04 Mar Fischer likes prospects for venture capital program
Madison, Wis. – Jack Fischer has demonstrated a fair degree of salesmanship during his business career, and as the new secretary of the Wisconsin Department of Commerce, his salesmanship skills will come in handy as the Doyle Administration attempts to enact venture capital boosting elements of Accelerate Wisconsin.
Gov. Jim Doyle, a Democrat, has offered a series of proposals designed to boost venture capital and spark innovation as part of his Accelerate Wisconsin package. Ironically, it appears to have more support in the Republican controlled Assembly than in the Senate, which is controlled by Democrats.
Having already met with key lawmakers, Fischer does not believe he has an impossible selling job ahead of him, even with the economy slowing down and lower than projected sales tax collections contributing to a projected $652 million state budget deficit. That projection is provided by the Legislative Fiscal Bureau.
Fischer, who has more than 30 years’ experience in the private sector as an architect, business owner, chief executive, and consultant, said he had met with the likes of Democratic Senators Roger Breske (Eland), Pat Kreitlow (Chippewa Falls), and Jeff Plale (South Milwaukee), and Republican Sen. Ted Kanavas (Brookfield).
“I think that legislative teams from both sides of the aisle recognize how important these programs are, and are working cooperatively to bring them to fruition,” Fischer said. “These are important elements of the Governor’s economic program, and they recognize these elements can make a difference in stimulating job growth.”
Accelerating Wisconsin
Under Accelerate Wisconsin, which is designed to build on tax incentives established under Act 255, a capital gains re-investment initiative has been proposed to increase investment in new Wisconsin businesses. The initiative would give individuals a limited, 100 percent capital gains exclusion of up to $10 million for long-term capital gains reinvested in qualifying Wisconsin businesses.
To further encourage the development of early-stage companies, Accelerate Wisconsin would:
• Increase the total amount of angel investor and venture capital tax credits available to businesses. By 2015, the total amount of Accelerate Wisconsin tax credits would reach $100 million, which would leverage a minimum of $400 million in private investment.
• Raise the current cap of $1 million in tax-creditable angel investment per business to $4 million. According to Doyle, permitting entrepreneurs to receive tax creditable investments of up to $4 million from angel investors would allow new start-up companies to receive financing from any combination of angel or venture investors to the maximum of $4 million in total tax-creditable investment.
• Double funding for current technology grants and loans, direct $5 million annually to provide seed money to start-up companies and small businesses, and supply the matching funds required for federal research grant applications.
The Act 255 program is credited by Doyle with increasing investments by angel investors in early-stage companies by more than 54 percent between 2005 and 2006, and with raising venture capital from $39 million in 2003 to $73 million in 2006.
Fischer said Act 255 was very meaningful to help stimulate investment in young and growing entrepreneurial companies. The Department of Commerce, he noted, has qualified 80 early-stage businesses as eligible for the tax-credit program.
Despite reports of reluctance on the part of some lawmakers, Fischer sees no major barriers to their enactment. “There are no specific issues,” he said. “They [lawmakers] have been very supportive conceptually about the plans to grow Wisconsin’s economy. They understand that it’s important work.”
Trade winds
As an executive, Fischer was well traveled, having visited Mexico, El Salvador, Brazil, and Western Europe, among others.
Given his international experience, he’s pleased that Wisconsin recently reported robust export activity for 2007, and the state’s technological prowess was a major factor. Exports increased by 11.8 percent to a record $19.2 billion last year, and they were led by industrial machinery (including computer equipment), which recorded $6.2 billion in exports; electrical machinery, $2.7 billion; and medical and scientific instruments, $2.1 billion.
Wisconsin now ranks as the nation’s 19th-largest exporting state, which Fischer believes will help Wisconsin weather an economic downturn. His boss, Gov. Jim Doyle, has acknowledged that challenging economic times are ahead and recently called for budget cuts to deal with the projected deficit.
Fischer declined to predict whether a recession is looming. “I’m just supporting a pro-growth agenda that’s been outlined by the Governor,” he said.
Still, he expects a number of businesses to flourish even in challenging times, noting that manufacturing, healthcare, and agriculture remain strong. Fischer cited the example of Marvel Manufacturing of Oshkosh, which makes world-class machines and blades for cutting and sawing.
The company reported $19 million in 2007 sales and employs 130 people. “They sell to Boeing and others and they can’t keep up,” Fisher said. “They are growing and creating jobs, the slowing economy has not touched them, and they are excited about their job-creating potential in 2008.
“So even in challenging times, there are always pockets of the economy that are doing very, very well.”
CEO mindset
Based on surveying by Wisconsin Manufacturers & Commerce, the tax climate in Wisconsin is cited by most CEOs as a drag on the state’s competitiveness. Yet those same chief executives laud the quality of life in Wisconsin, which their critics say would take a hit under anti-tax proposals like the Taxpayer’s Bill of Rights.
Fischer, a former architect who was in the consulting business for 33 years, represented a broad spectrum of clients inside an outside the state. During his career, Fischer said he was involved in thousands of design opportunities and he can’t think of any businesses or individual board members that based their location or relocation decision on taxes alone.
“They looked at our quality of life, public education system, world class universities, our fresh water, the work ethic of our people,” he said. “Their decisions on expansion and growth more often than not depended on 10 or 12 or 15 different criteria, not just one line.”
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