Amendment ASA2-SB463

SB463-ASA2,8,7 (3) Application. Any person may apply to the corporation, on a form prescribed by the corporation, for certification under sub. (4). The application shall include the name, address, and tax identification number of the person and any other information the corporation requires.

SB463-ASA2,8,10 (4) Certification. The corporation may certify an applicant who submits an application under sub. (3) to receive a grant under this section if the corporation determines that the applicant meets all of the following requirements:

SB463-ASA2,8,13 (a) The applicant operates a business incubator program in this state that is privately funded and that directly provides at least 2 of the following services to a start-up business that are designed to grow that business:

SB463-ASA2,8,17 1. A facility that offers rent of the facility at a rate lower than the market rate in the community and provides shared administrative services or other assistance designed to reduce the costs and encourage the growth of a start-up business the facility serves.

SB463-ASA2,8,18 2. Business management, technical, or marketing assistance.

SB463-ASA2,8,19 3. Development of a feasibility study, business plan, or financial plan.

SB463-ASA2,8,24 (b) The applicant owns at least $3,000,000 in cash or cash equivalents, or the applicant demonstrates to the satisfaction of the corporation that the applicant has obtained commitments from other funding sources sufficient to enable the applicant to invest at least $3,000,000 in start-up businesses within the 5 years after the corporation certifies the applicant under this subsection.

SB463-ASA2,9,4 (5) Contracts. Before the corporation makes a grant under this section to a certified seed incubator fund, the corporation shall contract with the certified seed incubator fund and, in addition to any other terms required by the corporation, that contract shall include the following requirements:

SB463-ASA2,9,6 (a) The certified seed incubator fund shall be headquartered in this state and employ at least 50 percent of its employees in this state.

SB463-ASA2,9,11 (b) The certified seed incubator fund shall invest 100 percent of the amount of any grant it receives from the corporation under this section in a business that is participating in a business incubator program that is operated by the certified seed incubator fund and that receives the investment under this paragraph as part of that program.

SB463-ASA2,9,15 (c) When the certified seed incubator fund makes an investment of grant moneys in a business, the certified seed incubator fund shall at least match the amount of those grant moneys with an investment of capital in the business that the certified seed incubator fund has raised from other sources.

SB463-ASA2,9,18 (d) The certified seed incubator fund may not apply the amount of the grant moneys it receives from the corporation toward a tax credit under s. 71.07 (5b) or (5d), 71.28 (5b), 71.47 (5b), or 76.638.

SB463-ASA2,9,24 (6) Reporting requirements. (a) By January 31 of each year, a certified seed incubator fund that receives a grant under this section shall submit a report to the corporation that includes, for each business in which the certified seed incubator fund held an investment of grant moneys from corporation, a description of the business and a description of the business's participation in the certified seed incubator fund's seed incubator program.

SB463-ASA2,10,2 (b) The corporation shall submit the information it receives under par. (a) with its annual report under s. 238.07 (2).

SB463-ASA2, s. 20 Section 20. Subchapter III of chapter 238 [precedes 238.40] of the statutes is created to read:

SB463-ASA2,10,5 chapter 238

SB463-ASA2,10,7 subchapter III badger jobs fund

SB463-ASA2,10,8 238.40 Definitions. In this subchapter:

SB463-ASA2,10,11 (1) "Angel investor network" means a group of persons that reviews new businesses or proposed new businesses for the potential investment in those businesses of moneys owned by those persons.

SB463-ASA2,10,13 (2) "Certified business development organization" means a person certified under s. 238.437.

SB463-ASA2,10,15 (3) "Certified venture capital fund" means a venture capital fund certified under s. 238.42 (2).

SB463-ASA2,10,16 (5) "Fund" means the badger jobs fund established under s. 25.90.

SB463-ASA2,10,17 (6) "Fund capital" means moneys in or received from the fund.

SB463-ASA2,10,19 (7) "Investment committee" means the investment committee of the fund appointed by the board under s. 238.41.

SB463-ASA2,10,21 238.41 Badger jobs fund. (1) The fund shall be administered by a 10-member investment committee.

