CHARLESTON, W.Va. - A $25 million venture capital program set up nine years ago at the request of then-Gov. Bob Wise has lost $20.8 million so far.
Some remaining investments still have a chance to eventually make money, an audit report says.
In his 2002 State of the State speech, Wise said, "We must draw in venture capital to encourage entrepreneurship and create jobs.
"At my direction, the West Virginia Investment Management Board is ready to move forward with a $25 million plan that will attract $75 million more dollars in federal funds for a total of $100 million in new investment capability for businesses in West Virginia."
The idea was that state Economic Development Authority, as manager of the program, would receive a $25 million loan from the state Investment Management Board - the agency that manages the state's pension funds.
The development authority then was to pick qualified venture capital companies to invest the money in West Virginia enterprises, and the state's investments would attract $75 million in federal money.
How much federal money the program ultimately attracted is not clear.
However, the $20.8 million in losses are spelled out in a draft audit report released Thursday by the West Virginia Enterprise Advancement Corp. - the entity set up by the development authority to oversee the program.
"On paper it looks like a $20.8 million loss, but there is no way to quantify that until all of the investments are liquidated," said David Warner, executive director of both organizations.
That typically happens when a startup sells stock to the public or is sold.
The bad investments typically get written off first and the investments that are winners "are the last to get liquidated because the venture capital firms want to maximize the return," Warner said.
"We are looking for a substantial upside from the current book loss. We won't know how it all settles out for another three or four years. The upside is going to be at the end, when the portfolio is liquidated."