WI
Wisconsin Senate Bill SB878

Wisconsin 2023-2024 Regular Session

Wisconsin Senate Bill SB878 Compare Versions

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33 2023 - 2024 LEGISLATURE
44 2023 SENATE BILL 878
55 January 5, 2024 - Introduced by Senators TESTIN, FELZKOWSKI and FEYEN,
66 cosponsored by Representatives WITTKE, ZIMMERMAN, DITTRICH, DUCHOW,
77 MOSES, O'CONNOR, PENTERMAN and RETTINGER. Referred to Committee on
88 Economic Development and Technical Colleges.
99 ***AUTHORS SUBJECT TO CHANGE***
1010 AN ACT to repeal 16.295 (4) (a) 2. and 16.295 (6) (b); to consolidate, renumber
1111 and amend 16.295 (4) (a) (intro.) and 1.; to amend 16.295 (5) (c) 3., 16.295 (5)
1212 (d) 1., 16.295 (5) (d) 4., 16.295 (6) (a), 16.295 (7) (a) 2., 16.295 (7) (a) 3. (intro.),
1313 16.295 (7) (a) 3. b., 16.295 (7) (a) 3. d., 16.295 (7) (a) 4. (intro.), 16.295 (7) (a) 4.
1414 f., 16.295 (7) (c) 1., 16.295 (7) (c) 2., 16.295 (7) (c) 3. and 16.295 (8) (intro.); to
1515 repeal and recreate 16.295 (6) (c); and to create 16.295 (6) (d) of the statutes;
1616 relating to: fund of funds investment program.
1717 Analysis by the Legislative Reference Bureau
1818 This bill requires the investment manager of the Badger fund of funds to do all
1919 of the following: 1) hold in escrow gross proceeds from its investments of $25,000,000
2020 received in fiscal year 2013-14 and its investments of $25,000,000 received in fiscal
2121 year 2023-24 until the manager has allocated 90 percent of the gross proceeds to
2222 investments in venture capital funds headquartered in this state; and 2) provide a
2323 progress report no later than March 1, 2024, to the joint committee on finance.
2424 This bill also provides that the investment manager's management fee may not
2525 exceed 1 percent of the sum of the following: the $25,000,000 received by the
2626 investment manager from the state in fiscal year 2013-14 and the first $5,000,000
2727 raised from other sources; the $25,000,000 received by the investment manager from
2828 the state in fiscal year 2023-24; and any amounts reinvested by the Badger fund of
2929 funds through the proceeds of its prior investments.
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3838 SENATE BILL 878
3939 For further information see the state fiscal estimate, which will be printed as
4040 an appendix to this bill.
4141 The people of the state of Wisconsin, represented in senate and assembly, do
4242 enact as follows:
4343 SECTION 1. 16.295 (4) (a) (intro.) and 1. of the statutes, as affected by 2023
4444 Wisconsin Act 19, are consolidated, renumbered 16.295 (4) (a) and amended to read:
4545 16.295 (4) (a) Subject to sub. (3), the department shall contract with the
4646 investment manager. The contract shall establish the investment manager's
4747 compensation, including any management fee. Any management fee may not exceed
4848 the following: 1. Annually, for no more than 4 years, on an annual basis, 1 percent
4949 of the total moneys designated under sub. (5) (b) 1. and 4., raised under sub. (5) (b)
5050 3., and reinvested under sub. (6) (c).
5151 SECTION 2. 16.295 (4) (a) 2. of the statutes, as created by 2023 Wisconsin Act
5252 19, is repealed.
5353 SECTION 3. 16.295 (5) (c) 3. of the statutes, as created by 2023 Wisconsin Act
5454 19, is amended to read:
5555 16.295 (5) (c) 3. Of the moneys designated under par. (b) 4., the investment
5656 manager shall commit all of those moneys to at least 4 investments in venture capital
5757 funds headquartered in this state within 24 months after the date the investment
5858 manager receives the moneys.
