When New Orleans-based startup Dinner Lab abruptly shut down in April, it wasn’t just private investors who lost millions. Louisiana taxpayers lost more than $3 million in tax credits as well, reports the New Orleans Advocate. At the time Dinner Lab was taking on investors, the state’s Angel Investor Tax Credit program, administered by Louisiana Economic Development, was offering investors a tax credit valued at 35 percent of their investment, which could be applied against their Louisiana tax obligations. Dinner Lab brought in $10 million, and investors wrote off more than $3 million in taxes.

Then the startup went bankrupt. Brian Bordainick, co-founder and CEO of Dinner Lab, told the Advocate that the Angel Investor program was crucial in funding the company’s launch. “Raising money is a tricky process, and New Orleans wasn’t a capital-rich environment for the type of company we had, so this opened things up,” Bordainick said. “I still think it’s a huge boon for the entrepreneurial community.”

But others say the Angel Investor program is risky, among the riskiest tax incentive programs Louisiana offers. In other programs, the benefits are tied to requirements for job creation or money spent in state, and often include “clawback” provisions that allow the state to recoup its money if the company doesn’t fulfill its end of the deal. The Angel Investor program has no such provisions, and no way to recoup tax credits when companies fail.

“You’re going to be taking some risks, and there will be some failures,” Robert Travis Scott, president of the Baton Rouge-based Public Affairs Research Council, told the Advocate. “The idea is that the winners will be really big winners and hopefully make up for the failures. … If it pays off, it’s supposed to pay off really big with lots of jobs and big successes in the state. It’s the state basically endorsing the idea of taking risks. The assumption going in is that you’ll have some failed companies — it’s the nature of it.”

Dinner Lab’s funding ran out in April, causing the company to lay off 43 people and shutter all of its projects save for one: Brooklyn FoodWorks, a culinary incubator. Dinner Lab sold memberships for private dinners in unusual spaces in 30 cities, like an Austin motorcycle dealership. Members also paid between $60 and $90 for the five-course meals and open bars, and were required to fill out detailed surveys responding to the food. The idea was to give talented chefs a venue and to sell that data back to restaurants, but as Bordainick details in this interview, the logistics of it all kept the company from ever turning a profit.

Since the Angel Investor program began in 2011, the state has issued a total of $65 million in tax credits for 114 projects. Since Dinner Lab got its funding, lawmakers have made the program less generous, reducing the incentive to tax credits of up to 25.2 percent of their investment.