CAPCO Programs

In 1998, Wisconsin established its own Certified Capital Companies (CAPCO) program:

On April 28, 1998, Wisconsin added a new tool to its economic development program when it enacted legislation authorizing tax incentives for investments in Certified Capital Companies (CAPCOs). CAPCOs, organizations whose primary business activity is investing in “qualified businesses,” have been used in a handful of other states as a method of promoting venture capital investment within the state. With the enactment of 1997 Wisconsin Act 215 (the Act), Wisconsin joined Louisiana, Missouri, and New York in offering premium tax credits to insurance companies that make a certified capital investment in a CAPCO. Florida joined the group shortly after Wisconsin by passing its own CAPCO legislation on May 28, 1998, and CAPCO legislation has been introduced in both houses of the Illinois Legislature.

This article reviews the development and operation of these CAPCO programs and the enabling legislation in Wisconsin, exploring the roles of the CAPCO investment vehicles, the qualified businesses that will receive the venture capital funds, and the insurance company investors. The article also focuses on how attorneys can help their clients in any of these three categories take advantage of Wisconsin’s new CAPCO program.

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Back in 2008, Advantage Capital Partners raised over $3 million through the New York CAPCO Program for Niagara Dispensing Technologies, Inc.:

Advantage Capital Partners, a leading venture capital and small business finance firm, today announced participation in a $3.6 million funding round for Niagara Dispensing Technologies, Inc., a highly-automated carbonated beverage dispensing company located in Western New York. Advantage Capital led the round, with other participating investors including Rand Capital and The Erie County Industrial Development Agency (ECIDA). The funding will be used to support the company’s continued growth.

“Closing on this funding is a major milestone for our company, as it will catapult us into the next phase of development for our beer dispense system technology,” said Thomas Gagliano, CEO of Niagara Dispensing Technologies. “We have an excellent product and now have the resources to grow our business and continue to improve our capabilities.”

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CAPCO Programs make the Midwest an attractive location for entrepreneurial endeavors:

In just three years, the InvestMidwest Venture Capital Forum has established itself as the Midwest’s premier annual venture capital forum, to date generating more than $100 million in equity investment for innovative entrepreneurial growth companies. From the Forum’s early focus on companies located primarily in the St. Louis/Kansas City regions, InvestMidwest is now poised to expand its reach to encompass the country’s entire central corridor, thereby attracting a larger audience of regional and national venture capitalists.

InvestMidwest is presented by the RCGA, Missouri Venture Forum, Greater Kansas City Chamber of Commerce, KCCatalyst, Kansas Technology Enterprise Corporation and Technology Gateway Alliance. The Forum is sponsored by the Danforth Foundation, the Ewing Marion Kauffman Foundation and a diverse group of public and private organizations.

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SOMS Technologies received funding from Advantage Capital Partners through the New York CAPCO Program:

Advantage Capital Partners, a leading venture capital and small business finance firm, has made an investment in SOMS Technologies LLC, the manufacturer of the microGreen(tm) vehicle engine oil filter. The microGreen filter is a “green” product that utilizes a patented filter technology designed to keep engine oil cleaner, extending the oil life up to 30,000 miles. The funding will be used to support the company’s continued growth.

“This financing comes at a crucial time, as we prepare to expand our marketing and sales efforts,” said Miles Flamenbaum, CEO of SOMS Technologies. “Advantage Capital’s investment will enable our company to continue to grow, helping more customers save time and money on their oil changes. Our microGreen oil filter helps customers protect the environment by reducing oil consumption and the generation of hazardous waste.”

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