LANSING —  A decade has passed since Michigan borrowed the last $250 million for a $450 million venture capital initiative that hoped to spur the creation of futuristic, high-tech startup businesses.

Now, Gov. Gretchen Whitmer has been handed the bill, even though some of those companies have since left Michigan.

The debt from the initiative is among a series of looming budget pressures inherited by the first-term Democrat, who wants a new repayment plan to minimize costs while preparing to borrow more money for highway repairs.

The Venture Michigan Fund, created in 2003 under former Gov. Jennifer Granholm, attempted to jumpstart the economy and turn the state into the next Silicon Valley. The plan called for taxpayers to back private venture capital firms, which gave money to early-stage businesses in exchange for an equity stake in those firms.

Results were mixed, and lawmakers disbanded the program in 2015 after $450 million in borrowed spending, calling it a risky use of taxpayer money.

The final tally for the program: 56 startup firms that now employ 1,760 Michigan residents, according to the state. That’s a cost of roughly $255,000 in taxpayer money per job.

A 2018 audit concluded the Venture Michigan Fund failed to live up to early hype and identified two companies that were sold and moved out of the state after receiving a combined $1.1 million in state funding.

Those firms, not directly named in the audit, took 100 jobs with them. It appears at least two other taxpayer-funded startups have left Michigan or closed since that time, according to a review by Bridge Magazine.

Tangent Medical Technologies of Ann Arbor was sold to ICU Medical of California, Relume Technologies of Oxford was sold to Revolution Lighting of Connecticut, Lynx Network Group of Kalamazoo was bought out by Everstream of Ohio and the California-based Concerto Health closed its Michigan offices in May.

Local phone numbers for all four firms no longer work, and the facilities are listed as “permanently closed” in Google business records.

Granholm and state lawmakers authorized the Venture Michigan Fund in the early 2000s at the onset of an economic downturn that gave way to the national Great Recession. The state borrowed money for the program in 2006 and 2010.

At the time, state officials were “throwing everything at the wall to see if it would stick and jumpstart the economy,” said Craig Thiel, research director at the Citizens Research Council. “This was one of them, and obviously it has not materialized like they thought it would.”

While the program was disbanded five years ago, principal payments on the final $250 million in loans the state took out to pay for it are just coming due. And because there is no money left in the Venture Michigan Fund, the state must pay back the lender with tax vouchers it had put up as collateral.

The Whitmer administration projects claims could cost the state $22.9 million in lost tax revenue during the current fiscal year, $67.6 million in fiscal year 2021 and $75 million in fiscal year 2022.

But the governor is proposing a plan her administration says would “free up reserve cash” and reduce total state costs: Buy back the vouchers, and pay the lender back with cash instead.

If it doesn’t, the state could have to issue additional tax vouchers to fully repay the lender, according to a Budget Office briefing.

That’s because the lender — Stanton Equity Trading Delaware LLC, a Credit Suisse affiliate — is not based in Michigan and does not have a state tax liability it could use the vouchers to reduce.

The Whitmer administration estimates the buyback plan could save the state $3.8 million this year and $11.2 million next.

It sounds complicated, but it’s the same thing then-Gov. Rick Snyder did in 2017 when his administration paid off the first $200 million the state had borrowed for the Venture Michigan Fund.

It’s a sound approach, according to James Hohman of the free-market Mackinac Center for Public Policy.

The venture capital program “accomplished neither its goal of creating new Michigan industries nor in being costless to the taxpayer,” Hohman said. “It’s good that the governor is doing what she can to minimize their costs, but this should never have happened in the first place.”

Whitmer will need sign-off from lawmakers.

The State Budget Office says it needs the Legislature to approve an initial $19.1 million in spending by March 1 “in order for the voucher purchase to occur and the associated financial losses to be avoided.”

Investors stood up for the Venture Michigan Fund program in 2015 when lawmakers put it on the chopping block, arguing it had helped attract other early stage investors and played a role in creating well paying, high-tech jobs in the state.

Success stories from the second round of Venture Michigan Fund investments the state is now paying off include companies like LLamasoft of Ann Arbor, which builds advanced supply chain software, and Pixel Velocity, another software firm in Ann Arbor.

Funding startups can be a “very risky investment” but “I think you do have to look at the long game,” said Ara Topouzian, executive director of the Michigan Venture Capital Association.

Topouzian, who began running the association in 2019, didn’t have firsthand knowledge of the defunct Venture Michigan Fund but said the state is generally in a “good spot” for venture capital and is no longer viewed as the kind of “flyover state” it once was.

“You’re not always going to see immediate returns on some of these deals,” he said. “I think that folks need to understand that startups are going in and out of business all the time. It’s risky, but these [venture capital firms] are the ones investing because they see the potential of that startup.”

As of 2019, more than 140 venture-backed startups were operating in Michigan, according to the Michigan Venture Capital Association’s annual report. Twenty-seven venture capital firms are headquartered in Michigan or have an office in the state.

The Michigan Venture Fund did not directly fund startups. Instead, the state invested taxpayer money into other venture capital firms which were then supposed to also invest a similar amount of their own money in Michigan companies.

But only four of 11 venture capital firms matched the state investment in Michigan startups during the first round of the program, and only two of 10 had matched the state in the second round as of late 2016, according to the 2018 audit.

“Although VMF was generally compliant with the legislative requirements, the actual financial results of its investment activities indicate that VMF may not have achieved the success envisioned when the legislation was enacted,” Michigan Auditor General Doug Ringler’s office concluded.