Venture capital plan No. 2, which was proposed recently by Gov. Scott Walker, is looking much better than capital plan No. 1. The second plan still needs a fix or two to minimize public risk, but once those are done it would be acceptable. The previous plan would have sold state bonds to raise venture capital money, but taxpayers would have been responsible for repaying the borrowing cost. Walker's new plan still proposes $100 million in bonds, but these would be backed by nonrefundable state tax credits, meaning that if there weren't enough earnings to repay the principal and interest, investors would receive credits to reduce tax liability. It comes down to an interest-free loan for the state. The $100 million would be invested in venture capital funds instead of directly in companies. What is good about this idea is that it rules out certified capital companies. These collections of funds benefited greatly from a $50 million venture capital plan passed by the Legislature in 1997, but it was a plan with little accountability. One company failed to report what it did with $8 million that it received from the state.
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