Illinois General Assembly - Full Text of HB4364
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Full Text of HB4364  102nd General Assembly

HB4364eng 102ND GENERAL ASSEMBLY

  
  
  

 


 
HB4364 EngrossedLRB102 23094 RJF 32250 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 11 and 20 as follows:
 
6    (30 ILCS 265/11)
7    Sec. 11. Technology Development Account II.
8    (a) Including the amount provided in Section 10 of this
9Act, the State Treasurer shall segregate a portion of the
10Treasurer's State investment portfolio, that at no time shall
11be greater than 5% of the portfolio, in the Technology
12Development Account IIa ("TDA IIa"), an account that shall be
13maintained separately and apart from other moneys invested by
14the Treasurer. Distributions from the investments in TDA IIa
15may be reinvested into TDA IIa without being counted against
16the 5% cap. The aggregate investment in TDA IIa and the
17aggregate commitment of investment capital in a TDA
18II-Recipient Fund shall at no time be greater than 5% of the
19State's investment portfolio, which shall be calculated as:
20(1) the balance at the inception of the State's fiscal year; or
21(2) the average balance in the immediately preceding 5 fiscal
22years, whichever number is greater. Distributions from a TDA
23II-Recipient Fund, in an amount not to exceed the commitment

 

 

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1amount and total distributions received, may be reinvested
2into TDA IIa without being counted against the 5% cap. The
3Treasurer may make investments from TDA IIa that help attract,
4assist, and retain quality technology businesses in Illinois.
5The earnings on TDA IIa shall be accounted for separately from
6other investments made by the Treasurer.
7    (b) The Treasurer may solicit proposals from entities to
8manage and be the General Partner of a separate fund
9("Technology Development Account IIb" or "TDA IIb") consisting
10of investments from private sector investors that must invest,
11at the direction of the general partner, in tandem with TDA IIa
12in a pro-rata portion. The Treasurer may enter into an
13agreement with the entity managing TDA IIb to advise on the
14investment strategy of TDA IIa and TDA IIb (collectively
15"Technology Development Account II" or "TDA II") and fulfill
16other mutually agreeable terms. Funds in TDA IIb shall be kept
17separate and apart from moneys in the State treasury.
18    (c) All or a portion of the moneys in TDA IIa shall be
19invested by the State Treasurer to provide venture capital to
20technology businesses, including co-investments, seeking to
21locate, expand, or remain in Illinois by placing money with
22Illinois venture capital firms for investment by the venture
23capital firms in technology businesses. "Venture capital", as
24used in this Section, means equity or debt financing that is
25provided for starting up, expanding, or relocating a company,
26or related purposes such as financing for seed capital,

 

 

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1research and development, introduction of a product or process
2into the marketplace, or similar needs requiring risk capital.
3"Technology business", as used in this Section, means a
4company that has as its principal function the providing of
5services, including computer, information transfer,
6communication, distribution, processing, administrative,
7laboratory, experimental, developmental, technical, or testing
8services; manufacture of goods or materials; the processing of
9goods or materials by physical or chemical change; computer
10related activities; robotics, biological, or pharmaceutical
11industrial activities; or technology-oriented or emerging
12industrial activity. "Illinois venture capital firm", as used
13in this Section, means an entity that: (1) has a majority of
14its employees in Illinois (more than 50%) or that has at least
15one general partner or principal domiciled in Illinois, and
16that (2) provides equity financing for starting up or
17expanding a company, or related purposes such as financing for
18seed capital, research and development, introduction of a
19product or process into the marketplace, or similar needs
20requiring risk capital. "Illinois venture capital firm" may
21also mean an entity that has a track record of identifying,
22evaluating, and investing in Illinois companies and that
23provides equity financing for starting up or expanding a
24company, or related purposes such as financing for seed
25capital, research and development, introduction of a product
26or process into the marketplace, or similar needs requiring

 

 

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1risk capital. For purposes of this Section, "track record"
2means having made, on average, at least one investment in an
3Illinois company in each of its funds if the Illinois venture
4capital firm has multiple funds or at least 2 investments in
5Illinois companies if the Illinois venture capital firm has
6only one fund. In no case shall more than 15% of the capital in
7the TDA IIa be invested in firms based outside of Illinois.
8"Co-investments", as used in this Section, means an indirect
9investment made through an investment vehicle specifically
10organized to act on direct investment opportunities in an
11identified for-profit, Illinois company that is operating as a
12technology business in which one or more funds sponsored by
13Illinois venture capital firms have already invested, or are
14investing alongside such investment vehicle, on the same terms
15as such investment vehicle. Co-investments are limited to
16investments in Illinois companies for the purpose of enhancing
17the overall objectives of this Act.
18    (d) Any fund created by an Illinois venture capital firm
19in which the State Treasurer places money pursuant to this
20Section shall be required by the State Treasurer to seek
21investments in technology businesses seeking to locate,
22expand, or remain in Illinois. Any fund created by an Illinois
23venture capital firm in which the State Treasurer places money
24under this Section ("TDA II-Recipient Fund") shall invest a
25minimum of twice (2x) the aggregate amount of investable
26capital that is received from the State Treasurer under this

 

 

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

 

 

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1        (1) the names of portfolio companies invested in
2    during the applicable investment period;
3        (2) the addresses of reported portfolio companies;
4        (3) the date of the initial (and follow-on)
5    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        (8) the fund name or, for any co-investments, the
13    company name;
14        (9) the fund vintage or, for any co-investments, the
15    date of investment;
16        (10) the total fund size;
17        (11) the dollar amount of the capital commitment made
18    by the Treasurer;
19        (12) the type of strategy pursued, including for
20    co-investments;
21        (13) to the extent the information is disclosed,
22    whether or not the TDA II-Recipient Fund possesses diverse
23    general partners and management, as listed under item (iv)
24    of paragraph (5) of subsection (h); and
25        (14) whether or not the TDA II-Recipient Fund is an
26    Illinois venture capital firm.

