Legislation creates $75 million fund for young businesses
JANESVILLE — A bill that would create a state-leveraged fund to invest in some of Wisconsin's most promising early stage companies would have applications in Rock County, according to one of the bills co-sponsors and local economic development officials.
The investment capital legislation would provide a $25 million state investment in a fund that would require a 2-to-1 match from private sources.
“I think this is one of the most important economic development bills we can pass,” said Sen. Tim Cullen, D-Janesville, a co-sponsor of the bill that has bipartisan support in both the Senate and Assembly.
State money would have to be matched 2-to-1 by money from private sources, so that a total of $75 million could be invested in young state businesses.
The funds would target businesses in agriculture, information technology, engineering, advanced manufacturing or medical devices.
The bill follows up actions by Gov. Scott Walker, who earmarked $25 million in his 2013-15 state budget bill and invited legislators to craft language to create the program.
Cullen said the nonpartisan State of Wisconsin Investment Board would play a major role in selecting the manager of the funds, and most state investments would be small, anywhere from about $100,000 to $500,000.
“I think SWIB's role will go a long way in ensuring a firewall between investment decisions and politics,” he said.
The Ewing Marion Kauffman Foundation, the world's largest foundation devoted to entrepreneurship, has reported that Wisconsin companies attract less than 1 percent of the country's venture capital and the state ranks near the bottom of all states for entrepreneurial activity.
Wisconsin lawmakers failed in their legislative session to agree on a proposal to boost investment in young companies.
Cullen said some start-ups would inevitably fail, but he suspects many more would succeed, and he perceives a tremendous desire for venture capital funding.
“There's a need for it statewide as well as in Rock County,” Cullen said. “I've talked with Forward Janesville and the Beloit Chamber of Commerce, and they are aware of people who could benefit in Rock County.”
John Beckord, Forward Janesville's president, said the vast majority of local economic development projects do not involve venture capital.
“But there are occasionally projects with high value in terms of investment, job creation, and tax base where it would be to our advantage to have access to venture capital,” Beckord said, noting the plans of SHINE Medical Technologies and NorthStar Medical Technologies to build medical isotope production plants in Rock County.
Cullen predicted the bill would pass the Legislature, possibly ahead of the state budget in June. But, he said, it will need bipartisan support.
“It's one of the most interesting issues in Madison, and there's opposition to it from the far ends of both parties,” he said. “On the far right, the Republicans call it crony capitalism. The far left wants to spend that $25 million on education and health care.”
Cullen said the next state budget likely would include $5 billion for education and $2 billion in health care initiatives.
“Twenty-five million is a big number when it stands alone, but it's nothing compared with $5 billion or $2 billion,” he said. “Some other people have said they are against this because it doesn't spend enough.
“I wish it was a larger amount, too, but the point is to get this started as soon as possible.”
Material from Gazette wire services was used in this story.