Qualified New Business Venture

Early-stage businesses conducting pre-commercialization activity related to proprietary technology may be designated as Qualified New Business Ventures.  This designation is designed to assist businesses in their efforts to attract investors by making state tax credits available to individuals and groups investing in these businesses.

Does Your Business Qualify?
To be certified as a Qualified New Business Venture by the Department of Commerce, businesses must be able to answer "Yes" to the following six questions: Are you seeking private equity funding for pre-commercialization activities related to the development of a proprietary new product or process in Wisconsin? Have you been in business for no more than 10 consecutive years? Are your principal administrative offices located in Wisconsin?                        or Does at least 80% of your payroll go to people employed in Wisconsin? Do you have less than 100 full-time equivalent (FTE) employees? (FTE=Total number of hours worked per year multiplied by total number of employees divided by 2,080 hours) Do at least 51% of your employees work in Wisconsin? Since its inception, has your business received, in aggregate, no more than $10 million of private equity investment in cash?
Department of Commerce Evaluation Criteria
Commerce will also consider the following factors when determining if an early-stage business should be certified as a Qualified New Business Venture: Is the business one of Wisconsin's targeted high-technology industries (biotechnology, health technology, information technology or nanotechnology)? Does the business have high-growth potential, long-term sustainability and sufficient barriers to entry? What is the experience level of the management team? What is the financial need of the business? What percentage of funding being sought by applicants will be spent on activities in Wisconsin?
Application Materials
The Department of Commerce is developing online application materials for Qualified New Business Ventures.  These forms should be available on this website in the near future.  In the meantime, applications may be obtained by contacting Kathy Collins.

A business may be designated as a Qualified New Business Venture if it meets the following criteria:

• The business must be engaged in, or must have committed to engage in, one of the following:

  1. Developing a new product or business process

  2. Manufacturing, agriculture or processing or assembly products and conducting research and development.

• Businesses engaged in real estate development, insurance, banking, lending, lobbying, political consultation, professional services provided by attorneys, accountants, business consultants, physicians or health care consultants, wholesale or retail trade, leisure, hospitality, transportation or construction are not eligible for the program.

Qualified New Business Ventures will be certified by Commerce on an annual basis.  Businesses wishing to continue their certification in the program must submit verification information annually.

Businesses can receive up to $4 million in tax credit-eligible cash equity investment, of which no more than $1 million in tax credit-eligible investment can come from angel investors.

Example:  $500,000 in angel investment + $3,500,000 in venture capital funds = $4 million in investments eligible to earn tax credits. 

Benefits to Investors

• Qualifying angel investors and angel investor networks that invest in Qualified New Business Ventures may be eligible to claim an income tax credit on that investment, equal to 12.5% in each of two years.

• Summary of 2007-2009 Biennel Budget Bill (2007 Wis. Act 20) Act 255 QNBV/Investor Tax Credit Changes

• Qualifying venture capital funds that invest in Qualified New Business Ventures may be eligible to claim a 25% income tax credit on that investment.  Up to $2 million in aggregate cash equity investment by a qualified fund in a single Qualified New Business Venture may qualify for the tax credit.

Subsequent Reporting

For a list of businesses certified as Qualified New Business Ventures, click here.

For Frequently Asked Questions, click here.  

For more information about Qualified New Business Ventures, and prior to submitting an application, please contact:

Chris Schiffner

608/267-2425

Chris.Schiffner@Wisconsin.gov

OR

Kathy Collins

608/267-0769

Kathy.Collins@Wisconsin.gov

The State of Wisconsin does not endorse the quality of management or the potential for earnings of the certified Qualified New Business Venture.  Furthermore, the Qualified New Business Venture's use of the phrase "certified" and/or "qualified new business venture" is not a recommendation or endorsement of the investment or the company by the Wisconsin Department of Commerce.

Certification of a fund by the Department of Commerce is not an endorsement of the quality of management of that fund.  The Department of Commerce is not liable for damages or losses to an investor.