Indiana Venture Capital Investment (VCI) Tax Credit: A Guide for Investors and Startups

If you're a venture investor or an early-stage startup in Indiana, the Venture Capital Investment (VCI) Tax Credit is a powerful tool to attract and secure funding. This program, administered by the Indiana Economic Development Corporation (IEDC), offers tax credits of 25% to 30% on qualified investments in Indiana-based startups, making early-stage capital more accessible and appealing.

This guide explains how the VCI tax credit works, who qualifies, and the step-by-step process for both investors and founders.

What Is the Indiana VCI Tax Credit?

The Indiana Venture Capital Investment Tax Credit incentivizes investments in early-stage companies that are headquartered in the state. Here’s how it breaks down:

• 25% tax credit for investments in standard Qualified Indiana Businesses (QIBs), up to a $1 million credit
• 30% tax credit for investments in minority- or women-owned QIBs, up to a $1.5 million credit

This makes Indiana a more competitive ecosystem for both entrepreneurs and venture capitalists.

Step 1: Qualify as a Qualified Indiana Business (QIB)

To unlock the VCI tax credit, startups must first apply and be approved as a Qualified Indiana Business.

QIB Eligibility Requirements:

• Must be headquartered in Indiana
• Must have either:
  • At least 50% of employees located in Indiana, or
  • At least 75% of assets in Indiana
• Must have less than $10 million in average annual revenue
• Must not be engaged in retail, real estate, or certain professional services

Applications are submitted through the Indiana Economic Development Corporation (IEDC) before the investment is made.

Step 2: Investor Applies for Investment Approval

After the company is approved as a QIB, the investor must apply for investment approval through the IEDC prior to finalizing the investment.

Applications can be submitted via Access Indiana, the state’s online portal for business services.

Step 3: Submit Proof of Investment for VCI Tax Credit

Once the investment is made, the investor must submit proof to the IEDC within 30 days. Required documentation includes:

• Confirmation that the company still qualifies as a QIB
• Details of the investment transaction
• A copy of the executed investment agreement (e.g., SAFE, convertible note, or equity purchase)

The IEDC then issues a VCI Certification Letter, which the investor includes when filing Indiana state tax returns.

Can the VCI Tax Credit Be Transferred?

Yes. The Indiana VCI tax credit is transferable, meaning investors can assign the credit to another party—often in exchange for cash. This creates liquidity for investors, especially those without Indiana tax liabilities.

To transfer the credit:

• Both the original investor and the assignee must submit notice of assignment forms to the IEDC
• The IEDC will issue a new Certification Letter for the assignee

Why the VCI Credit Matters for Indiana Startups

By reducing investor tax liability, the VCI tax credit program helps Indiana startups stand out in a competitive venture market. It’s especially valuable for early-stage founders trying to attract out-of-state or angel investors who might be hesitant otherwise.

Learn More About the Indiana VCI Program

More details, eligibility information, and application forms are available directly from the Indiana Economic Development Corporation (IEDC).

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