Legislature Fiscal Bureau: Venture Capital Fund of Funds Program (Wisconsin Economic Development Corporation)

Legislature Fiscal Bureau: Venture Capital Fund of Funds Program (Wisconsin Economic Development Corporation)


The Wisconsin Economic Development Corporation (WEDC) is a public-private entity created under state law as the state’s lead agency in promoting economic development. WEDC offers a number of tax credits, loans, grants, and technical assistance programs to eligible Wisconsin companies. According to WEDC’s annual report on economic development, in 2019-20 WEDC entered into contracts to award: (a) $45.8 million of tax credits; (b) $2.2 million of loans; (c) $27.5 million of grants; and (d) $170.2 million of federally tax exempt industrial revenue bonds. In addition, WEDC certified businesses to participate in the angel and early stage seed tax credit programs so that equity investors can receive up to $25.1 million for their investments in such businesses.

Badger Fund of Funds Investment Program

The Badger Fund of Funds investment program was established within the Department of Administration (DOA) under 2013 Act 41. Under Act 41, the state was required to commit $25 million GPR of capital to invest in venture capital funds. The venture capital funds would then make direct investments in businesses. Prior to enactment of Act 41, funding to support the fund of funds was placed in the Joint Committee on Finance’s supplemental appropriation by 2013 Act 20 (the 2013-15 biennial budget) for potential release pending enactment of subsequent authorizing legislation. On May 6, 2014, the Committee authorized the release of the supplemental funding. Under Act 41, venture capital funds that receive moneys from the state must make investments in eligible businesses that are: (a) headquartered in this state; (b) employ at least 50% of their full-time employees in this state; and (c) invest at least half of those moneys in businesses that employ fewer than 150 full-time employees. Eligible businesses must be in the agriculture, information technology, engineered products, advanced manufacturing, medical devices, or medical imaging industries. The venture capital fund must attempt to ensure that businesses represent diverse geographic regions of the state.

The state contracted with an investment manager in June, 2015, to invest the amounts contributed to the Badger Fund of Funds, including the state’s one-time contribution of $25.0 million. The state’s contribution is held in escrow and is released as capital draws are requested.

DOA’s Capital Finance Office publishes quarterly and annual reports on the Badger Fund of Funds. These reports detail the total fund size, the amount of the Badger Fund of Funds commitment, the amount of each commitment funded to date, and the amount invested to date. The reports also detail other activities conducted by portfolio fund managers. The most recent report was published on May 26, 2021, and is attached to this paper.

Click here to read the full LFB paper.