WisBusiness: State, UW-Madison programs aim to spur investment in entrepreneurs

The state and UW-Madison are pushing programs to encourage investment in new companies after venture capital spending fell to an eight year low in 2003.

On Feb. 6-7, five teams from UW-Madison’s Weinert Center for Entrepreneurship will pull all nighters, examining plans from two businesses seeking venture capital – Precision Information and Lucigen. The program is called Venture Capital Spring Training.

After a 15-minute pitch from the entrepreneurs, each team will present funding solutions to a panel of real-world venture capitalists. The students will be judged on their ability to evaluate and value a venture and their proposed a funding strategies.

“Venture Capital Spring Training will give students the chance to look at the business plan from an investor’s viewpoint,” Larry Cox, director of the Weinert Center for Entrepreneurship, says. “Whether our students go on to be entrepreneurs or work in the area of business development, this competition develops skills they will find useful.”

Also, the first Governor’s Business Plan Contest is hitting high gear. Hundreds of ideas from people in 100 different communities in Wisconsin have been proposed through the contest, run by the Wisconsin Technology Council.

Tech Council President Tom Still says that the 335 plans collected far exceeded expectations.

“It blew the doors off,” says Still. “It tells me there’s a lot of untapped entrepreneurial spirit in Wisconsin.”

Ideas will be winnowed into four category winners and a grand prizewinner will be named at the Wisconsin Entrepreneurs’ Conference in June.

Investors have been hard to come by for new companies in Wisconsin. Many, burned in the previous tech collapse, are sitting on their cash, waiting to see when the tech sector will flourish again.

“A lot of money is still parked and waiting to get back on the freeway,” Still observes, adding a lot of new companies are “in a no-man’s land right now.”

But things could improve in the next year or two, he says, if, among other things, the state Legislature passes important investment bills.

The first bill, SB 261, would earmark $45 million to develop business centers to help entrepreneurs find commercial uses for research conducted in Wisconsin; the centers would be a collaboration between the Department of Commerce and the UW System. The bill would provide $35 million for early-stage investments and $30 million for venture and angel investments. The $30 million includes tax credits for individual investors and an annual study of new state businesses.

The second bill, SB 249, would revamp the Certified Capital Companies program. Originally passed in 1998, that program offered $50 million in tax credits to insurance companies that invested in small Wisconsin companies. The new program, now to be called the Wisconsin Capital Companies program, would include any business that pays corporate franchise, income, or a premium tax. Fund managers in the program would be required to focus half of the money on early-stage and start-up companies.