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Innovation Fund Tax Credit

Encouraging investments in venture capital funds that invest in Iowa startups

The Innovation Fund Tax Credit was created to stimulate venture capital investment in innovative Iowa businesses. Individual investors receive tax credits equal to 25 percent of an equity investment in a certified Innovation Fund. In turn, those certified Innovation Funds make investments in promising early-stage companies that have a principal place of business in Iowa. Innovative businesses include, but are not limited to, businesses engaged in advanced manufacturing, biosciences and information technology.

  • Total amount available for investment in Innovation Funds is $8 million this fiscal year
  • Investors must invest in the form of cash to purchase equity or near-equity in an Innovation Fund
  • Investors issued an Innovation Fund tax credit certificate may transfer the tax credit certificate once
  • Fund must be certified by the Iowa Economic Development Authority (IEDA) Board before investments made in the fund can be eligible to receive a tax credit
  • Investors seeking tax benefits must invest in a certified Innovation Fund
  • Only investments made in a certified Innovation Fund will be eligible for the tax credit
  • Fund proposes to provide multiple rounds of funding and early-stage private sector funding to innovative businesses with a high growth potential, and proposes to focus such funding on innovative businesses that show potential to produce commercially viable products or services within a reasonable period of time
  • Fund proposes to evaluate all prospective innovative businesses using a rigorous approach and proposes to collaborate and coordinate with the authority and other state and local entities in an effort to achieve policy consistency
  • Fund proposes to collaborate with the Regents institutions of Iowa and to leverage relationships with such institutions in order to potentially commercialize research developed at those institutions
  • Fund proposes to obtain at least $15 million in binding investment commitments and to invest a minimum of $15 million in companies that have a principal place of business in Iowa
  • See the Administrative Rules for more information

How to Apply

  • Applications for certification are reviewed by the IEDA Board with certification granted after the fund demonstrates it can meet all the eligibility requirements
  • Tax credits available on a first-come, first-served basis
  • Investors must submit an application by March 31 of the year following the calendar year in which the equity investment was made to receive a tax credit certificate
  • Follow instructions on the Innovation Fund Investor Tax Credit Application
Program Contact(s)

Lisa Connell

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