Amendment SSA1-SB169

WHEDA must submit the investment manager's annual report to the legislature.

The investment manager must also submit a quarterly report to WHEDA for the preceding quarter that identifies each venture capital fund participating in the program, each business in which a venture capital fund held an investment under the program and the amount of each investment, and the number of employees each business employed when the venture capital fund first invested in the business under the program and the number of employees the business employed at the end of the quarter. WHEDA must publish the information contained in the investment manager's quarterly report on WHEDA's Internet site.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB169-SSA1,1 Section 1. 25.17 (72) of the statutes is created to read:

SB169-SSA1,4,2 25.17 (72) Appoint the board's representatives to the committee under s. 243.63 (3) (a).

SB169-SSA1,2 Section 2. 234.63 of the statutes is created to read:

SB169-SSA1,4,5 234.63 Fund of funds investment program. (1) Definition. In this section, "investment manager" means the person the committee selects under sub. (3) (a).

SB169-SSA1,4,8 (2) Establishment of program. The authority shall establish and administer a program for the investment of moneys in venture capital funds that invest in businesses located in this state.

SB169-SSA1,4,15 (3) Selection of investment manager; contract approval. (a) The authority and the investment board shall form a committee, consisting of representatives of the authority, who shall be appointed by the authority, and the investment board, to select the investment manager. The majority of the committee's members shall be representatives of the investment board. The committee shall select a person as investment manager who has expertise in the venture capital or private equity asset class.

SB169-SSA1,4,18 (b) 1. The executive director of WHEDA shall notify in writing the joint committee on finance of the investment manager selected under par. (a). The notice shall include the authority's proposed contract with the investment manager.

SB169-SSA1,5,4 2. If, within 14 working days after the date of the notice under subd. 1., the cochairpersons of the joint committee on finance do not notify the executive director of WHEDA that the committee has scheduled a meeting to determine whether the authority's proposed contract with the investment manager is contrary to this section or fails to implement an applicable provision of subs. (4) to (7), the authority and investment manager may execute that contract. If, within 14 working days after the date of that notice, the cochairpersons of the committee notify the executive director that the committee has scheduled that meeting, the authority and investment manager may execute the contract unless the committee determines at that meeting that the contract, in whole or in part, is contrary to this section or fails to implement an applicable provision of subs. (4) to (7).

SB169-SSA1,5,10 (4) Contract with investment manager; disclosure requirement. (a) Subject to sub. (3), the authority 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, annually for no more than 4 years, 1 percent of the total moneys designated under sub. (5) (b) 1. and raised under sub. (5) (b) 3.

SB169-SSA1,5,14 (b) The investment manager shall disclose to the authority any interest that it or an owner, stockholder, partner, officer, director, member, employee, or agent of the investment manager has in a venture capital fund that receives moneys under sub. (5) (b) or a business in which a venture capital fund invests those moneys.

SB169-SSA1,5,16 (5) Investments in venture capital funds. (a) Subject to sub. (4) (a), the authority shall pay $25,000,000 to the investment manager in fiscal year 2013-14.

SB169-SSA1,5,18 (b) The investment manager shall invest the following moneys in at least 4 venture capital funds:

SB169-SSA1,5,19 1. The moneys under par. (a).

SB169-SSA1,5,20 2. At least $300,000 of the investment manager's own moneys.

SB169-SSA1,5,22 3. At least $5,000,000 that the investment manager raises from sources other than the authority.

SB169-SSA1,5,24 (c) 1. Of the moneys designated under par. (b), the investment manager may not invest more than $10,000,000 in a single venture capital fund.

SB169-SSA1,6,5 2. Of the moneys designated under par. (b), the investment manager shall commit at least one-half of those moneys to investments in venture capital funds within 12 months after the date the investment manager executes the contract under sub. (4) (a), and the investment manager shall commit all of those moneys to investments in venture capital funds within 24 months after that date.

SB169-SSA1,6,8 (d) The investment manager shall contract with each venture capital fund that receives moneys under par. (b). Each contract shall require the venture capital fund to do all of the following:

SB169-SSA1,6,24 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 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 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. 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.

