100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB3205

 

Introduced 2/15/2018, by Sen. Don Harmon

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 265/5
30 ILCS 265/11

    Amends the Technology Development Act. Provides that the State Treasurer may segregate a portion of the Treasurer's State investment portfolio that at no time shall be greater than 5% (rather than 2%) of the portfolio, in the Technology Development Account IIa. Provides further requirements regarding investment in Technology Development Account IIa. Provides that the Treasurer may solicit proposals from entities to manage and be the general partner of a separate fund consisting of investments from private sector investors that must invest, at the direction of the general partner (rather than Treasurer), in tandem with Technology Development Account IIa in a pro-rata portion. Provides that moneys in Technology Development Account IIa may be invested by the State Treasurer to provide venture capital to technology businesses, including co-investments. Provides that in no case shall more than 15% (rather than 10%) of the capital in the Technology Development Account IIa be invested in firms based outside of Illinois. Requires any Technology Development Account II-Recipient Fund to report the specified additional information to the Treasurer on a quarterly or annual basis as determined by the Treasurer. Removes language prohibiting the State Treasurer from investing more than one-third of Technology Development Account II in any given calendar year. Modifies the purpose of the Act. Makes conforming and technical changes. Defines terms.


LRB100 18941 RJF 34191 b

 

 

A BILL FOR

 

SB3205LRB100 18941 RJF 34191 b

1    AN ACT concerning finance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Technology Development Act is amended by
5changing Sections 5 and 11 as follows:
 
6    (30 ILCS 265/5)
7    Sec. 5. Policy. The Illinois General Assembly finds that it
8is important for the State to encourage technology development
9in the State. The purpose of this Act is to attract, assist,
10and retain quality technology businesses and promote the growth
11of jobs and entrepreneurial and venture capital environments in
12Illinois. The creation of the Technology Development Account
13will allow the State to bring together, and add to, Illinois'
14rich science, technology, agricultural, financial, and
15business communities.
16(Source: P.A. 92-851, eff. 8-26-02.)
 
17    (30 ILCS 265/11)
18    Sec. 11. Technology Development Account II.
19    (a) Including In addition to the amount provided in Section
2010 of this Act, the State Treasurer may segregate a portion of
21the Treasurer's State investment portfolio, that at no time
22shall be greater than 5% 2% of the portfolio, in the Technology

 

 

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1Development Account IIa ("TDA IIa"), an account that shall be
2maintained separately and apart from other moneys invested by
3the Treasurer. Distributions from the investments in TDA IIa
4may be reinvested into TDA IIa without being counted against
5the 5% 2% cap. At the time of deposit, the aggregate investment
6in TDA IIa and the aggregate commitment of investment capital
7in a TDA II-Recipient Fund shall at no time be greater than 5%
8of the State's investment portfolio, which shall be calculated
9as: (1) the balance at the inception of the State's fiscal
10year; or (2) the average balance in the immediately preceding 5
11fiscal years, whichever number is greater. Distributions from a
12TDA II-Recipient Fund, in an amount not to exceed the
13commitment amount, may be reinvested into TDA IIa without being
14counted against the 5% cap. The Treasurer may make investments
15from TDA IIa that help attract, assist, and retain quality
16technology businesses in Illinois. The earnings on TDA IIa
17shall be accounted for separately from other investments made
18by the Treasurer.
19    (b) The Treasurer may solicit proposals from entities to
20manage and be the General Partner of a separate fund
21("Technology Development Account IIb" or "TDA IIb") consisting
22of investments from private sector investors that must invest,
23at the direction of the general partner Treasurer, in tandem
24with TDA IIa in a pro-rata portion. The Treasurer may enter
25into an agreement with the entity managing TDA IIb to advise on
26the investment strategy of TDA IIa and TDA IIb (collectively

 

 

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1"Technology Development Account II" or "TDA II") and fulfill
2other mutually agreeable terms. Funds in TDA IIb shall be kept
3separate and apart from moneys in the State treasury.
4    (c) Moneys in TDA IIa may be invested by the State
5Treasurer to provide venture capital to technology businesses,
6including co-investments, seeking to locate, expand, or remain
7in Illinois by placing money with Illinois venture capital
8firms for investment by the venture capital firms in technology
9businesses. "Venture capital", as used in this Section, means
10equity financing that is provided for starting up, expanding,
11or relocating a company, or related purposes such as financing
12for seed capital, research and development, introduction of a
13product or process into the marketplace, or similar needs
14requiring risk capital. "Technology business", as used in this
15Section, means a company that has as its principal function the
16providing of services, including computer, information
17transfer, communication, distribution, processing,
18administrative, laboratory, experimental, developmental,
19technical, or testing services; , manufacture of goods or
20materials; , the processing of goods or materials by physical or
21chemical change; , computer related activities; , robotics,
22biological, or pharmaceutical industrial activities; activity,
23or technology-oriented technology oriented or emerging
24industrial activity. "Illinois venture capital firm", as used
25in this Section, means an entity that: (1) has a majority of
26its employees in Illinois (more than 50%) or that has at least

