There may be few things legislators from both parties agree on these days, but one of them is the need to create more good paying jobs here in Wisconsin. So when a proposal comes around that offers solid prospects of spurring private sector job creation in emerging companies that are helping create our new economy, the public has a right to expect legislators to work together to get it done. Now is that time.
The venture capital legislation (AB-181) we introduced, along with Senator Darling and Senator Cullen, will give a much-needed boost to our state’s lagging venture capital industry. Venture capital is an essential component of providing financing for innovative businesses that are pioneering new products or new technologies. Financial institutions usually won’t offer traditional financing for start-up businesses in emerging fields. Without venture capital many of our most promising companies in Wisconsin today would never have made it.
Unfortunately, Wisconsin attracts only about one-half of 1 percent of the venture capital invested each year in the United States. We consistently lag behind Illinois, Minnesota and Michigan in total investment dollars. When compared to nine of our peer states with similar size workforces, Wisconsin is tied with Missouri for last place in the average number of venture capital funded deals per year.
As a result of being so far behind some of the most promising start-up companies choose to take their operations to other states where capital is more available.
Despite our relatively poor performance, the success stories made possible by venture capital funding are encouraging. Across the country, venture capital funding tends to be very efficient at allowing growth in job creation. Logistics Health in La Crosse was able to quickly grow to 1,000-plus employees today as a result of timely venture capital funding. Tomo Therapy in Madison, a pioneer in medical imaging, grew to over 600 employees with early venture capital financing. While there are many such examples, we can help make that list much larger with a relatively small investment of state funds to help jump-start this sector.
Our venture capital proposal matches $25 million in GPR funds Governor Walker has already allocated in his budget for economic development with an additional $65 million in private sector funds to create a state backed investment pool managed by a qualified venture capital funds manager.
Our proposal (AB-181) builds in multiple layers of accountability and oversight to ensure a transparent process that protects taxpayers while helping spur the launch of high-growth companies.
In light of the Legislative Audit Bureau’s report on WEDC, legislators raised concerns regarding the framework of the legislation. After weeks of discussion, we have introduced a substitute amendment that would move the program from the Wisconsin Economic Development Corporation to the Department of Administration to solve many of the issues members had.
DOA is certainly capable of taking on the reporting requirements and has the in- house tools to join the State of Wisconsin Investment Board (SWIB) in finding an investment manager that is best for the job. Currently, the Secretary of DOA sits on the board of SWIB, and the department does the bidding for private contracts on behalf of Wisconsin.
With DOA now administering our legislation, we have made it abundantly clear that creating jobs is not something we are willing to play politics with. It is time to remove the ‘optics’ of this legislation and move forward with a bill that is sure to benefit Wisconsin’s economy in the years ahead. Both parties need to work together in good faith to send a signal to all the start-up businesses in Wisconsin. Regardless of our opposing political views, we’re serious about supporting the growth of new businesses and new jobs in Wisconsin.
Mike Kuglitsch (R-New Berlin) represents the 84th Assembly District, which includes parts of Waukesha and Milwaukee counties. Fred Clark (D-Sauk City) represents the 81st Assembly District, which includes parts of Sauk, Iowa, Columbia and Dane counties.