5959 SECTION 4. 16.295 (5) (d) 1. of the statutes, as affected by 2023 Wisconsin Act
6060 19, is amended to read:
6161 16.295 (5) (d) 1. Make new investments in an amount equal to the moneys it
6262 receives under par. (b) in one or more businesses that are headquartered in this state
6363 and employ at least 50 percent of their full-time employees, including any subsidiary
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8787 SECTION 4
8888 SENATE BILL 878
8989 or other affiliated entity, in this state, and invest at least one-half of those moneys
9090 in one or more businesses that employ fewer than 150 full-time employees, including
9191 any subsidiary or other affiliated entity, when the venture capital fund first invests
9292 moneys in the business under this section. The venture capital fund's contract with
9393 a business in which the venture capital fund makes an investment under this
9494 subdivision shall require that, if within 3 years after the venture capital fund makes
9595 that its initial investment, the business relocates its headquarters outside of this
9696 state or fails to employ at least 50 percent of its full-time employees, including any
9797 subsidiary or other affiliated entity, in this state, the business shall promptly pay to
9898 the venture capital fund an amount equal to the total amount of moneys designated
9999 under par. (b) 1. and 4. that the venture capital fund invested in the business. The
100100 venture capital fund shall reinvest those moneys in one or more businesses that are
101101 eligible to receive an investment under this subdivision, subject to the requirements
102102 of this section.
103103 SECTION 5. 16.295 (5) (d) 4. of the statutes is amended to read:
104104 16.295 (5) (d) 4. At least match Ensure that any moneys it receives under par.
105105 (b) and invests in a business is accompanied with an investment in that business of
106106 moneys the venture capital fund has raised from sources other than the investment
107107 manager. The investment manager venture capital fund shall ensure that, on
108108 average, for every $1 a venture capital fund receives under par. (b) and invests in a
109109 business, the venture capital fund invests $2 in that business from sources other
110110 than the investment manager when measured across all individual businesses
111111 receiving moneys under this paragraph, the venture capital fund at least matches
112112 any moneys it receives under par. (b) with investments in such businesses the
113113 venture capital fund has raised from sources other than the investment manager.
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140140 SECTION 6 SENATE BILL 878
141141 SECTION 6. 16.295 (6) (a) of the statutes is amended to read:
142142 16.295 (6) (a) The investment manager shall hold in an escrow account at a
143143 bank with its headquarters in this state its gross proceeds from all investments of
144144 the moneys designated under sub. (5) (b) 1. and 4. until the investment manager
145145 satisfies allocates the proceeds as provided in par. (b) (c).
146146 SECTION 7. 16.295 (6) (b) of the statutes is repealed.
147147 SECTION 8. 16.295 (6) (c) of the statutes is repealed and recreated to read:
148148 16.295 (6) (c) Within 24 months after receiving any proceeds from the
149149 investment of the moneys designated under sub. (5) (b) 1. and 4., the investment
150150 manager shall commit 90 percent of the gross proceeds to investments in venture
151151 capital funds headquartered in this state.
152152 SECTION 9. 16.295 (6) (d) of the statutes is created to read:
153153 16.295 (6) (d) 1. The investment manager shall ensure that the gross proceeds
154154 resulting from investments made with moneys designated under sub. (5) (b) 1. and
155155 4. are reinvested so that when averaged across all venture capital fund recipients,
156156 for every $1 of moneys reinvested as set forth in par. (c), venture capital fund
157157 recipients must receive $2 from sources other than the investment manager. Any
158158 individual business that receives an investment made by the investment manager
159159 under par. (c) is required to receive additional investments made by sources other
160160 than the investment manager.
161161 2. The investment manager shall contract with each venture capital fund that
162162 receives moneys under par. (c). Each contract shall require the venture capital fund
163163 to:
164164 a. Make new investments in an amount equal to the moneys it receives under
165165 par. (c) in one or more businesses that are headquartered in this state and employ
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193193 SECTION 9
194194 SENATE BILL 878
195195 at least 50 percent of their full-time employees, including any subsidiary or other
196196 affiliated entity, in this state, and invest at least one-half of those moneys in one or
197197 more businesses that employ fewer than 150 full-time employees, including any
198198 subsidiary or other affiliated entity, when the venture capital fund makes its initial
199199 investment of moneys in the business under this section. The venture capital fund's
200200 contract with a business in which the venture capital fund makes an investment
201201 under this subsection shall require that, if within 3 years after the venture capital
202202 fund makes its initial investment, the business relocates its headquarters outside of
203203 this state or fails to employ at least 50 percent of its full-time employees, including
204204 any subsidiary or other affiliated entity, in this state, the business shall promptly pay
205205 to the venture capital fund an amount equal to the total amount of moneys
206206 designated under par. (c) that the venture capital fund invested in the business. The
207207 venture capital fund shall reinvest those moneys in one or more businesses that are
208208 eligible to receive an investment under this subdivision, subject to the requirements
209209 of this section.
