State senators say outlook bright for ‘investment capital’ bill

MADISON — The chances are good for approval of proposed legislation that would raise roughly $250 million to fund nascent companies, a pair of prominent state senators said Tuesday as part of a Wisconsin Early Stage Symposium forum held at Monona Terrace.

Now that the political passions that rose to the boiling level during the last session have cooled — and several rounds of recalls are receding from memory — lawmakers should be able to work together on a plan that can create employment by providing money to capital-starved young companies, said Sen. Alberta Darling, R-River Hills, and Sen. Tim Cullen, D-Janesville.

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Gov. Scott Walker has said he backs such a proposal and has tasked the Wisconsin Economic Development Corp. with building a broad-based coalition to rally support for the plan.

Darling said last year’s plan was a casualty of both the “bloody battle” over the budget and a tight funding environment: legislators could not figure out an acceptable way to pay for it.

“We didn’t have the critical mass to get it done,” noted Darling, who said many legislators do not understand how venture capital or angel investor networks operate.

“For many of them, that just sounds like rich people trying to get richer,” added Darling, who said any new legislation would be dubbed an “investment capital” bill.

Though no specific deal has been reached, Cullen said “there isn’t an inch of difference between Alberta and I” on their support for the overall plan. But the key to passage will be to get a plan that can be supported by moderate Republicans and Democrats, he said.

He also said that neither he nor Darling could speak for members of the state Assembly, who were not represented on the panel. Cullen and Darling also said the proposal would most likely be funded by general tax revenue because selling bonds would require interest payments, which would increase the cost.

“This is all about creating jobs,” Cullen said. “Everyone wants jobs, but there are no specifics yet. Well, this is an idea that can create new businesses and jobs.”

Other members of the panel included Tom Still, president of the Wisconsin Technology Council, which hosted the forum; and Tim Keane, who heads Golden Angel Investors. Mark Ehrmann of the Quarles & Brady law firm was the panel moderator.

Still said the symposium, which is aimed at bringing together entrepreneurs and investors, will draw more than 440 participants this year – up from around 420 last year. The gathering will continue Wednesday with additional forums and talks.

“I think that’s indicative of the activity in this state,” he said. “But we’re at a critical stage. Young companies need more capital to be truly successful.”

Keane, who has started and run several businesses, said he does not view the proposed state plan as competition to privately run angel and venture capital organizations.

Rather, it would be a fund that his group could coordinate with to support start-ups, added Keane, who directed the Kohler Center for Entrepreneurship at Marquette University for a decade and continues to teach at the business school.

In a separate forum, panelists warned that the looming fiscal cliff has spooked the stock market and could result in another recession.

But Alan MacCleod of Capstone National Partners, the former chief of staff to U.S. Congressman Ron Kind, D-La Crosse, said he believes that while there will be a “lot of posturing,” legislators will reach a deal because they understand the damage it would cause the economy.

Jeanne McCabe, who heads JZB Solutions and is the former chief operating officer at the Morgridge Institute for Research, said she is optimistic that Republicans and Democrats can work together to compromise.

“The pulse in Washington is that they will not go over,” she said. “If they do, it’s hard to predict what would happen.”

Chris McCannell of APCO Worldwide, said “too much is at stake. The two sides will step back from partisanship. Reading the tea leaves, I’d say they understand that going over is not good for the economy and markets.

“In the short term, they will probably make some kind of partial down payment to start dealing with the nation’s $1.2 trillion debt.”

Moderator Ed Maginot, a tax partner with Grant Thornton law firm, however, warned that the nation cannot continue to borrow and take on more debt.

“It’s growing at an enormous rate,” he said.

The question, he added, is whether it’s paid down with tax increases or tax reform.

On a more positive note, the trio of panelists said they believe the outlook is bright for tech companies as a result of President Obama’s re-election.

“The tech community should have positive feelings,” said McCannell. “There is clear direction for the country on health care and financial regulation reform. Democrats are generally sympathetic to supporting technological advances.”

Still, said McCabe, there won’t be a huge amount of growth in the economy because of fiscal issues.

“But technology is where the growth will be,” she said.

— By Brian E. Clark

For WisBusiness.com