The state of Wisconsin is in the process of selecting venture capital funds that will receive a piece of a new $50 million fund designed to support the state's burgeoning startup scene.
Demand for that money far exceeds the supply. The Wisconsin Economic Development Corp. (WEDC), which is overseeing the new Wisconsin Investment Fund, received 31 applications from venture firms requesting a total of around $500 million.
The number of applicants was more than expected, Wisconsin Investment Fund committee chair Anne Smith said Tuesday in the committee's first report to the WEDC board.
Venture funds that the committee selects will be required to match the state's investment at least one-to-one with private dollars, invest that money in Wisconsin-based companies and return the proceeds to the WEDC for reinvestment.
The $50 million for the Wisconsin Investment Fund comes from federal dollars through the State Small Business Credit Initiative (SSBCI) under the American Rescue Plan Act. In addition to that, Wisconsin Gov. Tony Evers is proposing $75 million in the new state budget to go toward a venture capital program.
Strong early demand for the SSBCI funds demonstrates the need for additional state funding for venture capital, WEDC secretary and CEO Missy Hughes said at the Tuesday WEDC board meeting. Under Evers' proposal, the WEDC would run the $75 million venture capital program.
"We have the ability to make that $75 million from the state budget go to work right away," Hughes said. "We can stand it really alongside the structure that we've set up for the Wisconsin Investment Fund."
Of the 31 applications the WEDC received for the Wisconsin Investment Fund, 19 came from venture capital funds in Wisconsin and 12 were from out-of-state funds, Smith said.
Among the out-of-state venture funds that applied, several have already invested in Wisconsin companies or have been tracking local companies and are "ready to hit the ground running," Smith said. Others expressed a new interest in investing in Wisconsin startups, she said.
The venture funds that applied for Wisconsin Investment Fund dollars have collectively invested more than $600 million in Wisconsin already and have nearly $1.5 billion in total funds under management, Smith said. They range from funds managing less than $10 million to several managing more than $100 million.
"We have a big variety of funds to look at, which should give us a lot of different perspectives and a lot of good opportunities to spend this money wisely," Smith said. "We're seeing applicants that are not strangers to our state."
The Wisconsin Investment Fund committee is in the process of scoring each applicant based on a rubric and intends to report its selections to the WEDC Audit and Budget Committee in July, Smith said.
A WEDC board report Tuesday also disclosed that Joe Kirgues has resigned as a board member. Kirgues is the co-founder of gener8tor, one of the most active startup accelerators and early-stage venture capital firms in Wisconsin. Gov. Evers will appoint his replacement.
