In an effort to create jobs for promising new startups, state lawmakers from both parties unveiled a venture capital bill Wednesday based on provisions mapped out in Gov. Walker’s budget proposal.
Assembly Majority Leader Scott Suder, R-Abbotsford, led a press conference to overview the bipartisan Venture Capital Commission’s funding efforts supporting entrepreneurs and early state companies.
The bill’s lead author, Rep. Mike Kuglitsch, R-New Berlin, said the investment capital bill results from more than two years of work. The bill is based on findings the past decade indicating job creation in Wisconsin has come largely from companies that have been operating less than five years, while mature businesses have lost employment, according to Kuglitsch.
“The biggest hurdle for a young entrepreneur with ideas to overcome is capital,” Kuglitsch said. “So, it only makes sense that an economic development strategy for a state should include investment capital. We have the great ideas in this state. All we need to do is attract more investment capital.”
Sen. Alberta Darling, R-River Hills, and Rep. Fred Clark, D-Sauk City, are also authors in for the bill.
Kuglitsch said the bill would bring $25 million in backing to startups and entrepreneurs. He added private companies would be required to match state “fund of funds” investments at a 2 to 1 ratio.
Sen. Tim Cullen, D-Janesville, said the bill represents a collaborative attempt to improve Wisconsin’s job market while putting divisive political affiliations aside.
“I am very pleased that this bill requires the non-partisan State of Wisconsin Investment Board play a majority role in selecting a funds manager,” Cullen said. “I think SWIB’s role will go a long way in ensuring a firewall between investment decisions and politics.”
A similar venture capital investment bill failed last legislative session as lawmakers disputed the efficiency and trust of private financial support, especially regarding regulation of Certified Capital Companies accused of skimming profits.
Afterward, Sen. Julie Lassa, D-Stevens Point, and Assembly Minority Leader Peter Barca, D-Kenosha, officially announced their plans to back a different bill to invest more money into venture capital funding.
The Democrats also said a shortage of financial support exists for venture capital, but emphasized any legislation to address the issue must be sustainable for the long-term. Lassa said that element must be more prominent in Venture Capital Commission’s bill to ensure its effects are not short-lived and then forgotten.
“What we’re going to find is the money is slow to get out the door, it’s going to be slow to create the good, family-supporting jobs that we need,” Lassa said regarding the measure lasting only two years. “I’m really afraid that it will end there.”
Lassa said the proposal by Darling and Kuglitsch is one-time investment giving funds to managers for just two years to create contracts with entrepreneurs and new companies.
Barca said he believes the one-time $25 million commitment will not drive companies to invest in Wisconsin. Instead, a residency requirement for private investors must be included in the bill, noting the goal is not to provide loans temporarily then move on to the next initiative.
“We’re glad Representative Kuglitsch, Representative Clark and Senator Darling kicked this off today,” Barca said. “We view this as Representative Clark said — just as a start. We really need to examine what is going to make this sustainable, what is going to ensure young entrepreneurs are going to have enough capital to start, grow and expand their businesses.”
