A proposed $100 million venture capital fund designed to support Wisconsin early-stage companies was not included in a version of the state budget proposal passed by the Joint Finance Committee Thursday night.
Part of Governor Tony Evers' state budget proposal included the “Wisconsin Fund," a venture capital fund that would invest $100 million in emerging companies in Wisconsin.
The fund would have been structured as a "fund of funds model," meaning $100 million would be allocated to private venture capital funds who would in turn invest in Wisconsin-based startups.
The Wisconsin Fund would have made the state an investor alongside other private venture capital funds, requiring a funding match of 2-to-1, private to public, according to the proposal.
While the JFC voted to pass the state budget proposal in an 11 to 4 vote, it did not include the $100 million venture capital program proposed by Evers in the Wisconsin Economic Development Corporation budget.
Wisconsin Fund proponents contend that a fund of funds program would bridge a gap in funding for early-stage companies, who need capital to develop products, hire key employees and launch their businesses.
Wisconsin Fund supporters have also argued that without this fund, many of Wisconsin’s early-stage companies would move closer to the coasts where most venture funds are located, or they would go out of business before reaching their full potential.
Organizations backing the Wisconsin Fund including the Wisconsin Startup Coalition and the Wisconsin Fund Coalition now say they will continue to advocate for the fund and explore other avenues to have it passed in the future.
"The state of Wisconsin is in excellent fiscal health, now is the time to make long-term, pro-growth investments ensuring Wisconsin's economy remains vibrant for future generations," said Taralinda Willis, co-founder and CEO of Curate and a WSC board member. "We are disappointed by the JFC's decision to pass on the proposed $100 million venture capital fund of funds but believe this idea has a life outside of the budget process."
The Wisconsin Fund previously received bipartisan support from eight former secretaries of the Wisconsin Economic Development Corp. and the former state Department of Commerce – the group includes five appointed by Republican governors and three by Democratic governors.
However, a free-market advocacy group previously called on Evers to remove the Wisconsin Fund from the state’s budget proposal, citing concerns over the ability of state government to make sound investments in early-stage startups.
Despite the decision by the Republican-controlled JFC, the WSC and the WFC believe a $100 million fund of funds still has bipartisan support from legislative and administrative leadership.
“The Tech Council and the coalition will continue to engage with lawmakers who have shown great interest in what such a fund would mean to Wisconsin’s innovation economy,” said Tom Still, president of the Wisconsin Technology Council.
Wisconsin Fund supporters say a separate bill could be created to include the fund of funds, and are hopeful that such a bill would be considered in future legislative sessions, said Peter Welch, WSC co-founder and The Welch Group chief operating officer.
“We think there’s been positive discussion about it on both sides of the aisle," Welch said. “It’s going to take some work but I think there’s some opportunity for a separate bill."