The second account is aptly called the Illinois Growth and Innovation Fund (formally referred to as TDA II in state statute). Like TDA I, the underlying goal of the Illinois Growth and Innovation Fund (IGIF) is to leverage state dollars to help attract, assist, and retain quality technology businesses in Illinois, which is expected to spur economic growth and job creation while earning investment returns for Illinois residents.
50 South Capital, a subsidiary of the Northern Trust Corporation, was selected to be the Program Administrator.
Key Points
- February 2016 Launch – On February 1, 2016, the Treasurer’s Office launched the Illinois Growth and Innovation Fund, initiating a process that will ultimately invest $222 million in technology businesses over the course of six years (the target is commit $74 million each of the first three years, with remaining uncommitted capital and earning distributions committed in the fourth, fifth and sixth years of the program).
- $622 Million Economic Impact – The $222 million is expected to attract an additional $400 million in private sector investments for participating technology businesses.
In regard to the impact on job creation and economic growth in Illinois, TDA I has enabled venture capital firms to invest $115 million in 37 Illinois companies (as of June 2015). That in turn has attracted more than $450 million in additional private investment. Companies that received TDA I investments have created approximately 1,200 direct jobs and 2,700 indirect jobs in Illinois.
- Supporting Diversity – IGIF also gives clear direction to ensure that qualified fund managers and technology businesses owned by minorities, women, military veterans, or disabled persons are recommended for IGIF assets.
- Website Coming Soon – In an effort to further ensure transparency and accountability, a website is coming soon that will post up-to-date information on program performance as well as provide a process whereby Illinois-based entrepreneurial ventures can submit their endeavors for seed capital/funding consideration.
Technology Development Account I
In 2005, the first Technology Development Account (TDA I) was established, authorizing the Treasurer’s Office to allocate up to 1% of the state portfolio to venture capital firms located in Illinois with a goal of investing in technology businesses seeking to locate, expand, or remain in Illinois.
At its core, TDA I carries a dual purpose: (1) to support the growth of Illinois technology businesses, which in turn bolsters job creation and boosts the state’s economy, and (2) to generate positive investment returns for the State of Illinois.
TDA I utilizes a fund-of-funds approach with areas of investment including Emerging Funds, Venture Funds, and Buyout/Sub-Debt Funds. Additional diversification is achieved vis-à-vis industry, investment stage, and vintage year. As such, TDA I contains over 250 portfolio companies across 18 funds (as of June 2015).
While TDA I investments will continue to wind down through 2015 to 2023 (approximately), the following takeaways help underscore the performance of the program:
- Realized Gains – Since inception through June 30, 2015, the Treasurer’s Office has received distributions of $26,911,184 in capital gains and dividends.
- Internal Rate of Return – As of June 30, 2015, the total IRR of TDA I is 6.1% annualized, net of investment management fees. That is up from 5.6% in September 2014, and 4.9% in December 2013.
- Market Value – As of June 30, 2015, the market value of the TDA I portfolio is $55,700,624.