"Legislation signed into law last Tuesday that authorizes the buyback of $100 million in tax vouchers for what has become a controversial state program won't have any impact on state investments in venture capital companies.
The program, the Venture Michigan Fund, will continue to make investments from its two funds, and both state and out-of-state VC firms that have been promised money from the funds will get the full allotment.
It got broad bipartisan support in Lansing, passing in the Senate unanimously.
The first fund of $95 million was launched in 2006 with money borrowed from Deutsche Bank and was collateralized with $200 million in tax vouchers in the event the state fell behind on future principal and interest payments.
The second fund of $120 million was collateralized with $250 million in vouchers to an affiliate of Credit Suisse in 2010.
At the time, legislators hoped that future interest payments would be made from profits returned to the fund from the VC firms it invested in.
But the Great Recession delayed investments and delayed the growth of the startups, in turn slowing the pace at which they could be sold or taken public.
Early this year, the House Fiscal Agency told legislators that it might cost the state as much as $140 million in the next three years to cover shortfalls in loan and interest payments for the first fund..."
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