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Public Act 102-1023


 

Public Act 1023 102ND GENERAL ASSEMBLY

  
  
  

 


 
Public Act 102-1023
 
SB3777 EnrolledLRB102 23093 RJF 32249 b

    AN ACT concerning finance.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Technology Development Act is amended by
changing Sections 11 and 20 as follows:
 
    (30 ILCS 265/11)
    Sec. 11. Technology Development Account II.
    (a) Including the amount provided in Section 10 of this
Act, the State Treasurer shall segregate a portion of the
Treasurer's State investment portfolio, that at no time shall
be greater than 5% of the portfolio, in the Technology
Development Account IIa ("TDA IIa"), an account that shall be
maintained separately and apart from other moneys invested by
the Treasurer. Distributions from the investments in TDA IIa
may be reinvested into TDA IIa without being counted against
the 5% cap. The aggregate investment in TDA IIa and the
aggregate commitment of investment capital in a TDA
II-Recipient Fund shall at no time be greater than 5% of the
State's investment portfolio, which shall be calculated as:
(1) the balance at the inception of the State's fiscal year; or
(2) the average balance in the immediately preceding 5 fiscal
years, whichever number is greater. Distributions from a TDA
II-Recipient Fund, in an amount not to exceed the commitment
amount and total distributions received, may be reinvested
into TDA IIa without being counted against the 5% cap. The
Treasurer may make investments from TDA IIa that help attract,
assist, and retain quality technology businesses in Illinois.
The earnings on TDA IIa shall be accounted for separately from
other investments made by the Treasurer.
    (b) The Treasurer may solicit proposals from entities to
manage and be the General Partner of a separate fund
("Technology Development Account IIb" or "TDA IIb") consisting
of investments from private sector investors that must invest,
at the direction of the general partner, in tandem with TDA IIa
in a pro-rata portion. The Treasurer may enter into an
agreement with the entity managing TDA IIb to advise on the
investment strategy of TDA IIa and TDA IIb (collectively
"Technology Development Account II" or "TDA II") and fulfill
other mutually agreeable terms. Funds in TDA IIb shall be kept
separate and apart from moneys in the State treasury.
    (c) All or a portion of the moneys in TDA IIa shall be
invested by the State Treasurer to provide venture capital to
technology businesses, including co-investments, seeking to
locate, expand, or remain in Illinois by placing money with
Illinois venture capital firms for investment by the venture
capital firms in technology businesses. "Venture capital", as
used in this Section, means equity or debt financing that is
provided for starting up, expanding, or relocating a company,
or related purposes such as financing for seed capital,
research and development, introduction of a product or process
into the marketplace, or similar needs requiring risk capital.
"Technology business", as used in this Section, means a
company that has as its principal function the providing of
services, including computer, information transfer,
communication, distribution, processing, administrative,
laboratory, experimental, developmental, technical, or testing
services; manufacture of goods or materials; the processing of
goods or materials by physical or chemical change; computer
related activities; robotics, biological, or pharmaceutical
industrial activities; or technology-oriented or emerging
industrial activity. "Illinois venture capital firm", as used
in this Section, means an entity that: (1) has a majority of
its employees in Illinois (more than 50%) or that has at least
one general partner or principal domiciled in Illinois, and
that (2) provides equity financing for starting up or
expanding a company, or related purposes such as financing for
seed capital, research and development, introduction of a
product or process into the marketplace, or similar needs
requiring risk capital. "Illinois venture capital firm" may
also mean an entity that has a track record of identifying,
evaluating, and investing in Illinois companies and that
provides equity financing for starting up or expanding a
company, or related purposes such as financing for seed
capital, research and development, introduction of a product
or process into the marketplace, or similar needs requiring
risk capital. For purposes of this Section, "track record"
means having made, on average, at least one investment in an
Illinois company in each of its funds if the Illinois venture
capital firm has multiple funds or at least 2 investments in
Illinois companies if the Illinois venture capital firm has
only one fund. In no case shall more than 15% of the capital in
the TDA IIa be invested in firms based outside of Illinois.
"Co-investments", as used in this Section, means an indirect
investment made through an investment vehicle specifically
organized to act on direct investment opportunities in an
identified for-profit, Illinois company that is operating as a
technology business in which one or more funds sponsored by
Illinois venture capital firms have already invested, or are
investing alongside such investment vehicle, on the same terms
as such investment vehicle. Co-investments are limited to
investments in Illinois companies for the purpose of enhancing
the overall objectives of this Act.
    (d) Any fund created by an Illinois venture capital firm
in which the State Treasurer places money pursuant to this
Section shall be required by the State Treasurer to seek
investments in technology businesses seeking to locate,
expand, or remain in Illinois. Any fund created by an Illinois
venture capital firm in which the State Treasurer places money
under this Section ("TDA II-Recipient Fund") shall invest a
minimum of twice (2x) the aggregate amount of investable
capital that is received from the State Treasurer under this
Section in Illinois companies during the life of the fund.
"Illinois companies", as used in this Section, are companies
that are headquartered or that otherwise have a significant
presence in the State at the time of initial or follow-on
investment. Investable capital is calculated as committed
capital, as defined in the firm's applicable fund's governing
documents, less related estimated fees and expenses to be
incurred during the life of the fund. For the purposes of this
subsection (d), "significant presence" means at least one
physical office and one full-time employee within the
geographic borders of this State.
    Any TDA II-Recipient Fund shall also invest additional
capital in Illinois companies during the life of the fund if,
as determined by the fund's manager, the investment:
        (1) is consistent with the firm's fiduciary
    responsibility to its limited partners;
        (2) is consistent with the fund manager's investment
    strategy; and
        (3) demonstrates the potential to create risk-adjusted
    financial returns consistent with the fund manager's
    investment goals.
    In addition to any reporting requirements set forth in
Section 10 of this Act, any TDA II-Recipient Fund shall report
the following additional information to the Treasurer on a
quarterly or annual basis, as determined by the Treasurer, for
all investments:
        (1) the names of portfolio companies invested in
    during the applicable investment period;
        (2) the addresses of reported portfolio companies;
        (3) the date of the initial (and follow-on)
    investment;
        (4) the cost of the investment;
        (5) the current fair market value of the investment;
        (6) for Illinois companies, the number of Illinois
    employees on the investment date; and
        (7) for Illinois companies, the current number of
    Illinois employees; .
        (8) the fund name or for any co-investments, the
    company name;
        (9) the fund vintage, or for any co-investments, the
    date of investment;
        (10) the total fund size;
        (11) the dollar amount of the capital commitment made
    by the Treasurer;
        (12) the type of strategy pursued, including for
    co-investments;
        (13) to the extent the information is disclosed,
    whether or not the TDA II-Recipient Fund possesses diverse
    general partners and management, as listed under item (iv)
    of paragraph (5) of subsection (h); and
        (14) whether or not the TDA II-Recipient Fund is an
    Illinois venture capital firm.
    If, as of the earlier to occur of (i) the fourth year of
the investment period of any TDA II-Recipient Fund or (ii)
when that TDA II-Recipient Fund has drawn more than 60% of the
investable capital of all limited partners, that TDA
II-Recipient Fund has failed to invest the minimum amount
required under this subsection (d) in Illinois companies, then
the Treasurer shall deliver written notice to the manager of
that fund seeking compliance with the minimum amount
requirement under this subsection (d). If, after 180 days of
delivery of notice, the TDA II-Recipient Fund has still failed
to invest the minimum amount required under this subsection
(d) in Illinois companies, then the Treasurer may elect, in
writing, to terminate any further commitment to make capital
contributions to that fund which otherwise would have been
made under this Section.
    (e) The investment of the State Treasurer in any fund
created by an Illinois venture capital firm in which the State
Treasurer places money pursuant to this Section shall not
exceed 15% of the total TDA IIa account balance.
    (f) (Blank).
    (f-5) The aggregate dollar amount available for new
investments entered into following the effective date of this
amendatory Act of the 102nd General Assembly shall, as
applicable, be allocated as follows:
        (1) No more than 15% for emerging TDA II-Recipient
    Funds for which the Treasurer's investment exceeds 15% of
    the total dollar amount under management in that fund. For
    purposes of this paragraph (1), "emerging TDA II-Recipient
    Fund" means a fund whose management company or sponsor has
    sponsored no more than 2 private investment funds,
    including the prospective TDA II-Recipient Fund in which
    the Treasurer proposes to invest.
        (2) No more than 5% for co-investments.
        (3) No less than 80% for TDA II-Recipient Funds that
    do not meet the criteria in paragraphs (1) or (2) of this
    subsection (f-5).
    (g) The Treasurer may deposit no more than 15% of the
earnings of the investments in the Technology Development
Account IIa into the Technology Development Fund.
    (h) The Treasurer shall disclose on the website of the
Treasurer, at least annually, the following aggregate
financial performance information for TDA II-Recipient Funds:
        (1) the Treasurer's internal rate of return for the
    past one, 3, 5, and 10 years, and since 2016;
        (2) the Treasurer's total commitment;
        (3) the capital called;
        (4) the cash distributions;
        (5) the following information regarding the current
    portfolio: (i) the value of the portfolio, committed and
    uncommitted; (ii) the TDA II-Recipient Funds under
    management within Illinois; (iii) the TDA II-Recipient
    Funds under management outside of Illinois; and (iv) to
    the extent relevant data has been reported to the
    Treasurer, the dollar amount invested in TDA II-Recipient
    Funds that have a general partner who is a qualified
    veteran of the armed forces, qualified service-disabled
    veteran, minority person, woman, or person with a
    disability, as those terms are referenced and defined in
    Section 30 of the State Treasurer Act; and
        (6) the amount invested in each investment strategy,
    including venture capital, growth equity, debt, and
    co-investments.
(Source: P.A. 100-1081, eff. 8-24-18; 101-657, eff. 3-23-21.)
 
