Many Georgia policymakers and business leaders contend the state has a shortage of venture capital, a form of business financing that helps fund early stage companies. To remedy this problem, some Georgia leaders are considering CAPCO legislation, an expensive tax credit program advertised as a jobs and economic development bill. Georgia’s CAPCO proposal – sometimes referred to as the “Georgia Small Business Investment Company Act, or Senate Bill 203”– would provide $125 million worth of tax credits to “certified capital companies” (CAPCOs), who would then invest in Georgia small businesses. Although strengthening Georgia’s venture capital market could well improve the state’s economy long-term, the CAPCO model is a fundamentally-flawed method for doing so. This policy brief provides an overview of CAPCO and how it works, why CAPCO is bad public policy, and offers alternatives and recommendations. Download the PDF.
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