2023 Illinois Compiled Statutes › Chapter 20 - EXECUTIVE BRANCH › 20 ILCS 3501/ - Illinois Finance Authority Act. › Article 810 - Venture Investment Fund

(20 ILCS 3501/Art. 810 heading)
ARTICLE 810
VENTURE INVESTMENT FUND
(20 ILCS 3501/810-5)
Sec. 810-5. 
		Findings and Declaration of Policy. 
		It is hereby found and
declared that a continuing need exists to maintain and develop the State's
economy; that assisting and encouraging economic development through private
enterprise will help to create and maintain employment and governmental
revenues
and is an important function of the State; that the availability of seed
capital
and equity capital is an important inducement to enterprises to remain, locate
and expand in the State; that there exists in the State gaps in the
availability
of capital for the development and exploitation of new technologies, products,
processes and inventions and that this shortage has resulted and will continue
to result in a shortfall in the development of new enterprises and employment
in
Illinois; that the establishment of the Illinois Venture Investment Fund and
the
exercise by the Authority of the powers granted in
Sections 810-5 through 810-40
of this Act will promote economic development resulting in increased employment
and public revenues; and that the provisions of this Act are hereby declared to
be in the public interest and for the public benefit.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/810-10)
Sec. 810-10. 
		Definitions. 
		The following terms, whenever used or referred
to in this Article, shall have the following meanings
ascribed to them, except where the context clearly requires otherwise:
(a) "Co-venture investment" means a venture capital or seed capital
investment
by the Authority in qualified securities of an enterprise that is made after or
in conjunction with one or more professional investors that have or are making
equity investments in that enterprise, as provided in this Act. A direct
investment made by the Authority may later be treated as a co-venture upon such
investment made by a professional investor.
(b) "Direct investment" means a venture capital or seed capital investment
by
the Authority in qualified securities of an enterprise in which no professional
investor or seed capital investor is also making an equity investment.
(c) "Enterprise" means an individual, corporation, partnership, joint
venture,
trust, estate, or unincorporated association.
(d) "Professional investor" means any bank, bank holding company, savings
institution, trust company, credit union, insurance company, investment company
registered under the Federal Investment Company Act of 1940, pension or
profit-sharing trust or other financial institution or institutional buyer,
licensee
under the Federal Small Business Investment Act of 1958, or any person,
partnership, or other entity whose principal business is making venture capital
investments and whose net worth exceeds $250,000.
(e) "Qualified security" means any note, stock, convertible security,
treasury
stock, bond, debenture, evidence of indebtedness, limited partnership interest,
certificate of interest or participation in any profit-sharing agreement,
pre-organization certificate or subscription, transferable share, investment
contract, certificate of deposit for a security, certificate of interest or
participation in a patent or application therefor, or in royalty or other
payments under a patent or application, or, in general, any interest or
instrument commonly known as a "security" or any certificate for, receipt for,
guarantee of, or option, warrant, or right to subscribe to or purchase any of
the foregoing.
(f) "Seed capital" means financing in the form of investments in qualified
securities that is provided for applied research, development, testing, and
initial marketing of a technology, product, process, or invention and
associated working capital.
(g) "Seed capital investor" means any person, partnership, corporation,
trust, or other entity making a seed capital investment.
(h) "Director" means the person designated by the Authority to manage the
activities associated with the Illinois Venture Investment Fund.
(i) "Venture capital" means financing in the form of investments in
qualified securities that is provided for the capital needs of a company that
is
developing a new technology, product, process, or invention.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/810-15)
Sec. 810-15. 
		Illinois Venture Investment Fund. 
		There is created the
Illinois
Venture Investment Fund, hereafter referred to in
this Article
as the "Fund". The Treasurer of the Authority shall have custody of the Fund,
which shall be held outside of the State treasury. The Authority is authorized
to accept any and all grants, loans, including loans from State public employee
pension funds, as authorized by this Act or any other statute, subsidies,
matching funds, reimbursements, appropriations, transfers of appropriations,
federal grant monies, income derived from investments, or other things of value
from the federal or state governments or any agency of any other state or from
any institution, person, firm or corporation, public or private, for deposit in
the Fund.
The Authority is authorized to use monies deposited in the Fund expressly for
the purposes specified in and according to the procedures established by
Sections 810-20 through 810-40 of this Act. The Authority may appoint a
Director
to manage the activities associated with the Fund. Such Director shall receive
compensation as determined by the Authority.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/810-20)
Sec. 810-20. Powers and Duties; Illinois Venture Investment Fund Limits. The
Authority shall invest and reinvest the Fund and the income, thereof, in the
following ways:
(a) To make a direct investment in qualified securities issued by
enterprises
and to dispose of those securities within 10 years after the date of the direct
investment as determined by the Authority for the purpose of providing venture
capital or seed capital, provided that the investment shall not exceed 49% of
the estimated cost of development, testing, and initial production and
marketing
and associated working capital for the technology, product, process, or
invention, or $750,000, whichever is less;
(b) To enter into written agreements or contracts (including limited
partnership agreements) with one or more professional investors or one or more
seed capital investors, if any, for the purpose of establishing a pool of funds
to be used exclusively as venture capital or seed capital investments. The
Authority shall not invest more than $2,000,000 in a single pool of funds or
affiliated pools of funds.
