Rep. Bob Wittke A forthcoming state budget proposal to create a new $75 million venture capital fund of funds could lead to a total of $300 million in new VC funding becoming available for Wisconsin startups. During next week’s meeting of the state’s Joint Finance Committee, Rep. Bob Wittke, R-Racine, will
[caption id="attachment_569477" align="alignleft" width="300"] Rep. Bob Wittke[/caption]
A forthcoming state budget proposal to create a new $75 million venture capital fund of funds could lead to a total of $300 million in new VC funding becoming available for Wisconsin startups.
During next week’s meeting of the state’s Joint Finance Committee, Rep. Bob Wittke, R-Racine, will make a budget motion to create the Forward Wisconsin Fund. He says this $75 million, one-time investment in Wisconsin startups is necessary to make sure the state remains economically competitive.
“The Badger Fund of Funds has been a success for Wisconsin venture capital," said Wittke in a statement. "As we head into an age of greater technological development we must invest in new businesses that will grow Wisconsin and keep us on the cutting edge for business ventures of all kinds. As I look at our neighboring states and how they may be investing I recognize that now is our time to use one-time money to establish the Forward Wisconsin Fund to invest in new ventures, new companies, and new ideas for generations to come.”
If the budget motion gains approvals from both the Joint Finance Committee and state Legislature, the Wisconsin Economic Development Corp. will be tasked with creating this new VC fund. The move is being supported by the Wisconsin Startup Coalition.
[caption id="attachment_569469" align="alignleft" width="300"] Peter Welch. Photo courtesy of the Wisconsin Startup Coalition.[/caption]
“Anything we can do to make Wisconsin a better place for startups is our goal,” said Peter Welch, executive director of the Wisconsin Startup Coalition.
The group became involved in conversations surrounding a new government-supported VC fund last year, when Gov. Tony Evers proposed a $100 million fund of funds in his budget, which was later scrapped by the Legislature.
“We were kind of brought in at the last minute there to try to answer questions and see what was possible, but it was too late,” said Welch. “So, this session, the governor put in $75 million and we were involved right from the start.”
The new $75 million VC fund was included in Gov. Evers’ initial 2023-2025 budget proposal, but later scrapped by the Legislature. However, this time around, a version of the fund was revived through conversations with various stakeholders, including WEDC. Welch explained the current Forward Wisconsin Fund proposal has some differing criteria than Evers’ original plan.
The Forward Wisconsin Fund would earmark $75 million in the budget that WEDC would then invest in Wisconsin-based VC funds under the condition that those VCs raise $3 from private investors for every $1 of public money they receive. This means a total of $300 million in VC funding could become available to Wisconsin-based startups.
The fund would be evergreen, so any returns from successful startup exits would go toward renewing the Forward Wisconsin Fund’s funding.
“From my conversations with WEDC and their leadership, they have expressed support of what we’ve discussed conceptually,” said Welch. “I don’t want to give the impression that this is a done deal in the Legislature. We have some strong authors and some strong support for what we’re working on, but it’s up to us to convince the rest of the Legislature that this is a really critical investment for the economy.”
WEDC is already gaining additional experience in launching new VC funds through the recently created Wisconsin Investment Fund. This $50 million fund, first unveiled in February, will soon have fund managers as a request for qualifications officially closed May 11.
There would likely be another RFP process that takes place if the Wisconsin Forward Fund gains the necessary approvals. WEDC would return to the Joint Finance Committee to advocate for its chosen fund managers before the $75 million would be released.
“(Startups are) a critical part of our economic fabric,” said Welch. “Wisconsin is blessed with a lot of older, established companies and they’re great but they’re not always necessarily going to be around. We need to have the churn of new companies coming in and making our communities more vibrant. These companies we’re starting now with new venture funds have the potential to become the next Johnson Controls or Rockwell Automation. These companies need to start somewhere, and we want them to start in Wisconsin.”