210210 b. Invest all of the moneys it receives under par. (c) in businesses in the
211211 agriculture, information technology, engineered products, advanced manufacturing,
212212 medical devices, or medical imaging industry and attempt to ensure that all those
213213 moneys are invested in businesses that are diverse with respect to geographic
214214 location within this state.
215215 c. Provide to the investment manager the information necessary for the
216216 investment manager to complete the annual report under sub. (7) (a) and the
217217 quarterly report under sub. (7) (c).
218218 d. Disclose to the investment manager and the department any interest that
219219 the venture capital fund or an owner, stockholder, partner, officer, director, member,
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246246 SECTION 9 SENATE BILL 878
247247 employee, or agent of the venture capital fund holds in a business in which the
248248 venture capital fund invests or intends to invest moneys received under par. (c).
249249 SECTION 10. 16.295 (7) (a) 2. of the statutes is amended to read:
250250 16.295 (7) (a) 2. The investment manager's internal rate of return from
251251 investments under sub. subs. (5) (b) and (6) (c).
252252 SECTION 11. 16.295 (7) (a) 3. (intro.) of the statutes is amended to read:
253253 16.295 (7) (a) 3. (intro.) For each venture capital fund that contracts with the
254254 investment manager under sub. (5) (d) or (6) (d), all of the following:
255255 SECTION 12. 16.295 (7) (a) 3. b. of the statutes is amended to read:
256256 16.295 (7) (a) 3. b. The amounts invested in the venture capital fund under sub.
257257 subs. (5) (b) and (6) (c).
258258 SECTION 13. 16.295 (7) (a) 3. d. of the statutes is amended to read:
259259 16.295 (7) (a) 3. d. The venture capital fund's average internal rate of return
260260 on its investments of the moneys it received under sub. (5) (b) or (6) (c).
261261 SECTION 14. 16.295 (7) (a) 4. (intro.) of the statutes is amended to read:
262262 16.295 (7) (a) 4. (intro.) For each business in which a venture capital fund held
263263 an investment of moneys the venture capital fund received under sub. (5) (b) or (6)
264264 (c), all of the following:
265265 SECTION 15. 16.295 (7) (a) 4. f. of the statutes is amended to read:
266266 16.295 (7) (a) 4. f. A statement of the number of employees the business
267267 employed when the venture capital fund first invested moneys in the business that
268268 the venture capital fund received under sub. (5) (b) or (6) (c), the number of employees
269269 the business employed on the first day of the investment manager's fiscal year, and
270270 the number of employees the business employed on the last day of the investment
271271 manager's fiscal year.
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299299 SECTION 16
300300 SENATE BILL 878
301301 SECTION 16. 16.295 (7) (c) 1. of the statutes is amended to read:
302302 16.295 (7) (c) 1. An identification of each venture capital fund under contract
303303 with the investment manager under sub. (5) (d) or (6) (d).
304304 SECTION 17. 16.295 (7) (c) 2. of the statutes, as affected by 2023 Wisconsin Act
305305 19, is amended to read:
306306 16.295 (7) (c) 2. An identification of each business in which a venture capital
307307 fund held an investment of moneys the venture capital fund received under sub. (5)
308308 (b) or (6) (c) and a statement of the amount of the investment in each business that
309309 separately specifies the amount of moneys designated under sub. (5) (b) 1. or 4. that
310310 were contributed to the investment.
311311 SECTION 18. 16.295 (7) (c) 3. of the statutes is amended to read:
312312 16.295 (7) (c) 3. A statement of the number of employees the business employed
313313 when the venture capital fund first invested moneys in the business that the venture
314314 capital fund received under sub. (5) (b) or (6) (c) and the number of employees the
315315 business employed at the end of the quarter.
316316 SECTION 19. 16.295 (8) (intro.) of the statutes is amended to read:
317317 16.295 (8) PROGRESS REPORTS. (intro.) In 2015 and, 2018, and 2024, no later
318318 than March 1, the department shall submit reports to the joint committee on finance
319319 that include all of the following:
320320 (END)
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