Let's be honest. At a bunch of shops the engineers hired in year 2 will never be properly recouped because the company will be out of business in less than 7 years.
Start ups are hard, most fail. But what rational national policy makes is several orders of magnitude harder to succeed during the riskiest period by adding tax provisions on pretend profits?
Seems like the incentive is to make as little profits as possible at the start to avoid being killed by taxes. I would have expected an exclusion for companies that make below X dollars or are less then Y years old.