Last April we ran a series of posts about the South Carolina angel investor tax credits.
The tax credit award letters for 2020 have just been released, and so here is a quick update on the 2020 awards, the proration factor for the year, and what this might tell us.
For 2020, applicants received a tax credit of 18.86% of their investment amount. As we explained in the prior series, this means that people are receiving a tax credit of 18.86%, rather than the 35% that they would receive if the $5M cap on credits awarded was not being hit.
An updated table of “proration factors” for the last few years is shown in this table, with the inferred total amount of tax credit applications, and therefore the total implied investment amount, for each year.
In 2020, the proration factor is 0.53898, meaning approximately $9.3M of applications were made, and therefore around $27M of investments into eligible South Carolina startups were completed.
This is “down” from 2019 – with the proration factor slightly higher, and the applications and investing activity down 14%. Given a global pandemic and epic economic dislocation, this is a fairly minimal fall –with more qualifying investing activity than that long-ago “dark age” of…2017.
Naturally, it’s a little disappointing for investors to be getting less of the credit than expected. But as last year, from the wider perspective of South Carolina’s early-stage companies, entrepreneurs, and ecosystem, it’s good news. An impressive, and resilient, amount of investing activity into startups in South Carolina.