There’s a scene in “The Princess Bride,” shortly after the hero Westley is apparently tortured to death by Prince Humperdinck, in which Westley’s friends bring his body to the cottage of Miracle Max – played by Billy Crystal.

OK, you probably don’t remember that scene unless you’ve seen the movie a bunch of times. But Miracle Max examines the body and declares Westley is only “mostly dead,” which means revival is possible. Had Westley been “all dead,” Miracle Max explains, he could have done nothing more than search his pockets for loose change.

That scene comes to mind as the State Capitol debate over venture capital legislation starts to lose its pulse. State revenue estimates released last week turned a small budget surplus into a $143-million deficit, and potential sponsors of proposals for a state-leveraged fund to invest in start-up companies are glum about getting anything passed in this floor period.

Before everyone starts checking pockets for loose change, it’s worth considering why a well-crafted early stage capital program for Wisconsin need not cost the state money it doesn’t have – and help build revenues for future budgets.

First, some of the strategies being considered by lawmakers would not require a lot of spending in this budget cycle. The cost of using tax credits, for example, would be at least partially delayed. For example: A proposal under review by the Wisconsin Economic Development Corp. would recycle unused tax credits for an investment program largely limited to early stage deals.

Second, all of the plans have envisioned state dollars being used to attract private dollars from angels and venture capitalists in Wisconsin and beyond. It’s not as if the state would be the only investor.

Third, it is an investment – not a gift. If the state is treated like a limited partner, just like private investors, it would stand to get back its principal and other returns over time.

Fourth, and perhaps most important, angel and venture capital investments are a proven way to grow promising young companies – which, in turn, create most jobs over time. In addition to a “return on investment,” the state would also get a “return on tax dollars” through economic growth, sales tax revenues, income tax revenues and more.

The core reason to launch an early stage fund for Wisconsin is company creation in the short term and job creation over time. Despite having the right ideas, intellectual capital and research investments, Wisconsin has historically lagged in attracting investment dollars for emerging companies.

In 2011, Wisconsin companies raised just $72 million in venture capital, a drop from 2010 and in line with the state’s five-year average of $72.1 million. States with workforces of similar size – Arizona, Colorado, Indiana, Maryland, Minnesota, Missouri and Washington – all outperform Wisconsin when it comes to venture capital. Five-year averages in those states range from a low of $78.6 million in Missouri to $778.7 million in Washington.

Minnesota, a neighboring state with a very similar workforce and culture, has averaged $327.8 million in venture capital investments over the past five years. Minnesota has raised $6.5 billion in venture money over the past 40 years, compared to $1.2 billion in Wisconsin.

Over time, that competitive difference has delivered 447,285 jobs for Minnesota – or 19 percent of its private workforce in 2009. In Wisconsin, there were 60,156 venture-backed jobs for the same year, according to federal and industry data. That represents only 3 percent of Wisconsin’s private workforce. The U.S. average is 11 percent of the private workforce, or nearly 12 million jobs.

Had Wisconsin simply performed at the U.S. average for attracting venture capital, that investment would have produced 259,215 jobs in Wisconsin during a time when some sectors were losing jobs by the tens of thousands.

Wisconsin’s investor tax credit law, which took effect in 2005, provided a lift for a while, but other states have caught up when it comes to attracting venture capital and are pulling ahead. Ohio, Michigan, Indiana, Illinois and Minnesota have all taken more recent steps to spur investment – and done so with broad political support.

Plans for an early stage capital bill are “mostly dead” for now, as comic actor Crystal might say. But whether it’s this floor period or the next, the state Legislature should breathe new life into an idea that will help Wisconsin’s economy for years to come.

Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal.

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