State to Enter Venture Capital Business

Both houses of the legislature have now passed a bill, AB 181, which would establish a state-funded venture capital fund. The bill now goes to the governor for approval, the last step in the law-making process.

AB 181 passed the Assembly 91-2 on June 6, with overwhelming support from both parties. Only Reps. Chris Kapenga (R-Delafield) and Daniel Riemer (D-Milwaukee) voted against the proposal. The Senate then took up the bill and passed it 29-3, with Sens. Glenn Grothman (R-West Bend), John Lehman (D-Racine), and Fred Risser (D-Madison) voting no on June 18. Prior to passing the full bill, the Senate slightly amended the composition of the committee that will select the state’s investment manager. The Senate amendment meant the bill had to go back to the Assembly for its concurrence, which was received later that same afternoon.

The bi-partisan bill sparked much debate about the role of the state in economic development. One of the main topics of debate was who should be in charge of overseeing the management of the fund. When the bill was introduced, it was drafted so that the Wisconsin Economic Development Corporation (WEDC) would serve in that role. In response to the Audit Bureau’s report on mismanagement at the pseudo-agency, WEDC was stripped from the bill and the Department of Administration (DOA) placed in charge instead.

Another hot debate centered on the bill’s inclusion of sector-based restrictions on investment. As passed, the bill would only allow investments in agriculture, information technology, engineered products, advanced manufacturing, and medical devices and imaging industries, which critics say could limit the fund’s effectiveness. Supporters say this is a starting off point and the program could be expanded in the future when the legislature decides whether to further fund the program.