Building Missouri’s Early-Stage Capital Engine

NEXT Missouri, Inc.’s President, Ben Johnson, testified in support of HB 1845, the Missouri Angel Investment Incentive Act, on February 18.

Here’s Ben’s testimony submitted to the House Commerce Committee.

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Thank you, Chairman Casteel, and members of the Committee, for the opportunity to testify. And, thank you, Representative Gallick for your leadership on this issue.

Missourians are innovative and entrepreneurial but turning an idea into a company that creates jobs, pays wages, and contributes to the tax base is difficult without access to early capital. Many promising Missouri companies either fail to reach their potential or leave the state because the market for early-stage, private investment is underdeveloped in Missouri.

The Missouri Angel Investment Incentive Act solves this problem through a temporary and targeted intervention that catalyzes private markets and allows them to mature.

Early-stage investment—called angel capital—is typically the first professional funding a company receives—and it is critically important.

Without it, startups struggle to hire employees, lease facilities, and purchase equipment.

With it, they become employers rooted in Missouri that generate payroll, sales, and property tax revenue for years to come.

Moreover, when Missouri startups get early capital, Missouri sees investment pour in from other states.

At BioSTL, we’ve invested about $50 million in Missouri startups. Those companies have gone on to raise nearly $3 billion in additional capital - more than 85% from outside Missouri.

Let me say that again: BioSTL’s early investments helped Missouri startups put down roots that resulted in nearly $3 billion flowing into Missouri. That’s how we strengthen our state’s economy.

The angel investor credit is a means, not an end; the end objective is durable economic activity that broadens the state’s tax base—and it does it with private money, not public spending.

Other states have used a time-limited angel investor credit as a bridge to stronger private capital markets and broader tax reform. For example, Tennessee successfully used an angel investor tax credit to spur greater investment in startups as it phased out a state tax on dividends. Tennessee now has seven burgeoning startup ecosystems across the state, and Nashville ranks among the top 100 globally.

This proposal is designed with fiscal discipline and guardrails. It includes a clear sunset, a defined cap on total credits, and accountability measures to ensure transparency and evaluation. The intent is to end the credit once private markets are sufficiently developed, not to create a permanent subsidy. In this way, the legislation is structured to prevent dependence on incentives by jump-starting a market that can stand on its own.

The credit also ensures broad geographic access. By providing enhanced incentives for investments in rural communities, the legislation encourages capital formation across every region of the state, not just major metropolitan areas. This approach promotes statewide growth and distributes opportunity more evenly among Missouri’s counties.

Acting now positions Missouri to capture private capital that might otherwise flow to out-of-state funds and companies. By pairing a temporary, targeted market catalyst with broader tax reform goals, the state can convert new private investment into locally rooted employers, higher payrolls, and a more resilient revenue base. The result is not simply more startups; it is a stronger, self-sustaining economy capable of supporting Missouri’s long-term fiscal needs.