It seems like good news about the economy is in short supply these days, so it's a little surprising that an important story about economic success in Wisconsin flew under the radar last week.
According to the Wisconsin Technology Council, the nonpartisan science and technology adviser to the governor and Legislature, angel investment and early-stage investment in Wisconsin jumped 43 percent last year, to a new record high of $147 million in investment capital for the businesses and jobs of tomorrow. That's far outpacing the national average: According to the Center for Venture Research, early-stage investments grew by only 1.8 percent nationally in 2007.
Wisconsin's leap forward is no small feat. Families are struggling with the rising cost of gasoline and food, a difficult housing market and worries about job security, and in the same way businesses throughout the country are struggling with the credit crunch and uncertainty about how long this economy will stay in its slump. So for an area that could probably be expected to suffer - businesses looking for start-up cash and entrepreneurs with brand new ideas - a 43 percent jump is almost unheard of.
So, what caused it? Why was angel investment so successful in Wisconsin? A lot of it has to do with the successful and wildly popular Angel Investment Tax Credit Program. Simply put, this innovative program, facilitated in large part by the Wisconsin Angel Network, provides resources that connect potential investors from throughout the country to small and growing businesses in the state, and provides critical tax credits to facilitate the investment. Ideally, the businesses win because they get access to much-needed funding, the investors win as the businesses succeed, and the state wins because jobs are created, families are supported and the economy continues to grow.
As a welcomed by-product, angel investment as an industry has grown in Wisconsin as well. As recently as 2005, only six of these investment groups existed in the state: That number has grown to 20 in 2007. The amount these groups invested last year - $11.7 million - is up 600 percent from five years ago.
Republicans and Democrats in the state Assembly joined together with the governor this past session to strengthen and improve the angel investment program, sending a clear message to early stage investors that Wisconsin is open for business. The companies themselves certainly do their part: Wisconsin's workforce is second to none when it comes to hard work and dedication. The successes these businesses achieve are a testament to our state's ingenuity and enthusiasm, not to mention what can be achieved when the government rewards ambition and investment instead of looking to get its own piece of the pie.
The state actually gets a great bargain for the price of these tax credits. Every dollar invested by the state in the program can leverage up to four dollars in additional private-sector angel and venture investments, much of it from larger funds that tend to make larger investments in later-stage deals.
Our most recent state budget included a significant expansion and improvement of the angel investment tax credit program. When fully phased in, the total amount of tax credits that can be claimed for all tax years will be increased by $17.5 million (58 percent), to a total of $47.5 million, and the maximum individual investment will be increased from $500,000 to $2 million. The list of eligible businesses was also expanded to include, for the first time, qualified projects that use renewable energy. A bipartisan group of legislators in the state Assembly also worked with Governor Doyle this session to pass two bills to increase these tax credits and expand the list of eligible businesses, but both bills suffered a political death in the state Senate.
The angel investment program is by no means the only measure that the state Assembly passed to strengthen the economy in a time of need. We passed a Higher Education Tax Credit to help companies invest in their workforce: helping them to pay for their employees to get advanced training or pursue a higher education degree. We cut the state tax on capital gains if that money is reinvested into a Wisconsin-based business, and passed tax credits for businesses that invest in research and development for nanotechnology and bio-technology. Perhaps most importantly, we said "no" to nearly $18 billion in job-killing tax hikes that would have saddled our state with the worst business climate in the country.
While the 43 percent growth in angel investments is encouraging, times are still tough. Cash is tight for summer vacations, businesses and families are struggling to "make do with less," and budgets of every size are being stretched thin. But we're working hard in the state Capitol to encourage the jobs of tomorrow and protect the jobs of today, while taking full advantage of the opportunities that exist to invest in our economy even in tough times.
- Rep. Mike Huebsch, R-West Salem, is speaker of the Assembly.
According to the Wisconsin Technology Council, the nonpartisan science and technology adviser to the governor and Legislature, angel investment and early-stage investment in Wisconsin jumped 43 percent last year, to a new record high of $147 million in investment capital for the businesses and jobs of tomorrow. That's far outpacing the national average: According to the Center for Venture Research, early-stage investments grew by only 1.8 percent nationally in 2007.
Wisconsin's leap forward is no small feat. Families are struggling with the rising cost of gasoline and food, a difficult housing market and worries about job security, and in the same way businesses throughout the country are struggling with the credit crunch and uncertainty about how long this economy will stay in its slump. So for an area that could probably be expected to suffer - businesses looking for start-up cash and entrepreneurs with brand new ideas - a 43 percent jump is almost unheard of.
So, what caused it? Why was angel investment so successful in Wisconsin? A lot of it has to do with the successful and wildly popular Angel Investment Tax Credit Program. Simply put, this innovative program, facilitated in large part by the Wisconsin Angel Network, provides resources that connect potential investors from throughout the country to small and growing businesses in the state, and provides critical tax credits to facilitate the investment. Ideally, the businesses win because they get access to much-needed funding, the investors win as the businesses succeed, and the state wins because jobs are created, families are supported and the economy continues to grow.
As a welcomed by-product, angel investment as an industry has grown in Wisconsin as well. As recently as 2005, only six of these investment groups existed in the state: That number has grown to 20 in 2007. The amount these groups invested last year - $11.7 million - is up 600 percent from five years ago.
Republicans and Democrats in the state Assembly joined together with the governor this past session to strengthen and improve the angel investment program, sending a clear message to early stage investors that Wisconsin is open for business. The companies themselves certainly do their part: Wisconsin's workforce is second to none when it comes to hard work and dedication. The successes these businesses achieve are a testament to our state's ingenuity and enthusiasm, not to mention what can be achieved when the government rewards ambition and investment instead of looking to get its own piece of the pie.
The state actually gets a great bargain for the price of these tax credits. Every dollar invested by the state in the program can leverage up to four dollars in additional private-sector angel and venture investments, much of it from larger funds that tend to make larger investments in later-stage deals.
Our most recent state budget included a significant expansion and improvement of the angel investment tax credit program. When fully phased in, the total amount of tax credits that can be claimed for all tax years will be increased by $17.5 million (58 percent), to a total of $47.5 million, and the maximum individual investment will be increased from $500,000 to $2 million. The list of eligible businesses was also expanded to include, for the first time, qualified projects that use renewable energy. A bipartisan group of legislators in the state Assembly also worked with Governor Doyle this session to pass two bills to increase these tax credits and expand the list of eligible businesses, but both bills suffered a political death in the state Senate.
The angel investment program is by no means the only measure that the state Assembly passed to strengthen the economy in a time of need. We passed a Higher Education Tax Credit to help companies invest in their workforce: helping them to pay for their employees to get advanced training or pursue a higher education degree. We cut the state tax on capital gains if that money is reinvested into a Wisconsin-based business, and passed tax credits for businesses that invest in research and development for nanotechnology and bio-technology. Perhaps most importantly, we said "no" to nearly $18 billion in job-killing tax hikes that would have saddled our state with the worst business climate in the country.
While the 43 percent growth in angel investments is encouraging, times are still tough. Cash is tight for summer vacations, businesses and families are struggling to "make do with less," and budgets of every size are being stretched thin. But we're working hard in the state Capitol to encourage the jobs of tomorrow and protect the jobs of today, while taking full advantage of the opportunities that exist to invest in our economy even in tough times.
- Rep. Mike Huebsch, R-West Salem, is speaker of the Assembly.
