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Monday, January 30, 2006

Venture Michigan Fund Gets First $5 Million Investment

LANSING - The $150 million Venture Michigan Fund, which will invest in Venture Capital firms that in turn will pour money into promising Michigan technology companies, received its first $5 million cash infusion Monday, the deadline set by the Michigan legislature for the so-called Fund of Funds to become active.

Michigan Treasury spokesman Terry Stanton confirmed what sources had told Mitechnews.Com, that the $5 million investment had been made on time. Stanton declined to say what company, or companies, made the investment.

Sources said not to expect the Fund to actually start making investments in Michigan VC firms until sometime in the second calendar quarter, which would be from April through June this year.

The capital used by the Fund will come through the sale of debt instruments to Michigan-based banks, insurance companies and other corporations. When it was originally conceived in 2004, that debt instrument was the state’s Single Business Tax. Now that the SBT has been watered down, the debt instruments used to back the investments may also become Michigan income taxes, said Michigan Treasurer Jay Rising.

“You don’t know if the SBT will be there for five years and whether you’ll have to use the income tax as a back stop,’’ he said in an interview with Mike Brennan, Editor & Publisher of Mitechnews.Com. “You have to make sure there is transferability available and someone to transfer it to.”

But Securities and Exchange Commission rules prohibit Rising from talking further about the Fund until the fund begins making investments. He would not provide a time frame other than to say: “We got the legislative fixes at the end of November. We just have to get this thing up and running.”

Credit Suisse First Boston was chosen last year to serve as manager of the Venture Michigan Fund program. CSFB Managing Director Kelly Williams heads up the team managing the Fund.

The VMF investment policy requires that venture capital funds should have a substantial presence in Michigan and promote at least $2 investment in qualified businesses for every $1 of principal investment. No more than 15 percent of the total capital and outstanding commitments of the fund shall be invested in any single venture capital company and no investment committed to any venture company shall exceed 25 percent of the venture capital company’s total capital under management.

This story was written by Mike Brennan, Editor & Publisher of Mitechnews.Com.

Author: Mike Brennan
Source: Mitechnews.Com

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