$400 Million in New Venture Capital Money
On Thursday, May 5th, legislation was revealed by its main sponsors, Sen. Randy Hopper and Rep. Gary Tauchen, which would aid the venture capital community in Wisconsin. The “Wisconsin Jobs Act,” is a bill that would create two new complementary funds in Wisconsin – the Jobs Now Fund and the Badger Jobs Fund. The two funds combined would total up to $400 million.
The Jobs Now Fund would be a rapid-response fund, which would issue $200 million in tax credits over time to certain insurance companies that made investments in certified capital funds. The actual tax credits would be for 80% of the value of the investments made. In other words, the $200 million in tax credits could potentially attract up to $250 million in investments. The credits would not be able to be claimed for a minimum of five years, thereby insuring that the money would be invested long before the credits would be paid.
The Badger Jobs Fund, on the other hand, would be a longer term program. This fund would operate as a “fund of funds,” meaning it would invest up to $200 million in qualified venture capital funds. The money would come from the placement of bonds, which would be supported by investment returns, the growth of aggregate state tax collections from the companies financed by such venture capital funds, and contingent tax credits. Each qualified venture capital fund would be limited to no more than 15% of the entire pool of funds. Additionally, for each $1 a VC fund received from the Fund, it would need to raise at least $3 on its own.
The bill also contains certain governance provisions, criteria for eligible companies and investors and accountability standards.
It is estimated that some thirty other states have already enacted programs similar to the proposed Wisconsin Jobs Act. Given the success Wisconsin has had with its Act 255 Tax Credits, it appears we are fashionably late to the party in further developing the infrastructure necessary to help our home-grown high-growth companies.