SB169-SSA1,7,4 2. Commit at least one-half of any moneys it receives under par. (b) to investments in businesses within 24 months after the date it receives those moneys and commit all of those moneys to investments in businesses within 48 months after that date.

SB169-SSA1,7,7 3. Invest all of the moneys it receives under par. (b) in businesses that are diverse with respect to industry classification and geographic location within this state.

SB169-SSA1,7,13 4. At least match any moneys it receives under par. (b) and invests in a business with an investment in that business of moneys the venture capital fund has raised from sources other than the investment manager. The investment manager 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.

SB169-SSA1,7,16 5. 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).

SB169-SSA1,7,20 6. Disclose to the investment manager and the authority any interest that the venture capital fund or an owner, stockholder, partner, officer, director, member, 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. (b).

SB169-SSA1,7,24 (e) The investment manager's profit-sharing agreement with each venture capital fund that receives moneys under par. (b) shall be on terms that are substantially equivalent to the terms applicable for other funding sources of the venture capital fund.

SB169-SSA1,8,4 (6) Special requirements for investments of moneys contributed by the state. (a) The investment manager shall hold in an escrow account its gross proceeds from all investments of the moneys designated under sub. (5) (b) 1. until the investment manager satisfies par. (b).

SB169-SSA1,8,7 (b) At least annually, the investment manager shall pay any moneys held under par. (a) to the secretary of administration for deposit into the general fund until the investment manager has paid a total of $25,000,000 under this paragraph.

SB169-SSA1,8,11 (c) After the investment manager satisfies par. (b), the investment manager shall pay 90 percent of its gross proceeds from investments of the moneys designated under sub. (5) (b) 1. to the secretary of administration for deposit into the general fund.

SB169-SSA1,8,15 (7) Reports of the investment manager; public disclosures. (a) Annually, within 120 days after the end of the investment manager's fiscal year, the investment manager shall submit a report to the authority for that fiscal year that includes all of the following:

SB169-SSA1,8,17 1. An audit of the investment manager's financial statements performed by an independent certified public accountant.

SB169-SSA1,8,19 2. The investment manager's internal rate of return from investments under sub. (5) (b).

SB169-SSA1,8,21 3. For each venture capital fund that contracts with the investment manager under sub. (5) (d), all of the following:

SB169-SSA1,8,22 a. The name and address of the venture capital fund.

SB169-SSA1,8,23 b. The amounts invested in the venture capital fund under sub. (5) (b).

SB169-SSA1,8,25 c. An accounting of any fee the venture capital fund paid to itself or any principal or manager of the venture capital fund.

SB169-SSA1,9,2 d. The venture capital fund's average internal rate of return on its investments of the moneys it received under sub. (5) (b).

SB169-SSA1,9,4 4. For each business in which a venture capital fund held an investment of moneys the venture capital fund received under sub. (5) (b), all of the following:

SB169-SSA1,9,5 a. The name and address of the business.

SB169-SSA1,9,6 b. A description of the nature of the business.

SB169-SSA1,9,8 c. An identification of the venture capital fund that made the investment in the business.

SB169-SSA1,9,10 d. The amount of each investment in the business and the amount invested by the venture capital fund from funding sources other than the investment manager.

SB169-SSA1,9,12 e. The internal rate of return realized by the venture capital fund upon the venture capital fund's exit from the investment in the business.

SB169-SSA1,9,17 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), 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.

SB169-SSA1,9,20 (b) No later than 10 days after it receives the investment manager's report under par. (a), the authority shall submit the report to the chief clerk of each house of the legislature, for distribution to the legislature under s. 13.172 (2).

SB169-SSA1,9,22 (c) Quarterly, the investment manager shall submit a report to the authority for the preceding quarter that includes all of the following:

SB169-SSA1,9,24 1. An identification of each venture capital fund under contract with the investment manager under sub. (5) (d).

SB169-SSA1,10,5 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) 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. that were contributed to the investment.

SB169-SSA1,10,9 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) and the number of employees the business employed at the end of the quarter.

SB169-SSA1,10,11 (d) The authority shall make the investment manager's quarterly report under par. (c) readily accessible to the public on the authority's Internet site.

SB169-SSA1,10,12 (End)