Maine Seed Capital Tax Credit Update
News
The Maine Seed Capital Tax Credit (“MSCTC”) Program was created over 30 years ago to help attract equity investment to early stage, innovative startups in Maine. For those unfamiliar with the program, it is administered by the Finance Authority of Maine (FAME) and provides investors, both individuals and venture funds, a tax credit equal to 40% of their investment in a Maine based startup.
This financial incentive attracts in- and out-of-state investors to consider Maine startups and de-risks the investment opportunities. For Maine companies, with historically limited access to capital, the tax credit is a critical “carrot” for inducing investment. In Governor Mills’ 10 year Economic Development Strategy, MSCTC features in their action plan to promote innovation and entrepreneurship by helping to attract capital for companies to scale in the state.
In recent years, FAME has had $15M of tax credit available to allocate annually, and this level of funding extends at least through 2025. The MSCTC program allocated $5.3M in 2023, down slightly from $6.1M in 2022. In 2023, these credits supported 35 different companies in the state, and 141 tax credits were issued. The FAME team is still rounding up the total investment amount for 2023 (including co-investment), but in 2022, the amount invested into participating Maine companies was $46M.
In order to utilize the tax credit, both the startup company and investors need to apply to FAME to ensure they meet the established criteria. There are also limits on how much credit any one investor or startup can utilize. An investor may invest up to $500k in a business over a three-year period, and investors in a single startup can claim tax credits on up to $3.5M of total investment (but limited to $2M per year).
Ultimately, access to capital is hugely important for innovative companies to be able to scale. In Maine’s growing ecosystem, MSCTC plays a crucial role to incentivize and de-risk early stage investments.
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Interested in learning more about the MSCTC program? Click here.
Are you an accredited investor, interested in receiving Maine deal flow via email so you can leverage MSCTC? Complete MVF’s co-investor survey.
About Maine Venture Fund
Maine Venture Fund invests in Maine businesses that have the highest potential for growth and impact. For more information, visit maineventurefund.com.
Inquiries:
Terri Wark
Maine Venture Fund
(207) 305-0006
terri@maineventurefund.com
