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States should create Angel Capital Networks to link investors and young firms.

Angel capital, the capital invested by (usually) wealthy individuals in a region’s businesses, is as important as venture capital in supporting entrepreneurship. States can play a key role by helping to link angels and entrepreneurs. For example, the Wisconsin Angel Network (WAN) represents more than 200 individual investors and helps match them with start ups and young companies. Similarly, Pennsylvania’s Ben Franklin Investment Partners (BFIP) guarantees up to 25 percent of any loss experienced by a qualified private investor who makes an investment in a qualifying southeastern Pennsylvania emerging technology enterprise. A number of states also provide a modest tax credit to angel investors for investing in an in-state firm.