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Wisconsin small businesses to get boost in federal funds

WEDC is using $50M in federal dollars to create a new Wisconsin Investment Fund to support startups, small businesses

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1Day Review (CC BY 2.0)

Hundreds of new companies have been founded in Wisconsin since the start of the COVID-19 pandemic. Now the state is getting nearly $80 million to support those startups and small businesses.

Gov. Tony Evers is allocating $50 million of those funds to the Wisconsin Economic Development Corporation, or WEDC, which plans to create a new Wisconsin Investment Fund. The money comes from the federal State Small Business Credit Initiative through the American Rescue Plan Act.

“We see over the last few years record fundraising from the venture side of things, but also a lot of success and growth and resiliency from small businesses that are serving Main Street communities as well,” said Aaron Hagar, vice president of entrepreneurship and innovation.

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Through the $50 million project, the group aims to partner with venture capital funds and early-stage investors to support “better access to capital for tech and growth companies across the state,” Hagar said. He called small businesses “the lifeblood” of communities in Wisconsin.

The Evers administration will also allocate the money to some of WEDC’s existing programs. Its Technology Development Loan program will receive $8 million. The Capital Catalyst program, which focuses on supporting nonprofit lenders, will get an additional $6 million.

“Small businesses across the state are going to be able to access these funds to put plans in place that they may not have been able to access,” Hagar said, saying it will help small companies and startups looking to scale new technologies and bring ideas to the market.

Hagar said the group has not yet selected venture capital fund managers, but is in the process of gathering proposals.

“In Wisconsin, our small businesses and Main Street’s are the lifeblood of our communities and make our state the great place it is to live and raise a family,” said U.S. Democratic Sen. Tammy Baldwin, who supported the act.

About 500 new businesses have formed on average each month in the state since the summer of 2020, but leaders still face a tight labor market and inflation.

Hagar said it’s early in the year, but data so far suggests pandemic recovery has been strong.

“We’re really just trying to see if that sustains or if there’s a fall-off in investment activity or other sorts of funding. We won’t really know until probably well into the second quarter,” he said.

The WEDC is also working with the Wisconsin Housing Economic Development Authority, which received $15 million to improve access to capital and credit for small businesses that receive microloans from Community Development Financial Institutions.