SB463-ASA2,10,25 (2) (a) The board shall appoint the members of the investment committee on the basis of the members' expertise, experience, leadership, or advocacy in venture capital, investment banking, or entrepreneurship. The members shall serve 3-year terms. The board shall stagger the terms.

SB463-ASA2,11,2 (b) The corporation shall staff the investment committee and cover any administrative or operational costs of the investment committee.

SB463-ASA2,11,6 (3) The investment committee shall have all the powers necessary or convenient to carry out the purposes and provisions of this subchapter, including the power to execute contracts and other instruments required for the operation of the investment committee.

SB463-ASA2,11,11 238.42 Venture capital fund certification. (1) Application. Any venture capital fund may apply to the investment committee on a form prescribed by the investment committee for certification under this section. The application shall include the name, address, and tax identification number of the applicant and any other information the investment committee requires.

SB463-ASA2,11,15 (2) Certification. The investment committee may certify a venture capital fund that submits an application under sub. (1) to receive fund capital. In determining whether to certify a venture capital fund, the investment committee shall consider all of the following:

SB463-ASA2,11,16 (a) The investment experience of the venture capital fund's manager.

SB463-ASA2,11,18 (b) The past performance of any investment managed by the venture capital fund or the venture capital fund's manager.

SB463-ASA2,11,20 (c) The venture capital fund's commitment to investing in businesses within this state and maintaining an office in this state.

SB463-ASA2,11,23 (d) The venture capital fund's commitment to making investments that are diverse with respect to the geographic location within this state and industry classification of the businesses in which the applicant invests.

SB463-ASA2,12,3 (3) Application fee. A venture capital fund that applies for certification under sub. (1) shall pay to the investment committee a fee in the amount determined by the investment committee.

SB463-ASA2,12,7 238.43 Investments of fund capital in certified venture capital funds; requirements. (1) Fund investments. (a) From the appropriation under s. 20.192 (1) (q), the investment committee shall invest a total of at least $65,000,000 in certified venture capital funds over the life of the fund.

SB463-ASA2,12,12 (b) The investment committee shall ensure that 100 percent of the fund capital it invests under this section is invested in businesses that are headquartered in this state and that at least $60,000,000 of that fund capital is invested in businesses that meet all of the following additional conditions at the time a certified venture capital fund first invests in the business under this section:

SB463-ASA2,12,14 1. The business employs at least 50 percent of its full-time employees, including any subsidiary or other affiliated entity, in this state.

SB463-ASA2,12,16 2. The business employs less than 150 full-time employees in total, including any subsidiary or other affiliated entity.

SB463-ASA2,12,20 3. The business agrees to use fund capital only for research and development, the introduction of a new product in the market, the business's entry into a new market, or other activities that are expected to grow the business and create jobs in this state.

SB463-ASA2,12,23 4. The business is not primarily engaged in real estate development or sales, insurance, banking, lending, lobbying, political consulting, professional services, or retail sales, other than direct sales of products the business itself manufactures.

SB463-ASA2,12,25 (c) The investment committee may not invest more than $15,000,000 of fund capital in a single certified venture capital fund.

SB463-ASA2,13,5 (2) Contracts. Before the investment committee invests any fund capital in a certified venture capital fund, the investment committee shall contract with the certified venture capital fund and, in addition to any other terms required or negotiated by the investment committee, that contract shall include the following requirements:

SB463-ASA2,13,9 (a) The certified venture capital fund commits to maintaining a significant physical presence in this state, including locating an office in this state that is staffed with at least one full-time employee of the certified venture capital fund whose compensation is paid only by the certified venture capital fund.

SB463-ASA2,13,13 (b) Within 4 years after the certified venture capital fund receives a commitment of fund capital from the investment committee, the certified venture capital fund commits 100 percent of that fund capital to businesses approved by the investment committee.

SB463-ASA2,13,15 (c) The certified venture capital fund does not invest less than $250,000 in fund capital in any one business.

