Email a link to robert.kerr@illinois.gov

 

Angel Investment Tax Credit Program QNBVs mentioned in Forbes!

Pete Wilkins, Managing Director of Hyde Park Angels, recently published an article in Forbes, 12 Chicago VCs You Should Know About (3/7/19). He reviews "the region's key VC players and an example deal from each of their portfolios." 

Five of the companies listed are Angel program QNBVs!

VC FirmAngel Program Participant
Chicago VenturesG2 Crowd
HPACatalytic
Hyde Park Veture PartnersFourKites
MATH Venture PartnersJiobit
OCA VenturesRegroup Therapy

https://www.forbes.com/sites/peterandrewwilkins/2019/03/07/12-chicago-vcs-you-should-know-about/amp/?__twitter_impression=true

 

Great article on 2018 QNBV Tillable

After selling 640 Labs to Climate Corp., Corbett Kull raises $8.25 million for River North-based Tillable, which bring farmers and landowners together.

https://www.chicagobusiness.com/john-pletz-technology/ag-tech-entrepreneur-back-new-startup

 

Angel QNBVs raise money in December!

ChicagoINNO recently published a list of 12 Chicago tech and startup companies that raised money in December, 2018 . . . and FIVE out of the twelve are Illinois Angel Program QNBVs!

It's great to see our Angels getting the recognition (and CAPITAL) they deserve! If you haven't registered for 2019 QNBV status, now is the time to do it! Click here for more information.

 

The Mom Project – an Illinois Angel QNBV - raises $8M in a Series A round!

(12/17/18) The Mom Project is a Chicago-based startup that offers an online platform to help women remain active in the workforce . . . and they are also a certified venture in the 2018 Illinois Angel Investment Tax Credit Program!  On Monday, 12/17/18 they announced an $8M Series A raise, which along with a $2.6M seed round earlier this year, brings their total funding to $11M!

Read more about this exciting company here . . . and here . . . and here!

 

Angel Program Participants Honored at Chicago Innovation Awards

The 17th annual Chicago Innovation Awards were announced on Monday, October 29.   More than two dozen local companies and organizations across Chicagoland were recognized for their innovative spirit. The Illinois Department of Commerce and Economic Opportunity congratulates all the winners and would like to recognize those five companies who were participants in the Illinois Angel Investment Tax Credit Program.  

Illinois Angel winners in the "Up-and-Comer" category:

  • Parker Dewey (2018 Angel program)

  • Jiobit (2018 Angel program)

  • Truss (2018 Angel program)

  • Catalytic (2016 Angel program)

Illinois Angel Winner in the "Social Innovator" category:

  • BallotReady (2016 & 2018 Angel program)

 

 

Questions regarding the Angel Investment Tax Credit program can be sent to angelinvestment@illinois.gov