State legislators, investors and entrepreneurs almost overwhelmingly supported a bill to invest $25 million into early startup businesses at a public hearing Wednesday, with only a few minor hesitations.
Rep. Mike Kuglitsch, R-New Berlin, introduced the legislation, which has bipartisan support, last week to provide entrepreneurs and new business the financial support they need to push their plans into fruition. The bill calls for a 2-to-1 match from private businesses for every dollar the state invests.
The Wisconsin Economic Development Corporation would manage and allocate this state investment through a “fund of funds” operation to the most promising up-and-coming businesses and startups in Wisconsin, according to the bill.
WEDC Chief Operating Officer Ryan Murray said Wisconsin has potential to be a regional and national example of excellence in business development, but has also ranked near the bottom in entrepreneurial activity.
“We think this bill is a tremendous step forward,” he said. “We think it’s going to help us not just in the rankings, but the important thing is it’s going to help us in business creation, job creation and capital access for entrepreneurs.”
Murray added the bill is a measure legislators, governors and other policymakers are accepting nationwide, regardless of their political ideologies.
Additionally, he said jobs created by venture and early capital are high-paying and secure through economic turmoil with wages usually one-and-a-half times average occupations statewide.
While the bill has the right motives in mind to encourage job growth, Rep. Brett Hulsey, D-Madison, said the legislation will neither enough money nor a long enough period of time to have a significant impact.
“My concern is that $25 million from WEDC and 271 jobs, that’s more than a walking start; that’s a crawling start,” Hulsey said.
Rep. Penny Bernard Schaber, D-Appleton, echoed Hulsey’s reservations about the bill being only a one-time expenditure. She also questioned why the bill’s language does not require a return on investments that would be reinvested into the venture capital fund.
Kuglitsch dispelled concerns from Democrats regarding the initiative’s sustainability due to the limited size of the one-time investment pot at the Assembly Committee on Jobs, Economy and Mining public hearing. Kuglitsch said his bill is only the beginning of state-backed subsidies to young businesses in Wisconsin.
“As you heard throughout the testimony today, this is the first step,” he said. “We’re going to set up a program and we’re going to monitor it. When it succeeds, I think then we will pursue the avenues we have talked about.”
Tom Still, president of the Wisconsin Technology Council and the Wisconsin Innovation Network, said venture capital and angel capital investments account for 11 percent of private-sector jobs nationwide. However, such investments make up just 1 percent of total private sector funding, and Still called it a “highly efficient way to create jobs.”
Schraber went on to question whether the state government should spend taxpayer dollars on these private endeavors.
Rep. Fred Clark, D-Sauk City, a co-sponsor of the bill, said the government should step in and support early businesses if it results in boosting Wisconsin’s economy. He said it is currently ranked 44th nationwide in job creation.
“The government ought to get involved when there’s a need for the government to get involved,” he said. “If the private sector is doing something that we believe in, we need to be there. Let’s do what we need to do to get this sector up and running.”