SB463-ASA2,13,22 (d) The certified venture capital fund does not receive fund capital that exceeds 20 percent of the total moneys for investment, including any outstanding commitment, that the certified venture capital fund has raised from all sources, except that a Wisconsin-based certified venture capital fund, as determined by the investment committee, may not receive fund capital that exceeds 50 percent of the total moneys for investment, including any outstanding commitment, that the certified venture capital fund has raised from all sources.

SB463-ASA2,14,2 (e) The investment committee's investment of fund capital with any certified venture capital fund is on terms that are substantially equivalent to the terms applicable for other funding sources of the certified venture capital fund for similar investments.

SB463-ASA2,14,8 (f) From any distribution from a certified venture capital fund's investment in a business under this section that includes amounts contributed from the fund, the certified venture capital fund pays to the investment committee an amount equal to 100 percent of the principal amount of fund capital that was contributed from the fund to that investment before the certified venture capital fund makes any payment to a funding source for that investment that is not the fund.

SB463-ASA2,14,13 (g) From any investment of fund capital by a certified venture capital fund under this section, the certified venture capital fund does not pay a fee to itself or to any principal or manager of the certified venture capital fund that equals more than 2 percent of the total amount of fund capital contributed to that investment by the investment committee.

SB463-ASA2,14,17 (h) The certified venture capital fund discloses to the investment committee any interest that it or an owner, stockholder, partner, officer, director, member, employee, or agent of the certified venture capital fund holds in a business in which the certified venture capital fund invests or intends to invest fund capital.

SB463-ASA2,14,20 (i) The certified venture capital fund does not apply the amount of fund capital it receives toward a tax credit under s. 71.07 (5b) or (5d), 71.28 (5b), 71.47 (5b), or 76.638.

SB463-ASA2,14,22 (j) The certified venture capital fund maintains liability insurance in the amounts and for the coverages determined by the investment committee.

SB463-ASA2,15,2 (k) The certified venture capital fund agrees that the investment committee, the corporation, and the state may refer to the certified venture capital fund's name in public announcements or other documents or communications relating to the fund.

SB463-ASA2,15,8 (3) Repayment of fund capital. In addition to any other legal remedies available to the investment committee, if a certified venture capital fund fails to satisfy any of the requirements under sub. (2), the investment committee is entitled to payment from the certified venture capital fund equal to 100 percent of the amount of fund capital the certified venture capital fund received from the investment committee.

SB463-ASA2,15,12 238.435 Angel investor networks. (1) From the appropriation under s. 20.192 (1) (q), and subject to sub. (2), the investment committee may commit up to a total of $5,000,000 to investments proposed to the investment committee by angel investor networks.

SB463-ASA2,15,14 (2) The investment committee may commit fund capital to an investment in a business under this section only if all of the following requirements are satisfied:

SB463-ASA2,15,15 (a) The business is or will be headquartered in this state.

SB463-ASA2,15,17 (b) The angel investor network agrees to invest $2 for every $1 in fund capital that the investment committee commits to the investment.

SB463-ASA2,15,21 (c) The investment committee's profit-sharing agreement with the angel investor network is on terms that are substantially equivalent to the terms applicable for other persons in the angel investor network with respect to the investment.

SB463-ASA2,16,2 238.437 Grants to certified business development organizations. (1) Badger jobs fund grants. From the appropriation under s. 20.192 (1) (q), the investment committee shall make grants to certified business development organizations that total $5,000,000 over the life of the fund for investment in start-up businesses.

SB463-ASA2,16,6 (2) Application. Any person may apply to the investment committee, on a form prescribed by the investment committee, for certification under sub. (3). The application shall include the name, address, and tax identification number of the person and any other information the investment committee requires.

SB463-ASA2,16,13 (3) Certification. The investment committee may certify an applicant who submits an application under sub. (2) to receive a grant under this section if the investment committee determines that the applicant operates a nonprofit or for-profit business incubator, regional economic development partnership, local economic development organization, or non-profit or for-profit entrepreneurial service agency that directly provides one or more of the following services to start-up businesses:

SB463-ASA2,16,17 (a) A facility that offers rent of the facility at a rate lower than the market rate in the community and provides shared administrative services or other assistance designed to reduce the costs and encourage the growth of a start-up business the facility serves.

