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2023 - 2024 LEGISLATURE
2023 SENATE BILL 878
January 5, 2024 - Introduced by Senators TESTIN, FELZKOWSKI and FEYEN,
cosponsored by Representatives WITTKE, ZIMMERMAN, DITTRICH, DUCHOW,
MOSES, O'CONNOR, PENTERMAN and RETTINGER. Referred to Committee on
Economic Development and Technical Colleges.
***AUTHORS SUBJECT TO CHANGE***
AN ACT to repeal 16.295 (4) (a) 2. and 16.295 (6) (b); to consolidate, renumber
and amend 16.295 (4) (a) (intro.) and 1.; to amend 16.295 (5) (c) 3., 16.295 (5)
(d) 1., 16.295 (5) (d) 4., 16.295 (6) (a), 16.295 (7) (a) 2., 16.295 (7) (a) 3. (intro.),
16.295 (7) (a) 3. b., 16.295 (7) (a) 3. d., 16.295 (7) (a) 4. (intro.), 16.295 (7) (a) 4.
f., 16.295 (7) (c) 1., 16.295 (7) (c) 2., 16.295 (7) (c) 3. and 16.295 (8) (intro.); to
repeal and recreate 16.295 (6) (c); and to create 16.295 (6) (d) of the statutes;
relating to: fund of funds investment program.
Analysis by the Legislative Reference Bureau
This bill requires the investment manager of the Badger fund of funds to do all
of the following: 1) hold in escrow gross proceeds from its investments of $25,000,000
received in fiscal year 2013-14 and its investments of $25,000,000 received in fiscal
year 2023-24 until the manager has allocated 90 percent of the gross proceeds to
investments in venture capital funds headquartered in this state; and 2) provide a
progress report no later than March 1, 2024, to the joint committee on finance.
This bill also provides that the investment manager's management fee may not
exceed 1 percent of the sum of the following: the $25,000,000 received by the
investment manager from the state in fiscal year 2013-14 and the first $5,000,000
raised from other sources; the $25,000,000 received by the investment manager from
the state in fiscal year 2023-24; and any amounts reinvested by the Badger fund of
funds through the proceeds of its prior investments.
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SENATE BILL 878
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SECTION 1. 16.295 (4) (a) (intro.) and 1. of the statutes, as affected by 2023
Wisconsin Act 19, are consolidated, renumbered 16.295 (4) (a) and amended to read:
16.295 (4) (a) Subject to sub. (3), the department shall contract with the
investment manager. The contract shall establish the investment manager's
compensation, including any management fee. Any management fee may not exceed
the following: 1. Annually, for no more than 4 years, on an annual basis, 1 percent
of the total moneys designated under sub. (5) (b) 1. and 4., raised under sub. (5) (b)
3., and reinvested under sub. (6) (c).
SECTION 2. 16.295 (4) (a) 2. of the statutes, as created by 2023 Wisconsin Act
19, is repealed.
SECTION 3. 16.295 (5) (c) 3. of the statutes, as created by 2023 Wisconsin Act
19, is amended to read:
16.295 (5) (c) 3. Of the moneys designated under par. (b) 4., the investment
manager shall commit all of those moneys to at least 4 investments in venture capital
funds headquartered in this state within 24 months after the date the investment
manager receives the moneys.
SECTION 4. 16.295 (5) (d) 1. of the statutes, as affected by 2023 Wisconsin Act
19, is amended to read:
16.295 (5) (d) 1. Make new investments in an amount equal to the moneys it
receives under par. (b) in one or more businesses that are headquartered in this state
and employ at least 50 percent of their full-time employees, including any subsidiary
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SECTION 4
SENATE BILL 878
or other affiliated entity, in this state, and invest at least one-half of those moneys
in one or more businesses that employ fewer than 150 full-time employees, including
any subsidiary or other affiliated entity, when the venture capital fund first invests
moneys in the business under this section. The venture capital fund's contract with
a business in which the venture capital fund makes an investment under this
subdivision shall require that, if within 3 years after the venture capital fund makes
that its initial investment, the business relocates its headquarters outside of this
state or fails to employ at least 50 percent of its full-time employees, including any
subsidiary or other affiliated entity, in this state, the business shall promptly pay to
the venture capital fund an amount equal to the total amount of moneys designated
under par. (b) 1. and 4. that the venture capital fund invested in the business. The
venture capital fund shall reinvest those moneys in one or more businesses that are
eligible to receive an investment under this subdivision, subject to the requirements
of this section.
SECTION 5. 16.295 (5) (d) 4. of the statutes is amended to read:
16.295 (5) (d) 4. At least match Ensure that any moneys it receives under par.
(b) and invests in a business is accompanied with an investment in that business of
moneys the venture capital fund has raised from sources other than the investment
manager. The investment manager venture capital fund shall ensure that, on
average, for every $1 a venture capital fund receives under par. (b) and invests in a
business, the venture capital fund invests $2 in that business from sources other
than the investment manager when measured across all individual businesses
receiving moneys under this paragraph, the venture capital fund at least matches
any moneys it receives under par. (b) with investments in such businesses the
venture capital fund has raised from sources other than the investment manager.
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SECTION 6 SENATE BILL 878
SECTION 6. 16.295 (6) (a) of the statutes is amended to read:
16.295 (6) (a) The investment manager shall hold in an escrow account at a
bank with its headquarters in this state its gross proceeds from all investments of
the moneys designated under sub. (5) (b) 1. and 4. until the investment manager
satisfies allocates the proceeds as provided in par. (b) (c).
SECTION 7. 16.295 (6) (b) of the statutes is repealed.
