Tale of two states on jobs, venture capital

Zach Brandon of the Wisconsin Technology Council paints a dramatic story of what Wisconsin’s pathetic track record on venture capital has meant to the job base. His numbers on venture investing say that if Wisconsin had kept pace with the national average, it would have almost no unemployment.

Here are the numbers:
• The number of unemployed workers in Wisconsin is 215,767.
• The state has averaged 3% of its workforce in venture-backed businesses; the average across the states is 11%.
• That eight-point gap on a work force of 2.4 million means 259,215 fewer jobs.
• Minnesota, at 19% from ventures and about the same work force, has 447,285 in the startup sector.
• If the under-employed are counted, the Wisconsin number of people looking for work or better work is more than 400,000.

The message is clear. If the Badger state is serious about job creation, it needs to pick up the pace on venture capital formation. Minnesota has pulled in $6.5 billion in venture money over the last 40 years; Wisconsin $1.2 billion.

Unfortunately for the Badgers, the trend is going the wrong way. In 2011, Minnesota raised $275 million in startup money, below its five-year average of $328 million. In 2011, Wisconsin raised a paltry $72 million, worst of nine states its size and about on its five-year average.

Wisconsin deals raised .25% of the nation’s venture capital, down from .55% in 2010. Its population percentage is 1.84%.

The legislators in Madison led the nation in passing Act 255, which gives early stage investors a 25% tax credit for startup infusions. That’s been a big help for angel investing. But, other states have caught up, and, clearly, the state’s job base is still hurting from the lack of venture capital.

The Wisconsin Legislature is batting around several different versions of a venture capital bill, with most of the differences on the Republican side. For a party whose governor promised to create 250,000 jobs in his first term, the failure of GOP leadership on this bill during a special session on job creation is perplexing.

(Disclosure: I have a dog in the fight, since I’m working to create an angel fund for Southeastern Wisconsin.)

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