Tech Council board member Terry Grosenheider, Tech Council President Tom Still and Wisconsin Angel Network director Joe Kremer were among those who testified Tuesday before the Senate Committee on Job Creation, Economic Development and Consumer Affairs. Please read their testimony (below) as well as a news story on the hearing at:

Tom Still testimony:
“Thank you for the opportunity to address this committee as it considers possible next steps in the continuing effort to build a high-tech, high-growth Wisconsin economy.

The passage of Wisconsin Act 255 has been a model for state government in the area of economic development. It was written and passed with bipartisan support; Republicans and Democrats alike took part. Both the legislative and executive branches of state government were fully involved. It is leveraging private investment and action through public policy – and in full realization that results may not be fully apparent for years.

And, perhaps most important, it has highlighted and reinforced a dramatic change in how state government is approaching the state’s economic development. Act 255 has underscored the state’s commitment to growing our new economy from the ground up, rather than relying on old methods of chasing smokestacks that are no longer there.

The act does so through a mix of strategies, most of which you will hear more about today from others who will testify. They include tax credits aimed at encouraging angel investors and venture capitalists to invest more in Wisconsin, a variety of refocused technology grant and loan programs through the Wisconsin Department of Commerce, the creation of the Wisconsin Angel Network as a “network of networks,” and the birth of the Wisconsin Entrepreneurs’ Network.

The thrust of Act 255 is also very consistent with other major initiatives in the technology development arena. For example, the Wisconsin Technology Council produces the statewide Governor’s Business Plan Contest, the Wisconsin Entrepreneurs’ Conference, the upcoming Wisconsin Early Stage Symposium (Oct. 19-20) and a variety of events through the Wisconsin Innovation Network. In each of these programs, the emphasis is placed on helping early-stage companies and entrepreneurs.

One of the consequences of Act 255 has been better coordination of Wisconsin’s resources in the early-stage area. For example, the creation of the Wisconsin Angel Network through the Wisconsin Technology Council has led to greater communication with angel networks and individual angel investors. That has prompted more understanding of their needs, and the development of an online inventory of early-stage companies that appears to be the first of its kind in the nation.

By learning more about the interests and needs of angel investors, we also better understand the links between angel investment and other forms of private equity, such as venture capital. For years, Wisconsin has wondered why it has not attracted more venture capital, especially from investors outside the state. One reason is that those investors have not always found the fully-formed deals that they wanted to find. By helping angel networks finds deals across Wisconsin, we are planting the seeds for tomorrow’s venture investment.
I’m not suggesting that Wisconsin should abandon efforts to attract business from outside its borders. On the contrary, Wisconsin should be far more aggressive at doing so – perhaps emphasizing efforts to pursue investors and the kind of talent that can take young companies to the next step. Wisconsin should have a strong presence at events such as the upcoming BIO International Convention in Chicago in April 2006, it should pursue events such as the BIO Midwest Convention in 2007, and it should consider capitalizing on recent press attention by sending “venture missions” to the East and West Coasts.

We also need to hammer home the message that building Wisconsin’s economy will not be accomplished by Stevens Point trying to one-up Wausau, or Milwaukee trying to out-compete Madison. Wisconsin can only prosper by finding its niche in a 21st century economy that is truly global in nature. We must look to the strengths of the “I-Q Corridor,” which stretches from Chicago to the Twin Cities, encompassing most of Wisconsin in between, and think about selling ourselves to the world as a region.

The world has changed. Nations such as China and India are economic powers in ascendance. We cannot compete with them on labor costs, but we can compete through ideas, innovation, intellectual property, investment and interstate cooperation – the “Is” of the I-Q Corridor. And we can do so while offering quality of life, environment, education and workforce.

Act 255 is focused on building Wisconsin from within so it can compete far outside its borders. The Legislature can be proud of its role so far, and should be commended for looking for ways to build upon Act 255’s foundation.
Thank you for the chance to speak.”

Terry Grosenheider testimony:
 “Senator, thank you for the opportunity to testify today.

 My name is Terry Grosenheider. I serve on the Wisconsin Technology Council as Speaker Gard’s designee and I am a member of the Wisconsin Economic Development Association. I am currently a private banker at U.S. Bank, but I am not appearing in that capacity today. From 1992 to 2000, I served at the Wisconsin Department of Commerce, and from 2000 to 2002, I served as the Deputy Secretary of the Wisconsin Department of Financial Institutions. My remarks today reflect my service in government, my interest in economic development and my faith in the future of Wisconsin.
We have made significant progress in the last five years in making Wisconsin a more investor-friendly environment. I worked with many of you to champion those changes that have been made, but I am here today to tell you that there is more to be done.
Why, you might ask. Well for one, Wisconsin is 47th among the states in business creation. Two, Wisconsin trails the nation in percentage of its citizens with masters and doctoral degrees. And three, while Wisconsin lags the nation in per capita income, our taxes are higher.
This is hardly the recipe for success. Yes, jobs within the existing economy are rebounding and the economy in general is strengthening, but the question we must ask ourselves is, “Where will higher incomes, new growth and new jobs come from?”
To chart a better course we must engage the individual investor in building the Wisconsin economy. I applaud the steps that have been taken, in particular Act 255, but more must be done to improve the risk/reward ratio for Wisconsin investors. When asked to comment on today’s relative lack of new business investment in Wisconsin, people often speculate that we are conservative investors because of our Germanic and Scandinavian heritage.

While quaint, it fails to explain the great companies that have shaped the economic strength that we enjoy today. Miller Brewing, Allis Chalmers, Harley Davidson, Johnson Controls, Mercury Marine, Schneider Trucking, American Motors, Fort Howard and Consolidated Paper were all formed in the same ethnic environment by Wisconsin entrepreneurs who saw opportunity and took a chance based upon insight and skill. Many of these companies continue to thrive and contribute, while others are gone.
How could they have succeeded, while today we are looking for answers? The fact is, we have developed a conservative and restrictive investment  environment. Today it is easier to legally gamble your life savings away than it is to invest in emerging, growth Wisconsin companies. Allow me to state that another way, there are more restrictions on investment in legitimate emerging growth Wisconsin companies than there is on gambling in the state of Wisconsin.
Let’s put this in perspective. With Act 255, the Legislature created a $65-million package of investment tax credits spread over more than 10 years. Wisconsin residents will legally wager $6.5 million in the next 32 hours. If we want to create new businesses and new jobs, we must make it easier to invest, not more difficult. There will be alarmists who will raise the specter of illegal investment schemes. Let me tell you, those schemes already exist, they always have, they always will. We have the authority to prosecute those schemes and those schemers, and we should to the fullest extent of the law. In fact, the Department of Financial Institutions does a great job, and they will continue to do so. The changes I will propose will not inhibit their ability to enforce the law. Nor does this concern change the fact that we must make it easier to invest in Wisconsin’s future.
I would like to share with you some ideas that will make Wisconsin a better place to invest.
Increase from $30 million to $60 million the available investment tax credits for Angel Investors.

Increase from $3 million to $6 million the annual allocation of investment tax credits.

Permit unused Venture Capital Investment Tax Credits to be reallocated to Angel Investment Tax Credits in the succeeding year.

Likewise, we should permit unused Angel Investment Tax Credits to be reallocated to Venture Capital Investment Tax Credits in the succeeding year. The market should determine where the credits are used, not statutory limitations.

Increase the capital gains exemption to 100 percent for farmers, small business owners and investors who invest a long-term capital gain in a Wisconsin business or investment this will give those who have long-term capital gains the incentive to repatriate those gains as investments in Wisconsin businesses. It will provide additional capital for existing and start-up Wisconsin businesses and it will let this Legislature send the policy statement that Wisconsin wants investment because investment creates jobs.

Under sec. 551.23(10), Wis. Stats., increase to 100 (from the current 25) the number of security holders permitted under the exemption. These limits increase risk by concentrating it in fewer investors.

Under sec. 551.23(11), Wis. Stats., increase to 300 (from the current 25) the number of offers permitted under the exemption. These limits prevent effective networking essential to entrepreneurial success.

Eliminate a prohibition on advertising of offerings under the exemption.
Increase to $50 million (from the current $5 million) the maximum offering amount that can be raised from investors under the existing Wisconsin-Issuer-Registration-Exemption-by-Filing provision in DFI Section 2.028. This increase would acknowledge the increased cost of starting a new business.

Repeal the Shareholder Wage Lien statute. This statute puts investors in “double jeopardy.” Not only can they lose everything they have invested in a company; they can also be responsible for unpaid wages. Why are investors to blame? This statute create a unique investor risk, it gives a perverse new meaning to the term “risk capital.” It puts Wisconsin companies at a disadvantage when attempting to raise equity investments. Investors will look elsewhere.
These changes individually may appear as incremental improvements to the Wisconsin investment climate, but taken together they represent a substantial change. I will not claim that these are the only ideas that exist to improve the investment climate, they may not be the best ideas, but I believe they are a starting point, and that is what we need.
Thank you for your attention. I would be happy to answer any questions you may have.”

Joe Kremer testimony:
Since its creation in January 2005, the Wisconsin Angel Network (WAN) has been actively developing and deploying resources for the angel and entrepreneurial community.  They include:

Deal-flow pipeline

The deal-flow pipeline is an on-line inventory of companies looking for investments.  To date more than 100 entrepreneurs have created accounts, with more than 35 completing the required information to be visible to investors.  Already investor-members of WAN have invited companies listed on the deal-flow pipeline to present their financing opportunity to their groups.


WAN Membership

Eight angel networks/funds are currently members of WAN, accounting for more than 200 individual angel investors. To further expand financing opportunities for Wisconsin’s Entrepreneurs, WAN is targeting more reclusive early stage investors for membership, such as family funds and non-formal investor networks.


Angel Network Support and Development

WAN is actively assisting groups who are interested in forming angel networks in their communities.  WAN has also created an angel resource page on its website, located at  Resources include useful links and documents created by WAN specifically for angel investors.

Educational Seminars/Networking

In order to increase awareness of the Act 255 tax credits, WAN is organizing informational sessions at different locations throughout the state.  Additionally the Kauffman Foundation’s Power of Angel Investing, lead by nationally renowned authority in angel investing, John May of the NewVantage Group in Virginia, was held during the first day of the Entrepreneurs’ Conference on June 7.  Three more Power of Angel Investing seminars will be held this year: Fox Valley (Oct 17), Western Wisconsin – Menomonie (Oct 18), and Madison (Oct 19).


Each seminar is taken as an opportunity for angels investors to meet/network, increasing communication within the community and improving the likelihood of investors sharing ideas and investment opportunities.


Angel Investing Metrics

A goal of WAN is to increase the amount of more angel investing information that is being collected.  Along with information from WAN members, WAN has developed an early-stage investment reporting form for Wisconsin attorneys which the Wisconsin Bar Association has approved. 


Angel Networks in Wisconsin

Currently, there are nine active networks, one angel fund, three new networks (meeting regularly but have not yet invested in deals), and nine potential networks/funds in formation.  For the most current listing of existing networks, please visit a link from the Wisconsin Angel Network at

For more information or to read more about it, visit or