The Wisconsin Economic Development Corporation is launching a pilot program that will make direct equity investments in Wisconsin-based startups beginning in 2021.
The new program is called Wisconsin Investment Pilot, which has $500,000 to deploy across 10 startups. The WEDC will invest up to $50,000 per startup.
To be eligible for WIP funding, the startup must be certified by the WEDC as a Qualified New Business Venture. Eligible businesses must have matching funds at a rate of 4 to 1, meaning the WEDC will provide a maximum of $50,000 in funding if the startup has $200,000 in committed investments.
The WIP program targets tech-based businesses or emerging growth companies in Wisconsin. The program is designed to invest in startups that can both attract and train a high-wage and a highly skilled workforce.
The WEDC board of directors recently revised its cash and investment policy, which allowed for WEDC to make direct equity investments through the pilot program using dollars from WEDC’s program funding, said Missy Hughes, WEDC secretary and chief executive officer.
Hughes says the timing is right to support Wisconsin startups, especially those who are either raising capital to get started or are in need of additional capital to maintain or expand operations during the economic crisis caused by COVID-19.
“In these startup businesses and early stage companies is where you see jobs created and solutions come forward to problems, so it’s really important to support innovation and entrepreneurship in the state, and at the same time, do it in a way that acknowledges our role as stewards of the tax payer’s dollars,” Hughes said.
WEDC’s new role in Wisconsin’s venture ecosystem stems from discussion among members in the Entrepreneurship and Innovation Committee, which the WEDC created in 2019 to foster and support entrepreneurship in Wisconsin.
Hughes says as Wisconsin’s economic development agency, the WEDC must be pragmatic when investing public funds, but it is also necessary to take on risk.
“We want to make sure we’re doing it as thoughtfully as we can and important to take risk because that’s where you see the development happen,” Hughes said.