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Letter to lawmakers: Say no to Evers’ Venture Capital Plan

MADISON — The Wisconsin Free-Market Coalition is urging lawmakers to jettison the $100 million public venture capital fund included in Gov.Tony Evers’ biennial budget proposal. Giving the state control over a venture capital fund is a bad idea, as allowing governments to pick winners and losers always is.

The coalition  — which includes the Badger Institute, Americans for Prosperity-Wisconsin, the MacIver Institute, the Wisconsin Institute for Law & Liberty and Empower Wisconsin — notes that venture capital is risky enough in the marketplace, where experienced, deliberate investors use their own money to get behind a project once they’ve determined that a sound plan and potential earnings justify an investment.

“State government has no such expertise in determining the likely success of new ventures. Of even greater concern, the investments are made with taxpayers’ money,” the letter states.

The numbers are bleak. As The Wall Street Journal, reports, 95% of start-ups fail to meet specific revenue growth or break-even dates, 30% to 40% are forced to liquidate and lose all investor money and only 35% survive until their 10th anniversary. Three-quarters of venture capital-backed firms never fully return their original investment.

“Why would we want state government taking such a risk with taxpayer dollars?”

Why would we want the Evers administration, which has proved to be anything but good stewards of Wisconsin tax dollars, anywhere near a venture capital fund?

As the coalition notes, the fund would create an oversight board established by the Wisconsin Economic Development Corp. (WEDC), which would distribute taxpayer monies to an advisory board that would in turn steer them to sub-funds that would allocate money to business start-ups. The ostensible reason for using separately managed funds is to offset the risk of managers making bad investments.

“This would do little to alleviate underlying problems. Without their own skin in the game, selections may well be made without sufficient diligence or objectivity,” the coalition letter warns.

“When government officials or their designees channel taxpayer money to select businesses, it distorts the marketplace. Decisions often favor new businesses over their long-established, taxpaying competitors. When promised economic benefits fall short, no one is held to account, and there’s rarely analytical follow-up to determine what went wrong.”

State Rep. Scott Allen (R-Waukesha), said he’s particularly concerned about the Evers administration’s involvement in the fund. Bringing Woke policies to venture capital — the administration’s politically driven focus on equity and inclusion initiatives — should give taxpayers serious misgivings about how the fund would be directed, Allen said.

“Unfortunately, this is another classic case of Democrats wanting to pick the winners,” the lawmaker said. “While I appreciate this sort of token effort to help stimulate business development, I think (Evers) is just out of touch with the market realities right now … For him it’s just another box to check off.”

Policymakers would better serve taxpayers in creating an even playing field for all entrepreneurs and businesses, the Free Market Coalition asserts. Limiting regulatory burden, creating a pro-growth tax structure that makes Wisconsin more competitive and leads to a flourishing economy. Those things, frankly, are not in Evers’ liberal, big government DNA. But they are the fundamentals of conservative governance.

“After a year of COVID-19 and government-imposed hardships on businesses, the desire to help invigorate private enterprise is understandable. But this is the wrong way to go about it,” the coalition writes.

“The downside to this public venture fund is enormous. The upside is minimal, at best.”

Read the full letter here.

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5 thoughts on “Letter to lawmakers: Say no to Evers’ Venture Capital Plan

  • Gov. Evers – how many accountants and financial advisors are on staff? And what is their track record?

    I can’t believe a government official even dreams of entering such an enterprise that’s filled with mines that can explode at any time. And then everyone loses all their investments!

    Good grief!!!

  • Please let Evers know–The Government invested in Mortgage Packages made it illegal to not lend to low income—And look what happened there!…..Let’s give money to low income individuals- No down payment- No equity-100%value—property can only go up! And lets add this to Government Employees retirement plans as an investment….AND WHEN IT FAILED LETS WATCH THE HOUSING MARKET PLUMIT-BLAME THE BANKS AND WATCH THE STOCK MARKET PLUMIT-AND MAKE THE TAX PAYER PAY FOR JUST ANOTHER POOR DECISION BY THE GOVERNMENT! TELL TONY WERE STILL WAITING FOR THE IMPROVEMENT TO MPS!

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