 

 

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1one general managing partner or principal member of the general
2partner domiciled in Illinois, and that (2) provides equity
3financing for starting up or expanding a company, or related
4purposes such as financing for seed capital, research and
5development, introduction of a product or process into the
6marketplace, or similar needs requiring risk capital.
7"Illinois venture capital firm" may also mean an entity that
8has a track record of identifying, evaluating, and investing in
9Illinois companies and that provides equity financing for
10starting up or expanding a company, or related purposes such as
11financing for seed capital, research and development,
12introduction of a product or process into the marketplace, or
13similar needs requiring risk capital. For purposes of this
14Section, "track record" means having made, on average, at least
15one investment in an Illinois company in each of its funds if
16the Illinois venture capital firm has multiple funds or at
17least 2 investments in Illinois companies if the Illinois
18venture capital firm has only one fund. In no case shall more
19than 15% 10% of the capital in the TDA IIa be invested in firms
20based outside of Illinois.
21    (d) Any fund created by an Illinois venture capital firm in
22which the State Treasurer places money pursuant to this Section
23shall be required by the State Treasurer to seek investments in
24technology businesses seeking to locate, expand, or remain in
25Illinois. Any fund created by an Illinois venture capital firm
26in which the State Treasurer places money under this Section

 

 

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1("TDA II-Recipient Fund") shall invest a minimum of twice (2x)
2the aggregate amount of investable capital that is received
3from the State Treasurer under this Section in Illinois
4companies during the life of the fund. "Illinois companies", as
5used in this Section, are companies that are headquartered or
6that otherwise have a significant presence in the State at the
7time of initial or follow-on investment. Investable capital is
8calculated as committed capital, as defined in the firm's
9applicable fund's governing documents, less related estimated
10fees and expenses to be incurred during the life of the fund.
11For the purposes of this subsection (d), "significant presence"
12means at least one physical office and one full-time employee
13within the geographic borders of this State.
14    Any TDA II-Recipient Fund shall also invest additional
15capital in Illinois companies during the life of the fund if,
16as determined by the fund's manager, the investment:
17        (1) is consistent with the firm's fiduciary
18    responsibility to its limited partners;
19        (2) is consistent with the fund manager's investment
20    strategy; and
21        (3) demonstrates the potential to create risk-adjusted
22    financial returns consistent with the fund manager's
23    investment goals.
24    In addition to any reporting requirements set forth in
25Section 10 of this Act, any TDA II-Recipient Fund shall report
26the following additional information to the Treasurer on a

 

 

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1quarterly or annual basis, as determined by the Treasurer, for
2all investments:
3        (1) the names of portfolio companies invested in during
4    the applicable investment period;
5        (2) the addresses of reported portfolio companies;
6        (3) the date of the initial (and follow-on) investment;
7        (4) the cost of the investment;
8        (5) the current fair market value of the investment;
9        (6) for Illinois companies, the number of Illinois
10    employees on the investment date; and
11        (7) for Illinois companies, the current number of
12    Illinois employees.
13    If, as of the earlier to occur of (i) the fourth year of
14the investment period of any TDA II-Recipient Fund or (ii) when
15that TDA II-Recipient Fund has drawn more than 60% of the
16investable capital of all limited partners, that TDA
17II-Recipient Fund has failed to invest the minimum amount
18required under this subsection (d) in Illinois companies, then
19the Treasurer shall deliver written notice to the manager of
20that fund seeking compliance with the minimum amount
21requirement under this subsection (d). If, after 180 days of
22delivery of notice, the TDA II-Recipient Fund has still failed
23to invest the minimum amount required under this subsection (d)
24in Illinois companies, then the Treasurer may elect, in
25writing, to terminate any further commitment to make capital
26contributions to that fund which otherwise would have been made

 

 

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1under this Section.
2    (e) Notwithstanding the limitation found in subsection (d)
3of Section 10 of this Act, the investment of the State
4Treasurer in any fund created by an Illinois venture capital
5firm in which the State Treasurer places money pursuant to this
6Section shall not exceed 15% of the total investments in the
7fund.
8    (f) (Blank). The State Treasurer shall not invest more than
9one-third of Technology Development Account II in any given
10calendar year. If in any calendar year less than one-third of
11Technology Development Account II is invested, 50% of the
12shortfall may be invested in the following calendar year in
13addition to the regular one-third investment.
14    (g) The Treasurer may deposit no more than 10% of the
15earnings of the investments in the Technology Development
16Account IIa into the Technology Development Fund.
17(Source: P.A. 97-197, eff. 7-25-11.)