As a bipartisan group of lawmakers unveiled an investment capital bill they hoped would lead to as much as $90 million in investments, two Dem leaders said they’re working on an alternative that would aim for a bigger dollar amount.
Rep. Mike Kuglitsch, R-New Berlin, said the bipartisan bill would use the $25 million set aside in Gov. Scott Walker’s budget for co-investment with other private funds and help spur job growth by bolstering the state’s startup companies.
The bill also provides that the so-called “fund of funds” will invest all funds in agriculture, information technology, engineered products, advanced manufacturing or medical devices and imagining industries.
“The largest or biggest hurdle for a young entrepreneurs with ideas to become to become a productive young company is capital,” Kuglitsch said. “So it only makes sense that an economic development strategy for a state should include investment capital.”
Under the bill, a fund manager would be tasked with investing an initial minimum amount of $30.3 million — $25 million in state funds, $300,000 provided by the fund manager itself, and $5 million raised from other funding sources. Those funds must be invested in at least four different venture capital funds within two years and those funds must in turn invest in Wisconsin-based companies.
The hope is that around $90 million could be invested in startups as a result of public and private funding. The state’s share of the funds, $25 million, would have to eventually be paid back to the state. After that point, the investment manager would have to “pay 90 percent of its proceeds from such investments to the state.”
Meanwhile, Assembly Democratic Leader Peter Barca and Sen. Julie Lassa, D-Stevens Point, said that while the bill is a good “starting point,” they’ll be unveiling an alternative that would try to leverage a larger amount of money.
Lassa said that $25 million in state funding wouldn’t be enough to attract venture capital funds from out of state and get them to stay here.
While neither Barca or Lassa would put a number on how much was appropriate, they noted that the Venture Capital Task Force that both of them served on earlier this year was originally aiming for $200 million in venture capital funds. Both argued that if the venture funds don’t bring in many jobs in the short term, the initiative could be mothballed by a future Legislature.
“I’m really afraid that something that I think we need to be doing in terms of an investment capital … it will end there,” Lassa said. “Because the money wasn’t deployed fast enough, because we weren’t able to create private sector jobs fast enough, that the Legislature will walk away. And that is not something I want to see.”
Dems said their legislation is still being crafted, but that the structure will look similar to proposals that came out of the task force initially. When asked if Barca would vote against the Kuglitsch proposal, he said that he had “hope it doesn’t come to that” and that they’ll use this as a jumping-off point for further discussions.
— By Jason Smathers
WisBusiness.com
