Illinois General Assembly

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Full Text of SB0107  97th General Assembly



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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
5adding Section 11 as follows:
6    (30 ILCS 265/11 new)
7    Sec. 11. Technology Development Account II.
8    (a) In addition to the amount provided in Section 10 of
9this Act, the State Treasurer may segregate a portion of the
10Treasurer's investment portfolio, that at no time shall be
11greater than 2% of the portfolio, in the Technology Development
12Account IIa ("TDA IIa"), an account that shall be maintained
13separately and apart from other moneys invested by the
14Treasurer. Distributions from the investments in TDA IIa may be
15reinvested into TDA IIa without being counted against the 2%
16cap. The Treasurer may make investments from TDA IIa that help
17attract, assist, and retain quality technology businesses in
18Illinois. The earnings on TDA IIa shall be accounted for
19separately from other investments made by the Treasurer.
20    (b) The Treasurer may solicit proposals from entities to
21manage and be the General Partner of a separate fund
22("Technology Development Account IIb" or "TDA IIb") consisting
23of investments from private sector investors that must invest,



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



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



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



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



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1of Section 10 of this Act, the investment of the State
2Treasurer in any fund created by an Illinois venture capital
3firm in which the State Treasurer places money pursuant to this
4Section shall not exceed 15% of the total investments in the
6    (f) The State Treasurer shall not invest more than
7one-third of Technology Development Account II in any given
8calendar year. If in any calendar year less than one-third of
9Technology Development Account II is invested, 50% of the
10shortfall may be invested in the following calendar year in
11addition to the regular one-third investment.
12    (g) The Treasurer may deposit no more than 10% of the
13earnings of the investments in the Technology Development
14Account IIa into the Technology Development Fund.
15    Section 99. Effective date. This Act takes effect upon
16becoming law.