    (30 ILCS 265/20)
    Sec. 20. Technology Development Fund.
    (a) The Technology Development Fund is created as a
nonappropriated trust fund within special fund outside the
State treasury with the State Treasurer as custodian. Moneys
in the Fund may be used by the State Treasurer to pay expenses
related to investments from the Technology Development
Account. Moneys in the Fund in excess of those expenses may be
provided as grants to: (i) Illinois schools to purchase
computers, upgrade technology, and support career and
technical education; or (ii) incubators, accelerators,
innovation research, technology transfer, and educational
programs that provide training, support, and other resources
to technology businesses to promote the growth of jobs and
entrepreneurial and venture capital environments in
communities of color or underrepresented or under-resourced
communities in the State.
    (b) On or before January 31, 2023 and each year
thereafter, the Treasurer shall publish on his or her official
website the following information regarding the Technology
Development Fund for the previous fiscal year:
        (1) moneys spent on administration expenses;
        (2) moneys provided as grants to Illinois schools to
    purchase computers, upgrade technology, and support career
    and technical education;
        (3) moneys provided as grants to incubators,
    accelerators, innovation research, technology transfer,
    and educational programs; and
        (4) notice of all grants awarded.
(Source: P.A. 101-657, eff. 3-23-21.)

Effective Date: 1/1/2023