The state Department of Administration’s selection of Sun Mountain Capital to manage Wisconsin’s new state-sponsored venture capital fund is raising questions about the DOA’s vetting process.
WKOW-TV in Madison reported that Sun Mountain Capital has managed a similar fund in New Mexico that has lost money overall, and that 19 of the program’s 28 funds have lost money. The station also reported that Brian Birk, managing partner of Sun Mountain Capital, sat on the board of directors of a company that received money from the state fund.
However, under Sun Mountain Capital’s stewardship, the losses have been reduced from 18.2% to 2.3%. Sun Mountain has managed the fund since 2006.
To increase transparency, New Mexico state officials have stepped up oversight of the fund.
Under Act 41, the law that established the Wisconsin venture capital investment program, the DOA’s proposed contract with the investment manager must be submitted to the Legislative Audit Bureau for review. The audit bureau has 14 days to review the contract and render an opinion on how closely it conforms to Act 41 before the matter goes to the Joint Finance Committee.
Also under Act 41, the fund manager is required to report to the DOA any interest the manager has in the funds that are selected to make investments and any interest in a business in which a venture capital fund invests state money.
