CHAMPAIGN, IL – Mike Frerichs’ downstate home of Champaign-Urbana is known in technology circles as the birthplace of Mosaic, the first modern internet browser, as well as fictional birthplace of HAL 9000, the supercomputer co-star of 2001: A Space Odyssey. According to NerdWallet.com, Champaign is also known for a booming economy thanks to a local boom in technology jobs. With incomes rising 32% in recent years, Champaign is ranked as the third-fastest growing city in the state.
Frerichs hopes to expand that prosperity across Illinois as State Treasurer. Frerichs plans to take advantage of venture capital investment opportunities under the Illinois Technology Development Act that have been underutilized by Treasurer Rutherford. According to Frerichs, experts he has talked with agree the move will increase state returns on investments and grow the Illinois economy.
“While Tom Cross is focused on wasting tax dollars filing lawsuits and expanding the Treasurer’s office, I am focused on getting taxpayers the greatest return on their investment while creating jobs here in Illinois,” says Frerichs. “Partnering with the private sector to grow Illinois jobs while growing our investments is a win for everyone. #NextTechIllinois is an investment in our state’s future.”
In 2011, Frerichs co-sponsored legislation to expand the Illinois Technology Development Act and tighten-up regulation of the funds. Under the old law, the State Treasurer could deposit up to one percent of the state’s investment portfolio into Illinois venture capital firms. Under the change backed by Frerichs and signed into law by Governor Quinn, the State Treasurer is authorized to increase its investment from 1 percent to 3 percent of the state’s portfolio, for a current maximum of $377 million, in venture capital firms. The change also required firms accepting the added funds to eventually match dollar-for-dollar into Illinois companies, effectively doubling the investment in Illinois technology companies down the road.
Of the 3 percent or $377 million ultimately available for investment under the new law, Rutherford’s office is currently only investing $44 million, or 0.35 percent. And while there are restrictions on year-to-year investment, this failure to adequately invest these funds has left millions of dollars on the table for Illinois based financial institutions and Illinois companies.
The Illinois Technology Partnership (ITP), a nonprofit technology policy advocate, has been a staunch proponent of increased venture capital. ITP notes that venture capital investments In Illinois dropped remarkably last year. The first three quarters of 2013 saw just $208 million in total private venture capital investment, down from $424 million in 2012 and $528 million in 2011.
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“We have a great opportunity to reinvest in Illinois,” says Howard Tullman, CEO of 1871, a nonprofit high tech incubator and partner of ITP.
“I believe Mike Frerichs has the right plan and the right experience to grow the state’s investments and grow our tech economy.”
“We work every day with veteran entrepreneurs who have great ideas that will create great paying jobs, but we are all struggling to compete for capital,” says Todd Connor, co-founder of The Bunker, which partners with 1871 and the Pat Tillman Foundation to invest in veteran-run companies. “The leadership skills forged during military service make these new business leaders a great investment. Frerichs’ plan will be a catalyst and is just the boost we need.”
Frerichs hopes to move quickly to boost the state’s technology investment, ramping the state’s portfolio up from $44 million currently to the maximum $377 million, which he estimates may take years to better fund the program. Frerichs is hoping to work with lawmakers to speed-up the investment timetable and make other technical changes.
“The message we are sending to Illinois technology companies and private investors is that under my watch, the Treasurer’s Office will once again be open for business, not out to lunch.”