Wisconsin investors seek regional partners and informed legislature – Regional cooperation is the way to attract venture capital to Wisconsin

Regional cooperation is the way to attract venture capital to Wisconsin, according to the Coalition for Capital Growth and Research, which held its first conference on Friday at UW-Madison’s Grainger Hall.

Tiffany Stronghart

http://www.wistechnology.com/article.php?id=1244

“We believe [venture capital] is a worthwhile agenda in the region,” said John Neis, a senior partner at Venture Investors and the conference’s founder. “It’s a big vision of what we’re trying to do, but we think it’s a valuable one and a necessary one to help us all as a region to create an environment to be that much more successful.”

In an effort to educate legislators about venture capital, Neis brought together policymakers, venture capitalists and economic developers to discuss how to bring more capital to Wisconsin. The organizers sought to stimulate interest in attracting venture capital and begin readying the tools to do so, and to foster regional cooperation. Many of the conference’s attendees were from outside of Wisconsin.

“We all kind of saw a common problem,” Neis said.

According to Mark Heesen, president of the National Venture Capital Association, venture-backed companies provided 10 million U.S. jobs, had sales of $1.8 trillion, and represented 10 percent of the U.S. economy in 2003. He also said that for every $33,000 of venture capital invested, one job was created.

“We just don’t want to tinker around the edges, we want to create new technology,” he said.

Elizabeth Donley of the Wisconsin Alumni Research Foundation said the state is taking some of the steps in the right direction, but that “we’re still missing quite a few pieces.”

“We have a ways to go in terms of environment fostering business,” she said.

Peter Hofherr, director of the Missouri Department of Agriculture, agreed that cooperation is an important first step. “We’re going to have to work as a region,” he said during a panel discussion. “Venture capital is one area we can and should work together.”

Coming out of commercial uncertainty

Neis suggested several goals that should be met in order to bring in venture capital. While there’s opportunity for capital in the state, people are uncertain about how to use the opportunity, Neis said. That has led to Wisconsin being ranked as a third-tier state in capital and infrastructure, according to Glenn Yago, director of Capital Studies at the Milken Institute.

“[There are] tremendous commercial opportunities, but tremendous disparity about how that can be moved into commercialization,” said Neis, who sees research into existing problems as the first step.

Neis envisions “a committee or board to define [the] research agenda and define a budget to push this effort forward.”

“Let’s find out what is out there, and try to identify data sources … that we can pull into this,” he said.

He also wants to create a database of venture programs. What little work has been done to assess U.S. venture capital programs, Neis said, has been completed by program advocates and is biased.

In the long term, Neis said he envisions regional cooperation among states, which would not have to fight over limited capital. In addition to creating goals, the conference also recognized the fact that many policymakers do not have enough information about venture capital in order to make informed decisions.

Cory Nettles, Wisconsin’s secretary of commerce, said it’s often difficult to get good policies made because of politics and a lack of information. He suggested a neutral arbiter, such as the Wisconsin Technology Council, get involved.

“[We need to] get those people engaged and get them leading their respective legislative branches. [We’ve] got to have someone internally who is informed and interested.”

Economic improvement is also needed to stop the flow of college graduates leaving the state for richer ones, said David Ward, president of Northstar Economics. This brain drain, he said, is in turn leading to slower economic growth.

“We’re trying to generate change in the way we think about economic development in the state,” he said.

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Tiffany Stronghart is a Madison-based freelancer for WTN and can be reached at [email protected].