Wisconsin investment fund aimed at startups

For many startup owners, access to capital is a lifeline that can determine the success or failure of their business. While Wisconsin entrepreneurs have long had access to initial capital or angel investments, it is more difficult for firms to access larger investments needed to grow. In the last few months, rising interest rates and tightening credit have also made it more challenging for startups to secure the funding they need to grow.

That’s why a recent announcement from the U.S. Treasury Department provides a groundbreaking opportunity. Wisconsin will receive $50 million in State Small Business Credit Initiative funds, which is a federal program, to establish the Wisconsin Investment Fund, a new venture capital fund under the direction of the Wisconsin Economic Development Corp. (WEDC), the state’s economic development organization.

Using a fund-of-funds model, the aim of the Wisconsin Investment Fund is to provide later-stage investments to help Wisconsin startup businesses attract the capital they need to scale up. Sourcing these dollars in Wisconsin increases the odds they continue growing here, according to Missy Hughes, secretary of  the WEDC.

“The federal funding gives us the opportunity to build this fund and put the infrastructure in place to lean into local funds and private sector expertise,” Hughes stated.

Gov. Tony Evers’ proposed 2023–25 budget calls for $75 million in state funding for venture capital. According to Hughes, this additional state funding would “supercharge” the Wisconsin Investment Fund, bringing total funding to $125 million. With $125 million to invest in Wisconsin startups, Wisconsin would be in a better position to compete with other Midwest states. Ohio, for example, has established the $97 million JobsOhio fund, Indiana has the $250 million Next Level fund, and Illinois has the $1 billion Growth and Innovation fund.

“Funding from local sources is critical because startup companies often locate near their biggest investors,” Hughes notes. “This means that the more Wisconsin investors, including WEDC, can help lead later stage and larger funding rounds, the more likely our state will hold on to promising startups as they are ready to scale.”

Hughes believes the Wisconsin Investment Fund, in partnering with other funds, will at least double the amount of capital available in Wisconsin, allowing those businesses to stay here, grow here, and keep that capital working here. “It’s time for our state to take that critical next step,” she says.