The need for tax breaks for startup investors in a developing economy is becoming increasingly important as governments look for ways to boost economic growth and development. This is especially so for countries that are in the early stages of development, where low levels of capital investment can be a major obstacle to growth. 

This can be an effective way to encourage more private capital to flow into the early stage ecosystem, helping to create jobs and spur economic development. The main benefit of tax breaks in this sector is the increased level of investment they can bring to the aforementioned asset class, considering the risk involved in startup investing. By providing incentives to investors, the government can encourage them to put money into new businesses, which in turn can create jobs and help to grow the economy. In addition, new businesses often bring with them new technology and ideas, which can help to create a competitive advantage and encourage further economic growth. 

An added benefit is the boost to the country's entrepreneurial culture. By providing incentives for people to invest in new businesses, the government can help to create an environment that encourages people to take risks and to pursue their own business ideas. This can be especially beneficial in developing countries, where the lack of access to capital often makes it difficult for people to start their own businesses. 

Tax breaks for startup investors can also help to increase the number of high-growth companies in the country. By providing incentives to investors, the government can encourage them to put money into companies that have the potential to become large and profitable. This can help to create a larger, more dynamic economy and can also attract foreign investors, who may be more likely to invest in larger, more established companies. 

An example of a similar scheme is the Enterprise Investment Scheme ("EIS") in the UK, which allows companies to raise investments of up to £5 million a year and £12 million in the company's lifetime. Investors who back companies that qualify for the EIS scheme are incentivised through a tax relief on their investment which can be claimed anytime from the date of the investment to 7 years after, as long as the company still meets certain conditions.

Finally, such policies help to reduce the cost of capital, especially in environments with high-interest rates, making it easier for businesses to access the funds they need to start or expand. This can help to make it easier for entrepreneurs to access the resources they need to get their businesses off the ground and can help to create a more vibrant and competitive business environment. 

TLDR: Tax breaks for startup investors can be an effective way for governments to promote economic growth and development. By providing incentives for investors to put money into new businesses, the government can help to create jobs and spur economic growth. In addition, tax breaks can help to create a more entrepreneurial culture, create a larger and more dynamic economy, and can make it easier for businesses to access the capital they need to start or expand. All of these benefits can help to make a country more attractive to investors, both domestic and foreign, and can help to create a more prosperous and dynamic economy.