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Venture Capital

Tax & Incentive Profile

Venture Capital

INFORMATION FOR BOTH KANSAS AND MISSOURI IS PRESENTED BELOW.

Kansas

Seed & Venture Capital Funds

A credit for a portion of a taxpayer's investment in Kansas Venture Capital, Inc., Sunflower Technology Venture, LP, or a certified private venture capital company or local seed capital pool may be claimed against its Kansas income tax liability. The amount of the credit will be 25% of the total amount of cash investment. The amount of credit exceeding the taxpayer's liability in any one taxable year may be carried forward until the total amount of credit is used.

• Certified Development Companies. The state's network of CDCs administer micro-loan pools to assist small and start-up companies which would typically not qualify for financing from other sources.
• Kansas Technology Enterprise Corporation. KTEC provides financing and other assistance for "high-tech" Kansas businesses. Programs include early seed capital and grants for research and development, equipment and facilities, training, and technical consultation.
• Certified Kansas Venture Capital Companies. These companies make equity investmetns to aid the creation and expansion of Kansas businesses. Eligible businesses exhibit high levels of growth and profitability, but are unable to obtain conventional financing. The program excludes oil and gas exploration and development, real estate development or appreciation, banking or lending operations, retail, and certain service sector businesses.
• Certified Local Seed Capital Pool. This fund provides capital for small businesses to 1) develop a prototype product or process, 2) produce a marketing study to determine the feasibility of a new product or process, or 3) create a business plan for the development and production of a new product or process.
• Kansas Venture Capital, Inc. KVCI is a statewide risk capital system designed to create private risk capital for investment in smaller Kansas businesses. Funds are invested for the purpose of enhancing productive capacity within the state or adding value to goods or services produced or pocessed within the state. Most corporate businesses that meet the SBA's definition of a small business qualify for KVCI assistance.

Angel Investor Tax Credit Program

Tax credits are offered against Kansas income tax liability for accredited investors making investments in seed and early-stage capital financing for emerging Kansas businesses engaged in the development, implementation and commercialization of innovative technologies, products and agencies.

• The credit is 50% of the investor’s cash investment in the qualified business.
• If the amount of credit exceeds the investor’s tax liability in any one taxable year, the remaining portion of the credit may be carried forward until the total amount of the credit is used.
• There is a $50,000 tax credit limit per company per year.  Accredited angel investors can receive a total of $250,000 tax credits per calendar year.

Missouri

Seed Venture Capital

Venture Capital is equity financing. Equity financing involves no direct obligation of the business to repay any fund; however, it does involve selling a partial interest of the business to the investor. Because the investor owns a share of the business, they are interested in the long-term success and future profitability of the business. Equity financing tends to be very complicated and will require the business to see the advice and representation of an attorney and accountant.

New Enterprise Creation Act

The New Enterprise Creation Act is intended to generate investment for new, startup Missouri businesses that have not developed to the point where they can successfully attract conventional financing or significant venture capital from later-stage funds.

Certified Capital Companies

A Certified Capital Company (CAPCO) may invest in an eligible business, which is in need of venture capital and cannot obtain conventional financing. The eligible businesses must derive their revenue primarily from manufacturing, processing or assembling or products, conducting research and development, or, service businesses, which can demonstrate that more than 33% of its revenue would be from outside the state of Missouri.

DEFINING THE GREATER KC METRO AREA

Kansas City is a Missouri/Kansas bi-state metropolitan area. All statistical references made to Kansas City Metropolitan Statistical Area (MSA) include the counties of Cass, Clay, Clinton, Jackson, Lafayette, Platte and Ray in Missouri, and Johnson, Leavenworth, Miami and Wyandotte counties in Kansas. The greater Kansas City area also includes the adjoining Lawrence, KS, St. Joseph, MO, and Topeka, KS MSAs, as well as the Atchison, KS, Chillicothe, MO, Ottawa, KS, and Warrensburg, MO areas.