Local fund managers and venture capitalists urged Minnesota Gov. Mark Dayton's administration to consent to a private equity project. The project is a privately managed equity fund capitalized by Minnesota's foundations, pension funds, and large financial institutions. The funds would generally be invested in small promising Minnesota firms.

The idea for the fund came about in 2011 when the Dayton's administration looked for ways to speed up the economic recovery. Bank lending to small companies was contracting in 2011.

The idea outlines a program for large Minnesota institutions, such as Thrivent Financial, Ameriprise, and U.S. Bancorp to lead the funding and commit a few million dollars each. Foundations and affluent individuals could follow suit. Operating under program guidelines, a fund-of-fund manager could distribute the capital to Minnesota and other venture capital and private equity managers.

"We need the private sector to lead on this. There exists a capital scarcity for early-stage companies that need smaller amounts of capital and access to resources, to grow and become successful businesses. We can leverage our history of building partnerships. We know how to do this and we shouldn't wait until we have a crisis like Michigan did," said Leslie Frecon of LFE Capital. LFE Capital is recognized for its Minnesota portfolio of private ventures in small but growing companies.