Investors captured voter imagination: What does it mean for Wisconsin?

Someplace, Mitt Romney must be smiling.

Romney, who lost the 2012 presidential election to President Obama, weathered no small amount of campaign heat over the alleged “vulture capitalist” practices of his private equity firm, Bain Capital. Romney was accused of building Bain’s portfolio on the backs of the working poor, a charge tied to the company’s merger and acquisition business far more than its venture capital investments.

Roll forward to the 2014 midterm elections and private equity investors such as Romney are political darlings versus objects of derision.

It’s a trend with implications for Wisconsin, where freshly re-elected Gov. Scott Walker and the Legislature have previously warmed to a stronger state role in propelling the high-growth economy. Consider these election results:

  • In neighboring Illinois, incumbent Gov. Pat Quinn was defeated by Bruce Rauner, a former partner in GTCR Golder Rauner, now known as GTCR. This private-equity firm has invested more than $10 billion since 1980 in more than 200 companies, largely in financial services, technology, and health care. Rauner’s critics portrayed him as Romney-esque, but voters responded to his message of reviving a sluggish Illinois economy.
  • In Rhode Island, Gina Raimondo, formerly of Point Judith Capital, was elected that state’s first female governor. Her platform included boosting advanced manufacturing, developing the state’s workforce, and supporting startup businesses with seed capital.
  • Charlie Baker, formerly of General Catalyst, was elected governor of Massachusetts — a state where Romney once served as governor. Massachusetts is perennially among the top three states in venture capital investments.
  • U.S. Sen. Mark Warner was re-elected in Virginia. He was an early investor in the cellular telephone business, co-founding the company that became Nextel, and later making early-stage investments in hundreds of startup companies.
  • In Michigan, Gov. Rick Snyder was re-elected in a hard-fought campaign. He co-founded Ardesta LLC, a venture capital firm based in Ann Arbor, Mich., and was one of the early investors in Wisconsin-based TomoTherapy, now Accuray.

Snyder represents the continuation of a bipartisan strategy in Michigan, which has invested $215 million over a little more than a decade in two venture capital funds that have helped rejuvenate that state’s high-growth, tech-based economy.

Elements of the Michigan story will be told Nov. 12 during the Wisconsin Early Stage Symposium, where one of Snyder’s top economic aides will speak with investors and others. Paula Sorrell, who as vice president of the Michigan Economic Development Corp. oversees its $1 billion portfolio of early-stage programs, will attend portions of the two-day event.

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Michigan launched its 21st Century Jobs Fund about a decade ago — about the time its auto industry began struggling to survive. Today, it is a limited partner in about half of the state’s 32 venture capital funds. Michigan has focused on building a strong pipeline of companies, from startups to those further along in their development, and on getting those companies the investment capital they need.

The state leverages about $10 in private investment for every dollar of state funding. In the last year alone, Michigan attracted national venture capital firms such as Baird Capital, Mercury Fund, Draper Triangle, and Microsoft Ventures. All have established offices in the state.

Michigan has invested about $215 million in two state venture capital funds over time as well as a platform for angel investing. Wisconsin recently approved investing $25 million in the “Badger Fund of Funds,” which is organizing with a goal of attracting a two-to-one match in private dollars.

Some policymakers in Wisconsin will say, “Let’s wait for investment returns from the Badger Fund of Funds before we take the next step.” The trouble with that approach is that venture capital doesn’t work that way. It will be years before traditional return on investment results are known, but the state would see economic results — more companies, startup activity, and dollar flow — quickly if it invests enough to attract more outside capital to Wisconsin.

America’s economy is constantly evolving, with new companies and ideas disrupting markets and creating new ones. Given the chance on Nov. 4, voters across the country embraced those candidates who understand that new economic reality.

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