SB463-ASA2,16,22 (b) As determined by the investment committee, high quality business support that is visible and easily accessible to entrepreneurs and small companies; that offers substantial management services or similar services to portfolio companies; and that integrates sources of deal flow, entrepreneurial support, and capital to effectively grow entrepreneurial commercialization outcomes.

SB463-ASA2,17,2 (4) Contracts. Before the investment committee makes a grant under this section to a certified business development organization, the investment committee shall contract with the certified business development organization, and, in addition to any other terms required by the investment committee, that contract shall include the following requirements:

SB463-ASA2,17,6 (a) The certified business development organization commits to maintaining a significant physical presence in this state, including locating an office in this state that is staffed with at least one full-time employee of the certified business development organization.

SB463-ASA2,17,10 (b) The certified business development organization invests 100 percent of the amount of the grant it receives from the investment committee under this section in a business that meets all of the following conditions at the time the certified business development organization first invests in the business under this paragraph:

SB463-ASA2,17,11 1. The business is headquartered in this state.

SB463-ASA2,17,13 2. The business employs at least 50 percent of its employees, including any subsidiary or other affiliated entity, in this state.

SB463-ASA2,17,17 3. The business agrees to use fund capital only for research and development, the introduction of a new product in the market, the business's entry into a new market, or other activities that are expected to grow the business and create jobs in this state.

SB463-ASA2,17,19 4. The business is not primarily engaged in real estate development or sales, insurance, banking, lending, lobbying, or political consulting.

SB463-ASA2,17,23 5. The business is participating in a business development program that is approved by the investment committee and is operated or approved by the certified business development organization, and the business receives the investment under this paragraph as part of that program.

SB463-ASA2,18,3 (c) 1. When a certified business development organization makes an investment of grant moneys in a business, the certified business development organization at least matches the amount of those grant moneys with an investment of capital in the business that the certified business development organization has raised from other sources.

SB463-ASA2,18,9 2. If an investment of grant moneys subject to subd. 1 is made as part of an existing equity investment portfolio that the certified business development organization already manages and that portfolio has been funded from other sources, the certified business development organization applies those moneys supplied from those other sources for the purpose of satisfying the matching requirement under subd. 1.

SB463-ASA2,18,12 (d) The certified business development organization does not apply the amount of the grant moneys it receives from the investment committee toward a tax credit under s. 71.07 (5b) or (5d), 71.28 (5b), 71.47 (5b), or 76.638.

SB463-ASA2,18,16 238.45 Reporting requirements. (1) Annual report. Annually, the investment committee shall submit to the chief clerk of each house of the legislature, for distribution to the legislature under s. 13.172 (2), and to the governor, a report that includes all of the following:

SB463-ASA2,18,18 (a) An accounting of the financial status of the fund, including the opinion of an independent certified public accountant.

SB463-ASA2,18,19 (b) The investment committee's current investment policy for the fund.

SB463-ASA2,18,21 (c) The investment committee's internal rate of return from its investments of fund capital.

SB463-ASA2,18,24 (d) For each certified venture capital fund in which the investment committee held an investment of fund capital under s. 238.43 during the preceding year, all of the following:

SB463-ASA2,18,25 1. The name and address of the venture capital fund.

SB463-ASA2,19,2 2. The amount of each investment and the amount contributed to the investment by the certified venture capital fund.

SB463-ASA2,19,4 3. The internal rate of return realized by the certified venture capital fund on each investment.

SB463-ASA2,19,7 4. An accounting of any fee the certified venture capital fund paid to itself or any principal or manager of the certified venture capital fund during the preceding year.

SB463-ASA2,19,9 (e) For each business in which a certified venture capital fund held an investment of fund capital during the preceding year, all of the following:

SB463-ASA2,19,10 1. The name and address of the business.

SB463-ASA2,19,11 2. A description of the nature of the business.

SB463-ASA2,19,12 3. The amount of each investment of fund capital in the business.