Governor Scott Walker signed Assembly Bill 181 into law today at MCT, Inc. in Milwaukee. Assembly Bill 181 establishes an economic development program within the Department of Administration (DOA) to invest in venture capital funds.
"Job creation depends on new business ventures, and the $25 million allocated for this program in the state budget will help grow private sector jobs by investing in start-up companies," Governor Walker said. "One hundred percent of the funds from this program will go to Wisconsin-based businesses, and there are a number of measures in place to ensure accountability and transparency for the hard-working taxpayers."
The program will operate under a "fund of funds" investment model. Under the new law, the DOA Secretary will form a five-member committee to select an investment manager who will invest state funds, along with other private investment dollars, with multiple venture capital funds who in turn invest the dollars directly in Wisconsin-based businesses. The committee will consist of representatives from the State of Wisconsin Investment Board and DOA's Capital Finance Office, and the investment manager selected must have expertise with venture capital or private equity.
"I hope that once success is shown, it will lead to additional measures to increase the amount of capital for new businesses and more Wisconsin jobs," Governor Walker continued. "I thank Representative Mike Kuglitsch (R-New Berlin) and Senator Alberta Darling (R-River Hills) for their leadership on this bill, which received enormous bipartisan support."
Assembly Bill 181 passed the Assembly on a vote of 91-2 and the Senate on a vote of 29-3. Assembly Bill 181 is Wisconsin Act 41.
Under the law, DOA is required to pay $25 million to the investment manager in FY13-14 for investments in venture capital funds. The investment manager is required to contribute at least $300,000 of its own funds and at least $5 million raised from other sources.
The investment manager must also set aside proceeds from the investments and must, at least, make annual payments to the state's general fund until the investment manager has paid the state $25 million. Following the $25 million reimbursement, the investment manager must pay 90 percent of its proceeds from such investments to the state.
To ensure accountability and transparency for taxpayer funds, the investment manager is required to submit quarterly and annual reports to DOA, which must include an annual audit of financial statements along with other important investment related information.
Governor Walker has partially vetoed this legislation to line out the $25 million appropriation because 2013 Wisconsin Act 20 (state budget) already appropriated $25 million for the program. A copy of Governor Walker's partial veto message is attached.
MCT, Inc. creates sign, display, and other products like technical textiles and composites. MCT's operations are based in Milwaukee, and the company employs approximately 15 people.