Wellmark venture capital and economic development program
Our venture capital and economic development program promotes business development and job creation across Iowa through five funding arrangements.
1. Early stage funding program
Early-Stage funding program encourages development of entrepreneurial ideas and keeps the resulting business and job creation in Iowa. Requests are submitted to any of four centers:
- Iowa State University External Site
- North Iowa Area Community College
- University of Iowa
- University of Northern Iowa
The centers screen funding requests and forward appropriate requests to Wellmark for research and underwriting. Funding ranges from $10,000 - $100,000 with a second note option-- for a total of $150,000 in funding per company. Funding comes in the form of debt with rights to convert to equity.
2. Late round financing
Wellmark participates in later round funding of Iowa startup companies to help develop technology and bring products to market. Investment is $100,00 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
By purchasing various state and federal tax credits, we can accomplish economic development goals in communities throughout Iowa. Tax credits include (but are not limited to) state wind energy, federal and state historic, and enterprise zone. Because the 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 U.S. Small Business Administration (SBA) certifies the IGBC to offer the 504 loan program to small businesses across Iowa.
In conjunction with Iowa banks and the SBA, the Small Business Loan Fund offers financing to allow companies without necessary capital to qualify for the 504 Small Business loans. 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 can work with their local bank or contact Iowa Business Growth Company External Sitefor more information.
5. Rural vitality fund
Wellmark committed $5 million in venture capital to Iowa Farm Bureau Federation's (IFBF) Renew Rural Iowa External Site program. This program encourages business development and expansion in rural Iowa communities of less than 30,000 people.
Qualified companies receive investments resulting in job creation, expansion, and growth in retail spending in the surrounding communities. This fund also works with traditional capital sources and offers equity and/or debt infusions to small and 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% to 1%, phased in over a four year period through 2007. This legislation kept 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.
For questions, comments, possible investors or small business loans, email CommunityVenturesFund@Wellmark.com Send Email.