Community Bankers of Wisconsin CapVest Fund, LP (“CapVest Fund”)
Overview:
The Community Bankers of Wisconsin (CBW) has formed the Community Bankers of Wisconsin CapVest Fund, LP (“CapVest
Fund”). CapVest is an abbreviation for “Capital Investment”.
As proposed the CapVest Fund will be a for-profit, private equity investment partnership headquartered in Madison, Wisconsin. The CapVest Fund will work in partnership with community banks to provide private equity capital to small and medium sized Wisconsin based businesses. Wisconsin banks will be the primary investors in the CapVest Fund.
The CapVest Fund will have a special niche in the equity capital market since most of the investments will be less than the majority of other equity/venture capital funds.
One of the major goals of the CapVest Fund is to enhance the State’s economy by providing a needed source of equity capital investment in smaller Wisconsin communities in partnership with local community banks.
Need for the CapVest Fund:
According to the Wisconsin Taxpayers Alliance our state lags behind the national average and surrounding states in the availability of venture capital. This issue has recently been discussed as part of the Department of Financial Institutions (DFI) Task Force on Financial Competitiveness 2005. As part of these Task Force deliberations one of the top priorities of the Financial Services & the New Economy committee was,
“The state should support programs aimed at increasing the availability of venture capital such as the CapVest Fund and other private sector sources.”
For Wisconsin community banks access to investment capital in smaller communities is critical for the overall economic vitality of the community. In Wisconsin, 71% of the state’s community banks are located in communities under 10,000 in population. Further, 58% of the community banks are located in communities under 5,000 in population.
Small Business Investment Company:
The CapVest Fund will be licensed by the Small Business Administration (“SBA”) to operate as a “participating security” small business investment company (“SBIC”). As such, the CapVest Fund will be eligible for advantageous long-term financing in the form of “participating securities” up to two hundred percent (200%) of the CapVest Fund’s private capital.
The SBIC program is a unique partnership of public and private funds in which the SBA supplements the capital of private venture capital investment firms. The primary objective of the SBIC program is to increase financing to “small” businesses. SBA defines “small” as businesses whose net worth is less than $18 million and have average net profit after tax for the two most recent years of less than $6 million.
