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Walker makes $25 million venture capital pitch

MADISON — Gov. Scott Walker plans to propose investing $25 million in the Wisconsin startups and emerging companies.

Walker told the Wisconsin State Journal for a story Monday that the investment will be included in his new biennial budget in the form of a venture capital fund. Walker also said the fund can satisfy startup companies' growing need for dollars and help create jobs to relieve the state's aging workforce.

The governor said the fund will combine state tax dollars with private investments, and Wisconsin will start by investing in $25 million and creating a framework for incorporating private funds.

Private managers will run the fund to invest in Wisconsin companies to help boost economy.

Walker said private entities that are interested in investing in the fund need to pitch in a total of $50 million to match the state's $25 million contribution.

In return, all investors will get their shares of return on investment. Walker said this "fund of funds" approach would allow the state to become an investor rather than just private companies, which sends a positive message to the venture capital community.

Some financial experts agreed that Walker's idea of mixing private investments with state contribution appeared attractive, as "it allows a market test as to whether there is sufficient interest in the funds," said Josh Lerner, a professor of investment banking at Harvard University.

But Lerner also noted Wisconsin has to make sure the fund is sufficient and the state has a sound environment in place for entrepreneurship and venture capital to grow.

Tom Still, president of the Wisconsin Technology Council, said Wisconsin is ready for the fund, citing the state's high ranks in patent production, academic, research and development but low in attractiveness to venture capital.

Walker said the new fund will be on top of millions of dollars in tax credits for startup companies he previously proposed, and will be initially placed in the state Department of Administration, a place Walker called safe and neutral, until the fund program can be established.

The idea of venture capital fund had a tough sell in the past. Legislation similar to Walker's proposal failed to pass in the last session because Republicans in both houses disagreed on the size and structure of the fund.

Walker said the $25 million is the minimum amount to start the fund.