States that have invested public resources into developing a financial mechanism and related network to propel start-up companies forward are reaping the benefits. Specifically, these states are experiencing accelerated growth rates among high-potential startups and those businesses are producing higher payrolls than comparable-sized firms. With the passage of 2013 Wisconsin Act 41, which was accomplished with bipartisan support, Wisconsin has an opportunity to do the same.
Hamilton Consulting’s Emily Kelchen, WEDA Executive Director Kristen Fish, and WEDA President-Elect Patrick Schloss attended the bill signing.
AB 181 passed the Assembly 91-2 on June 6, with overwhelming support from both parties. Only Reps. Chris Kapenga (R-Delafield) and Daniel Riemer (D-Milwaukee) voted against the proposal. The Senate then took up the bill and passed it 29-3, with Sens. Glenn Grothman (R-West Bend), John Lehman (D-Racine), and Fred Risser (D-Madison) voting no on June 18. Gov. Walker then signed the bill into law as Act 41 on July 18.
The bi-partisan bill sparked much debate about the role of the state in economic development. One of the main topics of debate was who should be in charge of overseeing the management of the fund. When the bill was introduced, it was drafted so that the Wisconsin Economic Development Corporation (WEDC) would serve in that role. In response to the Audit Bureau’s report on mismanagement at the pseudo-agency, WEDC was stripped from the bill and the Department of Administration (DOA) placed in charge instead.
Another hot debate centered on the bill’s inclusion of sector-based restrictions on investment. Act 41 only allow investments in agriculture, information technology, engineered products, advanced manufacturing, and medical devices and imaging industries, which critics say could limit the fund’s effectiveness. Supporters say this is a starting off point and the program could be expanded in the future when the legislature decides whether to further fund the program.
Funding for the venture fund was included in the state budget, so DOA is already working on investing the funds according to the procedures outlined in Act 41.