Giannoulias bill to attract more businesses, high-paying jobs
SB265 passes unanimously out of Illinois Senate committee today

February 27, 2009

A bill that would attract new businesses to the state and create high-paying jobs passed out of an Illinois Senate committee today.

Illinois State Treasurer Alexi Giannoulias supports Senate Bill 265 that would commit up to 2 percent of the state’s investment portfolio to launch high-tech firms throughout the state.

The bill would create Illinois’ second technology development account, the first of which was created by the General Assembly in 2002 but is close to reaching its $75 million limit. Establishing TDA II would continue to provide much needed capital to the high technology and venture capital sectors in Illinois and aims to generate new revenue through a partnership between the public and private sectors.

Under the current guidelines of the program, the Treasurer’s Office can commit up to 1 percent of the state’s investment portfolio to certain venture capital firms that have a commitment to investing in start-up technology businesses in Illinois.

Money used to invest in TDA II would not come from general revenue funds. Instead, a small portion of the state’s investment portfolio - which primarily is invested in fixed-income assets, including securities and some short-term, non-asset-backed commercial paper – would be allocated to TDA II. The legislation would also create a fund that would be supported with money from private-sector companies which would have an interest in matching the state’s investment strategy without additional administrative costs or resources.

“This fund will provide cash to start businesses at a time when unemployment is rising and credit is hard to come by,” Giannoulias said. “It also sends a message to investors that Illinois is a player in the technology sector and is serious about job creation and economic development.”

Giannoulias noted that neighboring states have already begun enhancing their venture capital programs and Illinois needs to stay competitive so businesses come to Illinois instead of other states offering incentives.

Ifbyphone, Inc., which provides automated telephone applications to small and medium sized businesses, is one of 29 high-tech companies in Illinois that has received support from venture capital firms that received funding from the original TDA. The Skokie-based company started with one paid employee in 2006 but has grown to 22 today and expects to add more employees this year.

“It is vitally important for businesses like ours to connect with investors that have the vision to see the power of new ideas and have the confidence that our idea will be successful. The return on that investment not only brings more high-paying jobs to the state, but also provides a service to other businesses to keep building here,” said Irv Shapiro, Ifbyphone’s CEO. “This is the third business I have built in Illinois and I believe in the talent, environment and people of this state. Initiatives such as TDA send a strong message that entrepreneurship is alive and well in Illinois.”

Ifbyphone is located in State Sen. Jeff Schoenberg’s (D-Evanston) legislative district, so he has seen first hand how these high-tech companies can bring high-paying jobs to Illinois communities. Schoenberg is the sponsor of SB 265.

“Ifbyphone is a small business that continues to grow every year and plant its roots deeper and deeper in our community,” Schoenberg said. “We need more businesses like this to come to Illinois, and that is exactly why we need to put more resources into the Technology Development Account II.”

To best protect the state’s assets, the Treasurer’s Office does not invest directly in start-up firms. In the case of Ifbyphone, the state committed money from its investment portfolio to I2A and APEX, venture capital firms with offices in Chicago. APEX and I2A then invested in Ifbyphone as part of its commitment to build a tech industry in the Midwest.

"It is essential that we invest in companies in our own communities in Illinois,” said David Weinstein, Managing Director of I2A. “We have a commitment to do that and it is encouraging that Treasurer Giannoulias and Senator Schoenberg are trying to move the state forward to make sure this continues to be a priority.”

iCyt Mission Technology, Inc. is another tech company that has received support from venture capital firms which received funding from the TDA. The investment helped Champaign’s iCyt, which produces equipment for cell and disease research, grow from just four employees a few years ago to 55 today.

In iCyt’s case, the Treasurer’s Office committed money from its investment portfolio to Illinois Ventures, a venture capital firm with offices in Chicago and Champaign.

Illinois Ventures then invested in iCyt as part of its commitment to build a tech industry in the state. About 90 percent of the companies Illinois Ventures invests in have some degree of operation presence in Illinois and more than 60 percent – including iCyt – are entirely based in the state.

"Without it, we wouldn’t be here,” iCyt CEO Tim Hoerr said of the state’s program.