The Illinois Senate voted unanimously Tuesday to pass a bill that authorizes 2 percent of the state Treasurer investment portfolio to be used for a fund-of-funds supporting technology companies. The House approved the measure May 31, and Gov. Pat Quinn is expected to sign the bill.
The legislation creates the Technology Development Account II, which will likely invest $150 million to $200 million in early- and growth- stage technology companies, said Ed Longanecker, executive director and regional vice president of Naperville-based TechAmerica, which is part of the Illinois Technology Alliance, a new technology consortium that lobbied for the funding.
The bill’s passage “signifies a very positive direction of our elected officials in truly understanding and supporting the importance of technology and its impact on our state and local economies,” Longanecker said.
Bill holds potential for job creation
Illinois’ Technology Development Account I, the 2003 precursor to the TDA II fund-of-funds, created at least 3,700 jobs from $31 million in investment over several years, said Maura O’Hara, executive director of the Illinois Venture Capital Association, which is also a member of the technology alliance.
The TDA I funds went to venture capital firms that invested $115 million in Illinois technology companies, which in turn attracted $165 million in additional investment, Longanecker said.
The potential is greater with the Technology Development Account II, which doubles the amount of funding specifically required to be invested in Illinois companies, he said. Similar legislation introduced in 2008, 2009 and 2010 failed to pass the Illinois House, due largely to a lack of understanding, experts said earlier.
The bill is a no brainer because the funding costs taxpayers nothing, O’Hara said. “This is the best of all worlds. It’s money the state Treasurer would be investing anyway. It’s not an expense item,” she said.
Bill doubles Illinois investment requirement
Instead of investing the money directly, the Treasurer’s office outsources administration to Northern Trust, which in turn selects the venture capital firms that will dole out the funds to high-growth technology companies, O’Hara said. The venture capital firms are required to invest part of the funds in Illinois companies, O’Hara said. “It’s intended to help high-growth companies grow,” she said.
Asked why the legislation finally passed the Illinois legislature after failing in the three prior years, O’Hara said, “We had a tremendous advocate in the House in Daniel Biss, a first-term representative. Because of his background, he understood the potential impact this could have on Illinois.” In addition, Longanecker said the Senate bill’s sponsor, Sen. Dan Kotowski, and the state’s new technology alliance helped champion the bill. “We all worked together, particularly toward the end,” he said.
The technology consortium made the legislators aware that jobs created by technology companies typically pay 64 percent higher on average than other private sector positions, Longanecker said. “These are the type of high quality, high paying jobs we need to support,” he said.