Wis. businesses press for venture capital bill
MADISON, Wis. (AP) — Business owners and leaders spoke out Wednesday in favor of a plan to put $25 million in state money into Wisconsin startups.
The bipartisan legislation from Republican Rep. Mike Kuglitsch of New Berlin would put the money into a fund that invests in agriculture, technology, energy and other industries. The fund also would get at least $50 million from private sources.
The initial $25 million was included in Republican Gov. Scott Walker's proposed budget. Under the proposal, the State of Wisconsin Investment Board and the Wisconsin Economic Development Corp. would hire a fund manager to attract private investments and direct them to newer companies — mostly younger than 5 years old — that are trying to grow and that have good potential.
David Summers is the co-founder of KrunchThat!, a Madison-based startup that uses research technology to help college students with academic papers. He and two partners started the company last year before launching a website in March.
He said the company is looking for about $1.5 million to help offset marketing and legal service costs and eventually hire more developers.
"Penetrating the market takes a lot of upfront capital," Summers said. "I think the legislation is a terrific way to supplement the funding gap we have seen."
Other business owners and leaders joined Summers in applauding the plan, saying it will bring certainty to state's entrepreneurial environment.
Steve Lyons, president of the Wisconsin Growth Capital Coalition, told the Assembly Committee on Jobs, Economy and Mining at a Capitol hearing that Wisconsin is falling behind states with a similar workforce in attracting venture capital to create jobs back home. Lyons noted that 19 percent of Minnesota's workforce is created by venture capital, compared with 3 percent in Wisconsin.
"If we are truly going to compete in the new marketplace, create jobs and lead the way as Wisconsin has in so many things, we must act now." Lyons said.
Tom Still, president of the Wisconsin Technology Council, said many companies left Wisconsin because the state didn't have enough capital to help them get through an early growth stage. Still said the funding would help create jobs with good salaries and benefits.
"It's a walking start," he said of the proposal. "It sets a way where right choices can be made."
Walker promised to create 250,000 private-sector jobs by 2015, but Wisconsin is far from reaching that goal. The state recently dropped to 44th in the nation for creating private-sector jobs.
The legislation drew concerns from two Democratic lawmakers who said a one-time investment is not enough to guarantee a long-term return.
Assembly Democratic Minority Leader Peter Barca of Kenosha, along with Sen. Julie Lassa of Stevens Point, announced last week that they are introducing separate venture capital legislation. Lassa said Kuglitsch's proposal doesn't require companies that received funds to have offices and staff in Wisconsin and therefore cannot ensure sustainable growth in the state.
Other Democrats wondered how many jobs Kuglitsch's proposal would actually create.
In response, Kuglitsch said his focus is on businesses, and that jobs would be created as a result.