WI Aims for More Startups with $25M VC Fund, Incentives for Entrepreneurs

Over the last month, Gov. Scott Walker has slowly rolled out a series of ambitious proposals ranging from $25 million for venture capital investment to $100 million for worker training and nearly $500 million in new state funds for public education. Together, these and other broad-ranging initiatives make up the $68 billion 2013-15 biennial budget unveiled in its entirety yesterday.

Seeding startups and encouraging an entrepreneurial climate is a major focus of the governor's economic development budget, which in addition to the venture capital initiative provides nearly $6 million for two interrelated programs where entrepreneurs can participate in an accelerator program and apply for early stage capital. Managed by the Wisconsin Economic Development Corporation (WEDC), the seed accelerator program provides matching funds to communities and partners to establish accelerators that offer services such as mentoring, business planning and networking. Under the capital catalyst program, entrepreneurs can apply for financing to start or grow their venture.

The $25 million venture capital investment proposal aims to attract private funding and create a large pool of funds for startup companies. A similar measure was floated last year, but failed to gain enough bi-partisan support. If approved, the funding would be transferred to the Department of Administration in FY14.

The governor's budget also would replenish the Economic Development Tax Credit program with $75 million over two years and repeal the lifetime cap on angel investment tax credits, currently set at $47.5 million. Like several of his fellow Republican governors, including Louisiana Gov. Bobby Jindal and Kansas Gov. Sam Brownback, Gov. Walker is proposing a large-scale reduction in income taxes, which is estimated to cost the state $343 million over the biennium.

Nearly $100 million in new funding is requested for workforce development initiatives — especially producing more "middle-skilled" workers and incentivizing colleges to address workforce needs. Beginning in FY14, 10 percent of state general aid for technical college districts would be based on performance measures such as student job placement rates, degrees and certificates awarded in high-demand fields, and the number of courses or programs with industry-validated curriculum. An additional $5 million in funding is recommended to help technical colleges with the transition to performance-based funding.

The University of Wisconsin (UW) System is slated to receive an additional $20 million over the biennium for performance-based economic development, workforce development and affordability grants. Another $2 million is included to support startup costs for developing additional programs and course offerings in the new UW Flexible Degree option program. Established last year, the program allows adults with some college experience to work at their own pace, earn credit for what they already know, and pay reduced rates through partnerships with employers (see the June 27, 2012 issue of the Digest).

Gov. Walker's 2013-15 budget is available at: http://www.doa.state.wi.us/debf/execbudget.asp?locid=166.