Gov. Tony Evers’ 2023-25 budget proposal recommends establishing this venture capital program under the Wisconsin Economic Development Corp. to invest these dollars into other venture capital funds.

“There’s always room for improvement on where it could go over time,” Tech Council President Tom Still told “Certainly by the money not really being available until 2024, that allows some time to take a look at the overall budget situation and decide, could it be a bit stronger? Could we do some things that truly put Wisconsin on the map? That’s something I’m always enthusiastic about.”

This concept is similar to the existing Badger Fund of Funds, which was originally created in 2013 with $25 million in state dollars, Still noted.

Under the new proposal, the $75 million fund of funds could invest up to $18.75 million per recipient venture capital fund, according to Evers’ executive budget. Those recipient VC funds would have to commit to investing that total in Wisconsin, with a private matching fund requirement “such that the program as a whole attains a required match rate of two private dollars for every state dollar invested,” per the budget document.

At least 20 percent of the total funds under management would be required to be invested into minority-owned or women-owned firms, or those located in underserved areas. And the guv is calling for the creation of an oversight board that would help manage the program.

Evers’ new fund of funds wouldn’t be required to repay the state’s investment. Similarly, the guv is also recommending removing the existing requirement that the Badger Fund of Funds must repay the state. But Still explained “it would have been hard to project a date” for that repayment to happen anyways, given the uncertainty inherent to startup companies.

“This is, I think, an important step because the state wins with successful angel and venture capital investments either way,” he said. “They hire employees, they work through a supply chain, they usually have higher than average salaries. Those people pay sales taxes and income taxes themselves, so the state wins indirectly simply by all that economic activity.”

The Tech Council had previously called for another $100 million fund of funds after the success of the original Badger Fund of Funds. But with the matching fund requirement in the proposal, Still says “it would probably still get there.”

While the Badger Fund of Funds was originally created in 2013, Still noted it didn’t really get started until around 2017. With private matching funds over time, he said it’s now grown to around $80 million. Five recipient funds make up the larger fund: Rock River Capital, the Winnow Fund, the Idea Fund of La Crosse, the Winnebago Seed Fund and Gateway Capital.

Those funds have collectively invested in about 36 companies, Still estimated.

“From a policy perspective, it makes sense to put eggs in a larger number of baskets, and you want different funds that might have different strengths, different areas of interest. So that’s a healthy piece,” Still said, referring to the $18.7 million limit per recipient fund in the new proposal.

While most of the nation’s venture capital still goes into the top four states — California, Massachusetts, New York and Texas — Still estimated Wisconsin is likely in the top 25 for investment activity. Although he conceded it’s “maybe not very far” into the top half, he noted funding totals have been rising in Wisconsin.

Wisconsin saw about $454.4 million in total investment in 2019, $483.7 million in 2020 and a record $868 million in 2021, according to figures provided by Still. That large increase was in line with the national trend, he noted.

“So 2022, we’re still collecting the data, but we already know that will be north of $500 million,” he said. “And maybe considerably north — we don’t know yet for sure, but more than a couple dollars north. And that’s good, because 2022 had so much economic uncertainty wrapped around it.”

See details on the new fund of funds proposal in the Budget in Brief:

See the full executive summary for Evers’ budget proposal: