InsideWis: To grow and keep young companies, Wisconsin must compete

InsideWis: To grow and keep young companies, Wisconsin must compete

By Tom Still

MADISON, Wis. — Wisconsin should place more faith in its young, homegrown companies.

One need not look very far to draw that conclusion. A quick tour across the Midwest reveals that many nearby states are investing their futures, sometimes with little more collateral than a sense of promise in people, ideas and technology. Here are examples.

  • In Indiana, the Next Level Fund has been co-investing $250 million in state money with private firms since shortly after its inception in 2017.
  • Ohio’s Third Frontier Fund has invested $221 million since 2016 in six venture capital development funds, which will get another $83.2 million from the state through 2025. A recent report concluded the six Ohio organizations have returned $66 for every $1 invested from 2016 through 2020.
  • The Illinois Growth and Innovation Fund, launched in 2016, has invested from a pool of $1 billion that includes state matching dollars.
  • Less than two weeks ago in Michigan, a group asked the Legislature to create a one-time, $126 million “Michigan Startup Evergreen Fund” modeled after the Ohio effort. Michigan has previous experience in venture capital development that attracted some of the nation’s larger funds to the state. The latest effort aims to plug a seed and early stage funding gap.

The list goes on: Politically red and blue states such as those listed above have good company in Texas, Florida, Maryland, Massachusetts, Missouri, Minnesota, Nebraska, New York and Pennsylvania. They’re all hoping to keep pace with California, which through a head start in the 1950s created its tech-based, venture-driven economy.

Wisconsin’s support for early stage investing got off to a solid start with the birth of its investor tax credit program in 2005, a platform alive and well today. It has helped angel and venture capital investments statewide grow from the tens of millions of dollars annually in the early 2000s to roughly $1.5 billion spread over 2021 and 2022. That was followed by the creation of the Badger Fund of Funds in 2013, which has levered $25 million from the state along with private dollars to invest in about three-dozen companies.

That sounds like progress — and it certainly is — but Wisconsin still isn’t keeping up with the “Joneses” in any neighborhood, let alone the Midwest.

Wisconsin represents nearly 2% of the U.S. population and is home to some of the nation’s finest research institutions and major companies. State partnerships just attracted two of 44 National Science Foundation grants awarded in a nationwide competition starting with more than 400 applications.

And yet, Wisconsin has only one-third of 1% of America’s venture capital under management. Statistica reports Wisconsin was 29th among the 50 states in the dollar value of venture capital investment in 2022, behind Vermont and Wyoming.

That means young companies born in Wisconsin and financed here through the startup phase may be forced to look elsewhere for serious, multi-million-dollar investment rounds. If they find those rounds elsewhere, their investors may well compel them to move.

Think of that scenario: Wisconsin educates its young people through its K-12 schools, tech colleges and public and private colleges; offers solid entrepreneurial programs to help them launch companies; and leaves it to investors and financial forces elsewhere to capitalize on that potential and spirit those young companies away.

Looking at it from outside Wisconsin’s borders, it must look like an economic version of the New York Yankees and Kansas City Athletics baseball relationship back in the day — with Wisconsin replacing the A’s as the perpetual farm team.

Republicans and Democrats in the Wisconsin Legislature can and do disagree on many things, but it should be possible to agree on steps to invest in homegrown assets — people, ideas and technologies — that will pay dividends to the state for years. A roadmap is available if there is a will to follow it.

Still is president of the Wisconsin Technology Council. He can be reached at