Madison –Today Governor Walker announced he is endorsing a framework for a compromise Venture Capital proposal for consideration by the Legislature. A bipartisan workgroup formed by the Governor has been meeting for weeks to discuss strategies to expand investment capital in Wisconsin. The group is headed by University Research Park Executive Director Mark Bugher and included Senator Alberta Darling, Senator Julie Lassa, Representative John Klenke, Representative Peter Barca, and businessman Kevin Conroy. Recognizing the importance of increasing access to capital for startups as quickly as possible, the Governor is putting forth a compromise framework using concepts the group agreed on and postponing future meetings of the full workgroup.
“Our proposal will allow the legislature to take action on areas of agreement amongst the bipartisan group of legislators that have been meeting on this issue,” said Governor Walker. “I want to thank them for working together to try and find areas everyone can agree on. I believe all members of the group approached the discussions in good faith and remain committed to increasing the capital available for investment. I remain open to continued discussions and ideas from legislators of both parties, but I believe we should move legislation forward now on the areas where we agree.”
The compromise put forward by the Governor contains a Fund of Funds model included in individual proposals previously introduced by Senator Darling, Sen. Lassa and Rep. Klenke. It also contains $100 million of funding as proposed by Senator Lassa and invests in a wide spectrum of early-stage businesses, a concept supported by Representative Barca.
A Fund of Funds means that the state fund would invest in other already existing investment funds, and not in companies directly. The Governor’s proposal would require that recipients of venture capital funds invest 100 percent of Fund of Funds dollars in Wisconsin businesses. Management fees would be limited to 0.5% of assets under management.
“The $100 million Fund of Funds approach is a good first step towards boosting investment capital in Wisconsin-based businesses,” Bugher said. “I believe it will win support from both investors and entrepreneurs and should be supported by any legislators interested in job creation.”
Under the Governor’s proposal there would be $100 million in investible capital through bonding that is backed by contingent, non-refundable tax credits. $5 million would also be set aside for co-investments in angel networks. The Governor’s proposal would have an independent nine member board provide oversight, with SWIB providing technical support. The board would be appointed by the Legislature and the Governor.
The angel co-investment component may be used for investments in Wisconsin businesses proposed by an angel investor network if the network agrees to invest $2 for every $1 in fund capital.
The Governor’s proposal would require an annual report to the legislature and governor and a comprehensive report to the Joint Committee on Finance after six years.
“Job creation depends on new business ventures,” added Governor Walker. “The $100 million contained in this compromise proposal will help grow private sector jobs. I hope that once the success of this proposal is shown, it will lead to additional measures to increase the amount of capital for new businesses.”