98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB4615

 

Introduced , by Rep. Lou Lang

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 265/11

    Amends the Technology Development Act. Changes "may" to "shall" in certain provisions concerning investments of moneys in the Technology Development Account IIa. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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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
5changing Section 11 as follows:
 
6    (30 ILCS 265/11)
7    Sec. 11. Technology Development Account II.
8    (a) In addition to the amount provided in Section 10 of
9this Act, the State Treasurer shall may segregate a portion of
10the Treasurer'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 shall
15may be reinvested into TDA IIa without being counted against
16the 2% cap. The Treasurer shall may make investments from TDA
17IIa that help attract, assist, and retain quality technology
18businesses in Illinois. The earnings on TDA IIa shall be
19accounted for separately from other investments made by the
20Treasurer.
21    (b) The Treasurer shall may solicit proposals from entities
22to manage and be the General Partner of a separate fund
23("Technology Development Account IIb" or "TDA IIb") consisting

 

 

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

 

 

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

 

 

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1technology businesses seeking to locate, expand, or remain in
2Illinois. Any fund created by an Illinois venture capital firm
3in which the State Treasurer places money under this Section
4("TDA II-Recipient Fund") shall invest a minimum of twice (2x)
5the aggregate amount of investable capital that is received
6from the State Treasurer under this Section in Illinois
7companies during the life of the fund. "Illinois companies", as
8used in this Section, are companies that are headquartered or
9that otherwise have a significant presence in the State at the
10time of initial or follow-on investment. Investable capital is
11calculated as committed capital, as defined in the firm's
12applicable fund's governing documents, less related estimated
13fees and expenses to be incurred during the life of the fund.
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 basis for all investments:
2        (1) the names of portfolio companies invested in during
3    the applicable investment period;
4        (2) the addresses of reported portfolio companies;
5        (3) the date of the initial (and follow-on) investment;
6        (4) the cost of the investment;
7        (5) the current fair market value of the investment;
8        (6) for Illinois companies, the number of Illinois
9    employees on the investment date; and
10        (7) for Illinois companies, the current number of
11    Illinois employees.
12    If, as of the earlier to occur of (i) the fourth year of
13the investment period of any TDA II-Recipient Fund or (ii) when
14that TDA II-Recipient Fund has drawn more than 60% of the
15investable capital of all limited partners, that TDA
16II-Recipient Fund has failed to invest the minimum amount
17required under this subsection (d) in Illinois companies, then
18the Treasurer shall deliver written notice to the manager of
19that fund seeking compliance with the minimum amount
20requirement under this subsection (d). If, after 180 days of
21delivery of notice, the TDA II-Recipient Fund has still failed
22to invest the minimum amount required under this subsection (d)
23in Illinois companies, then the Treasurer may elect, in
24writing, to terminate any further commitment to make capital
25contributions to that fund which otherwise would have been made
26under this Section.

 

 

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1    (e) Notwithstanding the limitation found in subsection (d)
2of Section 10 of this Act, the investment of the State
3Treasurer in any fund created by an Illinois venture capital
4firm in which the State Treasurer places money pursuant to this
5Section shall not exceed 15% of the total investments in the
6fund.
7    (f) The State Treasurer shall not invest more than
8one-third of Technology Development Account II in any given
9calendar year. If in any calendar year less than one-third of
10Technology Development Account II is invested, 50% of the
11shortfall shall may be invested in the following calendar year
12in addition to the regular one-third investment.
13    (g) The Treasurer shall may deposit no more than 10% of the
14earnings of the investments in the Technology Development
15Account IIa into the Technology Development Fund.
16(Source: P.A. 97-197, eff. 7-25-11.)
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.