State names venture capital fund manager

The Department of Administration has selected Sun Mountain Kegonsa to manage Wisconsin’s new state-sponsored venture capital fund. The company is a partnership between Sun Mountain Capital of New Mexico and Kegonsa Capital Partners of Fitchburg.

The state will invest $25 million into the new venture capital fund, while Kegonsa must put up another $5 million. Other funds will also be added as limited partners. The fund will be used to invest in Wisconsin businesses so that they aren’t forced to rely solely on wealthy angel investors to spark activity.

Following the announcement, WKOW 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.

To increase transparency, the fund was put under increased oversight by New Mexico state officials.

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 DOA any interest in the funds that serve as limited partners and any interest in a business in which a venture capital fund invests state money.