Have patience with venture capital program

If you doubted the pent-up demand for early stage capital in Wisconsin, consider this note from a startup company founder before a bill creating a state-leveraged fund had passed the full Legislature: “We’re eager to learn more about who we can contact, and how soon, about presentation opportunities for our company in front of the new fund. We believe we have a great story to tell!”

With hundreds of compelling startup company stories in Wisconsin, it’s no surprise that aggressive entrepreneurs would jockey to be first in line to make their pitch. That’s what good entrepreneurs do.

However, that line can’t form tomorrow. The Legislature has voted overwhelming to support a $25 million state investment in a larger “fund-of-funds” – and Gov. Scott Walker is likely to sign it into law – but the process of establishing the fund now enters a due diligence phase.

It will take several months before a private fund manager can be recommended by a committee led by the State of Wisconsin Investment Board, and that manager would need a similar amount of time to select four or more private recipient funds that would bring matching capital to the table.

It will likely be early 2014 before the fund is ready to make investments in emerging companies, and even then all the money won’t be invested at once.

That’s all part of a “belt-and-suspenders” approach baked into the bill by legislators who understandably wanted to ensure the best interests of taxpayers are protected over time.

If there’s one certainty about the state-backed fund over time, it will invest in some companies that will fail. That is the reality of all angel and venture funds.

It will take some time for the new state-backed fund to become operational, but entrepreneurs can safely begin polishing their pitches now.

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