SECTION 8. 16.295 (6) (c) of the statutes is repealed and recreated to read:
16.295 (6) (c) Within 24 months after receiving any proceeds from the
investment of the moneys designated under sub. (5) (b) 1. and 4., the investment
manager shall commit 90 percent of the gross proceeds to investments in venture
capital funds headquartered in this state.
SECTION 9. 16.295 (6) (d) of the statutes is created to read:
16.295 (6) (d) 1. The investment manager shall ensure that the gross proceeds
resulting from investments made with moneys designated under sub. (5) (b) 1. and
4. are reinvested so that when averaged across all venture capital fund recipients,
for every $1 of moneys reinvested as set forth in par. (c), venture capital fund
recipients must receive $2 from sources other than the investment manager. Any
individual business that receives an investment made by the investment manager
under par. (c) is required to receive additional investments made by sources other
than the investment manager.
2. The investment manager shall contract with each venture capital fund that
receives moneys under par. (c). Each contract shall require the venture capital fund
to:
a. Make new investments in an amount equal to the moneys it receives under
par. (c) in one or more businesses that are headquartered in this state and employ
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SECTION 9
SENATE BILL 878
at least 50 percent of their full-time employees, including any subsidiary or other
affiliated entity, in this state, and invest at least one-half of those moneys in one or
more businesses that employ fewer than 150 full-time employees, including any
subsidiary or other affiliated entity, when the venture capital fund makes its initial
investment of moneys in the business under this section. The venture capital fund's
contract with a business in which the venture capital fund makes an investment
under this subsection shall require that, if within 3 years after the venture capital
fund makes its initial investment, the business relocates its headquarters outside of
this state or fails to employ at least 50 percent of its full-time employees, including
any subsidiary or other affiliated entity, in this state, the business shall promptly pay
to the venture capital fund an amount equal to the total amount of moneys
designated under par. (c) that the venture capital fund invested in the business. The
venture capital fund shall reinvest those moneys in one or more businesses that are
eligible to receive an investment under this subdivision, subject to the requirements
of this section.
b. Invest all of the moneys it receives under par. (c) in businesses in the
agriculture, information technology, engineered products, advanced manufacturing,
medical devices, or medical imaging industry and attempt to ensure that all those
moneys are invested in businesses that are diverse with respect to geographic
location within this state.
c. Provide to the investment manager the information necessary for the
investment manager to complete the annual report under sub. (7) (a) and the
quarterly report under sub. (7) (c).
d. Disclose to the investment manager and the department any interest that
the venture capital fund or an owner, stockholder, partner, officer, director, member,
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SECTION 9 SENATE BILL 878
employee, or agent of the venture capital fund holds in a business in which the
venture capital fund invests or intends to invest moneys received under par. (c).
SECTION 10. 16.295 (7) (a) 2. of the statutes is amended to read:
16.295 (7) (a) 2. The investment manager's internal rate of return from
investments under sub. subs. (5) (b) and (6) (c).
SECTION 11. 16.295 (7) (a) 3. (intro.) of the statutes is amended to read:
16.295 (7) (a) 3. (intro.) For each venture capital fund that contracts with the
investment manager under sub. (5) (d) or (6) (d), all of the following:
SECTION 12. 16.295 (7) (a) 3. b. of the statutes is amended to read:
16.295 (7) (a) 3. b. The amounts invested in the venture capital fund under sub.
subs. (5) (b) and (6) (c).
SECTION 13. 16.295 (7) (a) 3. d. of the statutes is amended to read:
16.295 (7) (a) 3. d. The venture capital fund's average internal rate of return
on its investments of the moneys it received under sub. (5) (b) or (6) (c).
SECTION 14. 16.295 (7) (a) 4. (intro.) of the statutes is amended to read:
16.295 (7) (a) 4. (intro.) For each business in which a venture capital fund held
an investment of moneys the venture capital fund received under sub. (5) (b) or (6)
(c), all of the following:
SECTION 15. 16.295 (7) (a) 4. f. of the statutes is amended to read:
16.295 (7) (a) 4. f. A statement of the number of employees the business
employed when the venture capital fund first invested moneys in the business that
the venture capital fund received under sub. (5) (b) or (6) (c), the number of employees
the business employed on the first day of the investment manager's fiscal year, and
the number of employees the business employed on the last day of the investment
manager's fiscal year.
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SECTION 16
SENATE BILL 878
SECTION 16. 16.295 (7) (c) 1. of the statutes is amended to read:
16.295 (7) (c) 1. An identification of each venture capital fund under contract
with the investment manager under sub. (5) (d) or (6) (d).
SECTION 17. 16.295 (7) (c) 2. of the statutes, as affected by 2023 Wisconsin Act
19, is amended to read:
16.295 (7) (c) 2. An identification of each business in which a venture capital
fund held an investment of moneys the venture capital fund received under sub. (5)
(b) or (6) (c) and a statement of the amount of the investment in each business that
separately specifies the amount of moneys designated under sub. (5) (b) 1. or 4. that
were contributed to the investment.
SECTION 18. 16.295 (7) (c) 3. of the statutes is amended to read:
16.295 (7) (c) 3. A statement of the number of employees the business employed
when the venture capital fund first invested moneys in the business that the venture
capital fund received under sub. (5) (b) or (6) (c) and the number of employees the
business employed at the end of the quarter.
SECTION 19. 16.295 (8) (intro.) of the statutes is amended to read:
16.295 (8) PROGRESS REPORTS. (intro.) In 2015 and, 2018, and 2024, no later
than March 1, the department shall submit reports to the joint committee on finance
that include all of the following:
(END)
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