Giannoulias: Make Illinois the Silicon Prairie
Tech jobs bill needed to create, retain high-paying positions

March 3, 2010

Illinois State Treasurer Alexi Giannoulias will submit testimony today supporting a bill that will help position Illinois as the Silicon Valley of the Midwest by attracting new technology businesses and creating high-paying jobs across the state.

SB3655 would authorize the State Treasurer’s Office to allocate up to 2 percent of the state’s investment portfolio in the Technology Development Account, up from 1 percent (or $75 million) today. The legislation, which will be voted on this afternoon by members of the Illinois Senate’s Commerce Committee, would also create a private sector matching fund without adding any administrative costs or resources.

In the last four years, the state has committed nearly all of the current TDA allocation to 18 venture capital firms in Champaign, Chicago, Effingham, Evanston and Northbrook. Only $6.5 million remains in TDA today, and it could be gone by the end of the year. The fund is operating at a. 42 percent return on investment.

“With our research universities and educated workforce, Illinois has the potential to be the Silicon Prairie,” Giannoulias said. “Neighboring states have already begun this pursuit – gradually enhancing and building up their venture capital programs. Illinois needs to catch up to stay competitive as the new economy continues to define itself.”

Through Illinois venture capital firms, the state has invested in 35 Illinois  companies that have created thousands of good-paying jobs and compete in a wide range of industries including software, telecommunications, biopharmaceuticals and life sciences, business services, financial services and alternative energy. In addition to the state’s investment, private capital has contributed $550 million to these fast-growing companies.

"TDA is a unique program in that it creates job, encourages entrepreneurship and technology commercialization and has no net cost since the funds are all repaid – and then some," says Maura O'Hara, Executive Director of Illinois Venture Capital Association.  "I do not know of any other state program that has created jobs, increased payroll and supported the technology economy."

According to the National Venture Capital Association:

• Approximately 75 percent of venture capital investments are spent on payroll.

• 2.2 jobs are created from the ripple effect of a single job created by venture capital investments.

• An estimated 236,000 jobs have been created by venture-capital backed companies in Illinois during the past 30 years.

• Venture-backed companies have double the sales and invest in three times the amount of research and development as non-venture backed peers.

• Today 10.4 million jobs and 18 percent of the gross domestic product are attributed to venture-backed companies.

• One in three Americans is positively impacted by a venture-backed medical innovation.

Taking this information into consideration, the recent success of Champaign-based iCyt Mission Technologies has had a positive ripple effect on the Central Illinois economy.

Seeded in part with money from TDA, the medical technology company has created 44 jobs since its inception in 2005. With the multiplier, the effect is 90 additional jobs in retail, manufacturing and services.
Sony Corp., best known for its electronics and entertainment businesses, acquired iCyt in February and is expected to add hundreds of jobs in the coming years. Increasing TDA funding will help Illinois replicate iCyt’s success throughout the state.

“iCyt is a prototype for smart grown and job creation,” Giannoulias said. “It started as a small university research group, was fostered with venture capital and now is part of a Fortune 500 company.”