SB 169

This bill directs the Wisconsin Economic Development Corporation (WEDC) to

establish an economic development program that operates like what is often referred

to as a "fund of funds." Typically, under a fund of funds investment model, an

investment fund invests moneys with other investment funds that in turn invest

those moneys directly in operating businesses. Under this bill, WEDC must contract

with an investment manager to manage investments in venture capital funds and

Wisconsin businesses.

Before WEDC contracts with an investment manager, WEDC and the State of

Wisconsin Investment Board (SWIB) must form a committee to select the investment

manager. A majority of the committee's members must be representatives of SWIB.

WEDC's proposed contract with the investment manager is subject to passive review

by the Joint Committee on Finance (JCF). However, under the bill, JCF's review of

the contract is limited to determining whether the contract is contrary to the bill or

fails to implement an applicable provision of the bill.

The bill requires WEDC to pay $25,000,000 to the investment manager for

investments in venture capital funds. The bill also requires the investment manager

to contribute to those investments $300,000 of its own moneys and $5,000,000 raised

from other funding sources. The investment manager must attempt to invest all of

those moneys within 24 months after the date the investment manager executes the

contract with the corporation, and the investment manager must invest those

moneys in at least four different venture capital funds. The investment manager

may not invest more than $10,000,000 in any one venture capital fund.

The bill requires the investment manager to contract with each venture capital

fund that receives moneys under the program created in the bill. Under that

contract, each venture capital fund must do all of the following:

1. Invest all of the moneys the venture capital fund receives under the program

in businesses that are headquartered in Wisconsin and employ at least 50 percent

of their full-time employees in Wisconsin and invest at least one-half of those

moneys in businesses that employ fewer than 150 full-time employees when the

venture capital fund first invests in the business under the program. If, within three

years after the venture capital fund makes an investment in a business under the

program, the business relocates its headquarters outside of Wisconsin or fails to

employ at least 50 percent of its full-time employees in Wisconsin, the venture

capital fund must recover the total amount of moneys the venture capital fund

invested in the business under the program, including any matching funds, and

reinvest those moneys in one or more eligible businesses, subject to the bill's

requirements.

2. Invest at least one-half of those moneys in businesses within 24 months after

the venture capital fund receives the moneys and invest all of the moneys in

businesses within 48 months.