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Wellmark Venture Capital and Economic Development Program

Wellmark’s $25 million venture capital and economic development program promotes business development and job creation across Iowa. Wellmark provides financing through five funding arrangements:

  1. Early-Stage Funding Program designed to:
    • Encourage development of entrepreneurial ideas
    • Keep the resulting business and job creation in Iowa

    Requests are submitted to any of four centers:


    After the centers screen funding requests, appropriate requests are forwarded to Wellmark for research and underwriting. Funding is in amounts of $10,000 - $100,000 with a second note option for a total of $150,000 in funding per company. Funding is in the form of debt with rights to convert to equity.

  2. Late Round Financing – Wellmark participates in later round funding of startup companies in Iowa to develop technology and bring products to market.  Investment is $100,000 to $500,000 per deal. Subsequent investments in the same company may be considered for up to $1.5 million total per company. Wellmark does not act as a lead investor and would expect other institutional participants to take investment positions with the company.

  3. Tax Credit Opportunities – Purchase of various state and federal tax credits to accomplish economic development goals in communities throughout Iowa. Tax credits include but are not limited to:
    • State Wind Energy
    • Federal and State Historic
    • Enterprise Zone Tax Credits (Because these projects must create jobs in Iowa, the primary focus is on Enterprise Zone Tax Credits.)

  4. Small Business Loan Fund - For smaller companies that are no longer in the start-up stage, but do not want an equity investor, Wellmark provides a late-stage debt financing program.

    The Iowa Business Growth Company (IBGC) provides investigation, underwriting, and servicing for this program. The IBGC is certified by the U.S. Small Business Administration (SBA) to offer the 504 loan program to small businesses across Iowa.

    The Small Business Loan Fund offers financing in conjunction with Iowa banks and the SBA to allow companies without necessary capital to qualify for the 504 Small Business loans to receive funding. The Wellmark portion of the loan will not exceed 20% of the total financing up to a maximum of $750,000. Iowa business owners who are interested in Wellmark's small business loan program may work with their local bank or may contact Iowa Business Growth Company  for more information.

  5. Rural Vitality Fund - Wellmark committed $5 million in venture capital to Iowa Farm Bureau Federation's (IFBF) Renew Rural Iowa  program. This program encourages business development and expansion in rural Iowa communities with less than 30,000 people. 

    Investments are made to qualified companies resulting in the economic impact they provide on surrounding communities including new job creation, expansions, and growth in retail spending. This fund is intended to work with traditional capital sources and offers equity and/or debt infusions to small or mid-sized firms, financial backing and private financing options, as well as mentoring for entrepreneurial growth. No sub-prime loans, grants, or forgivable loans are offered. Businesses from Boone, Dyersville, Maquoketa, and Elkader are among past recipients.

    How the Program Began

    In 2002, the Iowa Legislature passed and Governor Vilsack signed into law, a reduction of the state's insurance premium tax from 2 percent to 1 percent, phased in over a four year period through 2007.  This legislation was viewed as crucial to keep Iowa-based insurance companies competitive, as many other states offered lower tax rates to insurers.

     

    As part of this change in law, several Iowa-based insurance companies voluntarily agreed to support a plan to commit $60 million of the projected premium tax reduction for economic development in Iowa. 

    Communities the Program Has Helped

    Since 2003, Wellmark has made over 60 venture capital investments in 34 communities throughout the state, including Cedar Rapids, Clinton, Davenport Ellsworth, Fairfield, Harlan, Hiawatha, Lake Mills, Mason City, Mt. Pleasant, Pella, Sheffield, Washington, and Waterloo, among others.

    Questions?

    For questions, comments, possible investors or small business loans, e-mail CommunityVenturesFund@wellmark.com .


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