Could Pennsylvania be the next hot destination for startups?

21 March 2024- A group of state House Republicans announced Wednesday a package of bills designed to support and promote startup initiatives across the Commonwealth.

The bills aim to capitalize on Pennsylvania’s many assets, including talented, hard-working people and valuable geographic location. The Commonwealth cannot afford to miss any more opportunities to Silicon Valley, New York or other start-up friendly areas.

The eight bills are being sponsored by Reps. Mike Armanini (R-Clearfield/Elk), Valerie Gaydos (R-Allegheny), Aaron Bernstine (R-Lawrence/Butler), Marla Brown (R-Lawrence) and Michael Stender (R-Northumberland/Montour).

Armanini has three bills as part of the package. The first would designate March 18-24 as “Commonwealth Startup Week” in an effort to highlight the many startup businesses that call Pennsylvania home.

Armanini’s second proposal would integrate the philosophy of the Commonwealth to move at a faster rate to capitalize on new opportunities in the startup world by establishing a task force on Startup Venture Opportunities. Composed of startup and venture founders, the tax force would play an integral part of growing startup initiatives across Pennsylvania.

Armanini has a third bill that would establish a Venture Capital Ecosystem Development Program, which would provide grants and technical assistance to universities, local governments and non-profit organizations. The program would provide seed funding for outreach efforts and allow startups to promote themselves and hone their efforts to secure additional funding.

“Pennsylvania’s economy and way of doing business can often be compared to a slow-moving vessel, which takes forever to ‘turn’ and travel with the wind in its sails,” Armanini said. “We need to strike a balance between a haphazard method of growth and our current over-cautious approach.”

Gaydos’ legislation would provide uncapped and non-expiring operating loss deductions to in-state startups. The cap on net operating losses harm new businesses that require large up-front investments and often need years to pay-off. This legislation aims to uncap the net operating loss carried forward by startups in Pennsylvania and allow them to have a non-expiring net operating loss, which can help ensure their long-term sustainability.

“New business creation is a large part of building our future,” said Gaydos. “The more we can do to fuel innovation and innovative companies, the better our futures will be. However, many new companies operate at a loss in the first few years. By extending the net operating loss carry forward tax deduction both in the amount that can be deducted and the length of time in which one can take the deduction against future gains, Pennsylvania can be competitive with other states. No one should ever have to leave Pennsylvania to start a business. Now with this legislation, there would be more incentive to innovate.”

Bernstine’s bill would establish a Student Startup Incubator Network, an initiative to empower student entrepreneurs to build companies here in the Commonwealth. The goal of this legislation is to harness the homegrown talent in Pennsylvania and see that the future of big technology can be developed in the Commonwealth.

“We need to ensure we are providing ample opportunity for young entrepreneurs to start and grow their business right here in the Commonwealth,” said Bernstine “Harnessing entrepreneurial talents among young Pennsylvanians and easing constraints of the labor market is vital to future economic growth.”

Brown has legislation to establish the Startup Investment Tax Credit to connect startups to early-stage investors. This legislation would be a step forward to creating a virtuous cycle where startup founders can place their roots in Pennsylvania and grow the next generation of startups.

Furthermore, Brown has an additional bill that would leverage the power of the Research and Development Tax Credit to incentivize technology research by startups. By investing an additional $12 million, this action would ensure the existing program is not negatively impacted and increases the overall cap to $72 million to combat the demands for the program.

“As a former small business owner, this legislation would have helped me a great deal,” said Brown. “I know the challenges startup businesses face. Early investment into startup businesses is critical to their initial success. My legislation invests in startups from the beginning to fully support employers and employees while encouraging further growth.”

Stender’s bill would restore the Commonwealth’s funding for venture investment back to a level commensurate with the technology sector’s importance by directing a portion of the Fantasy Sports Tax to the Ben Franklin Technology Partners, the Venture Investment Program and the Life Science Greenhouses.

“Pennsylvania is home to many early-stage startups that drive our local and state economy, and we must continue to provide funding to these high-impact ventures,” said Stender. “My legislation would restore the Commonwealth’s investment to a level proportionate with the importance of startups and entrepreneurs. “

Additional information about the bills is available here.