 

 

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1    If, as of the earlier to occur of (i) the fourth year of
2the investment period of any TDA II-Recipient Fund or (ii)
3when that TDA II-Recipient Fund has drawn more than 60% of the
4investable capital of all limited partners, that TDA
5II-Recipient Fund has failed to invest the minimum amount
6required under this subsection (d) in Illinois companies, then
7the Treasurer shall deliver written notice to the manager of
8that fund seeking compliance with the minimum amount
9requirement under this subsection (d). If, after 180 days of
10delivery of notice, the TDA II-Recipient Fund has still failed
11to invest the minimum amount required under this subsection
12(d) in Illinois companies, then the Treasurer may elect, in
13writing, to terminate any further commitment to make capital
14contributions to that fund which otherwise would have been
15made under this Section.
16    (e) The investment of the State Treasurer in any fund
17created by an Illinois venture capital firm in which the State
18Treasurer places money pursuant to this Section shall not
19exceed 15% of the total TDA IIa account balance.
20    (f) (Blank).
21    (f-5) The aggregate dollar amount available for new
22investments entered into following the effective date of this
23amendatory Act of the 102nd General Assembly shall, as
24applicable, be allocated as follows:
25        (1) No more than 15% for emerging TDA II-Recipient
26    Funds for which the Treasurer's investment exceeds 15% of

 

 

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1    the total dollar amount under management in that fund. For
2    purposes of this paragraph (1), "emerging TDA II-Recipient
3    Fund" means a fund whose management company or sponsor has
4    sponsored no more than 2 private investment funds,
5    including the prospective TDA II-Recipient Fund in which
6    the Treasurer proposes to invest.
7        (2) No more than 5% for co-investments.
8        (3) No less than 80% for TDA II-Recipient Funds that
9    do not meet the criteria in paragraphs (1) or (2) of this
10    subsection (f-5).
11    (g) The Treasurer may deposit no more than 15% of the
12earnings of the investments in the Technology Development
13Account IIa into the Technology Development Fund.
14    (h) The Treasurer shall disclose on the website of the
15Treasurer, at least annually, the following aggregate
16financial performance information for TDA II-Recipient Funds:
17        (1) the Treasurer's internal rate of return for the
18    past one, 3, 5, and 10 years, and since 2016;
19        (2) the Treasurer's total commitment;
20        (3) the capital called;
21        (4) the cash distributions;
22        (5) the following information regarding the current
23    portfolio: (i) the value of the portfolio, committed and
24    uncommitted; (ii) the TDA II-Recipient Funds under
25    management within Illinois; (iii) the TDA II-Recipient
26    Funds under management outside of Illinois; and (iv) to

 

 

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1    the extent relevant data has been reported to the
2    Treasurer, the dollar amount invested in TDA II-Recipient
3    Funds that have a general partner who is a qualified
4    veteran of the armed forces, qualified service-disabled
5    veteran, minority person, woman, or person with a
6    disability, as those terms are referenced and defined in
7    Section 30 of the State Treasurer Act; and
8        (6) the amount invested in each investment strategy,
9    including venture capital, growth equity, debt, and
10    co-investments.
11(Source: P.A. 100-1081, eff. 8-24-18; 101-657, eff. 3-23-21.)
 
12    (30 ILCS 265/20)
13    Sec. 20. Technology Development Fund.
14    (a) The Technology Development Fund is created as a
15nonappropriated trust fund within special fund outside the
16State treasury with the State Treasurer as custodian. Moneys
17in the Fund may be used by the State Treasurer to pay expenses
18related to investments from the Technology Development
19Account. Moneys in the Fund in excess of those expenses may be
20provided as grants to: (i) Illinois schools to purchase
21computers, upgrade technology, and support career and
22technical education; or (ii) incubators, accelerators,
23innovation research, technology transfer, and educational
24programs that provide training, support, and other resources
25to technology businesses to promote the growth of jobs and

 

 

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1entrepreneurial and venture capital environments in
2communities of color or underrepresented or under-resourced
3communities in the State.
4    (b) On or before January 31, 2023 and each year
5thereafter, the Treasurer shall publish on his or her official
6website the following information regarding the Technology
7Development Fund for the previous fiscal year:
8        (1) moneys spent on administration expenses;
9        (2) moneys provided as grants to Illinois schools to
10    purchase computers, upgrade technology, and support career
11    and technical education;
12        (3) moneys provided as grants to incubators,
13    accelerators, innovation research, technology transfer,
14    and educational programs; and
15        (4) notice of all grants awarded.
16(Source: P.A. 101-657, eff. 3-23-21.)