Wisconsin is seeking venture capital fund managers in the state to implement a new $50 million fund designed to help finance local startups.
The Wisconsin Economic Development Corp. (WEDC) is overseeing the new Wisconsin Investment Fund, which will partner with venture capital funds investing private capital in Wisconsin-based startups.
The fund's creation has been two years in the making, WEDC secretary and CEO Missy Hughes said on March 3 at a committee meeting for the fund.
Along with a proposed $75 million state-sponsored venture capital fund of funds program, the Wisconsin Investment Fund could help accelerate Wisconsin's startup economy by drawing more public and private venture capital financing to the state, which continues to lag behind other states in terms of access to venture dollars.
Financing for the Wisconsin Investment Fund comes from nearly $80 million Wisconsin received through the State Small Business Credit Initiative (SSBCI) under the American Rescue Plan Act. Gov. Tony Evers announced Wisconsin as a recipient of that federal funding in late February.
Venture capital fund managers in Wisconsin who are interested in co-investing with WEDC have until March 27 to respond to a WEDC request for qualifications (RFQ).
The agency issued a similar RFQ in April of 2022 and received 14 responses from 13 funds, WEDC deputy secretary Sam Rikkers said at the committee meeting. Those will be considered alongside the new submissions WEDC is seeking, he said.
The fund managers are required to match the state's investment at least one-to-one with private dollars and return investment proceeds to the WEDC for reinvestment.
Once the WEDC's Wisconsin Investment Fund committee selects the fund managers, those fund managers will select Wisconsin companies to invest in.
"We're looking to get this up and running as quickly as we can," WEDC vice president of entrepreneurship and innovation Aaron Hagar told Wisconsin Inno. "We know that there's a strong appetite for these resources, both from fund managers and from companies."
The fund is targeting early-stage companies with fewer than 500 employees. Per federal requirements, the funds can't be used in an investment round that's greater than $20 million.
Additionally, a portion of the funding is required to go to businesses with 10 or fewer employees and businesses that have historically had limited access to capital, either based on the owner's demographics or the location of the business, Hagar said.
The Wisconsin Investment Fund committee is chaired by Anne Smith, co-founder of the Law & Entrepreneurship Clinic at the University of Wisconsin Law School.
The committee also includes Fork Farms co-founder and Bank of Kaukauna CEO John Brogan, Google information technology executive Elaine Stephens, Willie Smith of Milwaukee's Northwest Side Community Development Corp., and Wisconsin entrepreneur and venture capital partner Toni Sikes of CODAworx and the Calumet Venture Fund.
In addition to the Wisconsin Investment Fund, $15 million of Wisconsin's federal SSBCI dollars will provide credit support to small businesses that receive microloans from community development financial institutions, $8 million will expand the WEDC’s Technology Development Loan program and $6 million will support the WEDC’s Capital Catalyst program.
The federal government doesn't provide the full amount of SSBCI funding at once, Hagar noted at the Wisconsin Investment Fund committee meeting earlier this month. Wisconsin has to utilize the bulk of the first tranche of funding, or $19 million, within three years in order to be eligible for the next share of the money, he said.