The agreement or contract shall provide for the pool of funds to be managed by
a professional investor. The manager may be the general partner of a limited
partnership of which the Authority is a limited partner.
The agreement or contract may provide for reimbursement of expenses of, and
payment of a fee to, the manager. The agreement or contract may also provide
for payment to the manager of a percentage, not to exceed 40% (computed on an
annual basis), of cash and other property payable to the Authority as its
pro-rata share of distributions to investors in the pool of funds, provided
that (i)
no amount shall be received by the manager upon sale or other disposition of
qualified investments in enterprises until recovery by the Authority of its
investment and upon liquidation or withdrawal of the Authority from the pool of
funds, the manager shall be obligated to refund any amount received by it from
such percentage if necessary to allow the Authority to recover its investment
or
(ii) the terms of payment of cash and other property to the Authority are no
less favorable to the Authority than payments to other seed capital investors
(other than the manager) who are parties to the agreement or contract.
(c) To make co-venture investments by entering into agreements with one or
more
professional investors or one or more seed capital investors, if any, who have
formally agreed to invest at least 50% as much as the Authority invests in the
enterprise, for the purpose of providing venture capital or seed capital; but
no more than $1,000,000 shall be invested by the Authority in the qualified
securities of a single enterprise. A total of not more than $1,500,000 may be
invested in the securities of a single enterprise, if the Authority shall find,
after the initial investment by the Authority, that additional investments in
the enterprise are necessary to protect or enhance the initial investment of
the
Authority.
Each co-venture investment agreement shall provide that the Authority will
recover its investment before or simultaneously with any distribution to
participating professional investors or seed capital investors. The Authority
and participating professional investors and seed capital investors shall share
ratably in the profits earned in any form on the co-venture investment, but the
Authority may, at its discretion, agree to pay to a participating professional
investor a percentage, not to exceed 40% (computed on an annual basis), of cash
and other property payable to the Authority as its pro-rata share of
distributions to investors in the pool of funds, provided that (i) no amount
shall be received by the participating professional investor upon sale or other
disposition of qualified investments in the enterprises until recovery by the
Authority of its investment and upon liquidation or withdrawal of the Authority
from the pool of funds, the participating professional investor shall be
obligated to refund any amount received by it from such percentage if necessary
to allow the Authority to recover its investment or (ii) the terms of payment
of cash and other property to the Authority are no less favorable to the
Authority
than payments to other seed capital investors or professional investors (other
than the professional investor) who are parties to the agreement or contract;
(d) To purchase qualified securities of certified development corporations
created under
Section 503 of the federal Small Business Administration Act,
including the Illinois Small Business Growth Corporation, for the purpose of
making loans to enterprises that have the potential to create substantial
employment within the State per dollar invested by the Authority, provided that
the investment does not exceed 25% of the total investment in each corporation
at the time the investment is approved by the Authority. Investment by the
Authority in the Illinois Small Business Growth Corporation is not limited by
the foregoing provision;
(e) To purchase qualified securities of small business investment companies
and
minority enterprise small business investment corporations certified by the
federal Small Business Administration which are committed to making 60% of
their
investments in the State, provided that investments from the Fund do not exceed
25% of the total investment in these entities at the time the investment is
approved by the Authority;
(f) To make the investments of any funds held in reserves or sinking funds,
or any funds not required for immediate disbursement, as may be lawful
investments
for fiduciaries in the State;
(g) To facilitate and promote the acquisition and revitalization of existing
manufacturing enterprises by, at the Authority's discretion, developing and maintaining a list of firms, or
divisions thereof, located within the State that are available for purchase,
merger, or acquisition. The list may be made available at such charges as the
Authority may determine to all interested persons and institutions upon
request. No firm shall appear on the list without its prior written permission.
The list
may contain such additional financial, technical, market and other information
as may be supplied by the listed firm. The Authority shall bear no
responsibility for the accuracy of the information contained on the list, and
each listed firm shall hold the Authority harmless against any claim of
inaccuracy.
Enterprises supported by investments from the Fund may receive consideration
by the Authority in the allocation of loans to be insured or loans to be made
from the proceeds of bonds to be insured by the Industrial Revenue Bond
Insurance Fund established under this Article, and the
Authority may coordinate its activities under the 2 programs.
(Source: P.A. 97-789, eff. 7-13-12.)
(20 ILCS 3501/810-25)
Sec. 810-25. 
		Direct and Co-venture Investments. 
		An enterprise seeking a
direct investment from the Illinois Venture Investment Fund shall file an
application with the Authority along with an applicable fee to be determined by
the Authority. A valid application shall contain a business plan, including a
description of the enterprise and its management, a statement of the amount,
timing, and projected use of the capital required, a statement concerning the
feasibility of the proposed technology, product, process, or invention, its
state of development and likelihood of commercial success, a statement of the
potential economic impact of the enterprise on the State, including the number,
location, and types of jobs expected to be created, and such other information
as the Authority shall require.
In addition to the foregoing, the Authority shall approve an application for a
direct investment and shall approve a co-venture investment only after it has
made the following findings:
(a) The enterprise has a reasonable chance of success;
(b) If the application is for a direct investment, Authority participation
is
necessary to the success of the enterprise because conventional, private
funding
is unavailable in the traditional capital markets, or because funding has been
offered on terms that would substantially hinder the success of the enterprise;
(c) The technology, product, process, or invention for which the investment
is
being made is feasible, has the potential to achieve commercial success and the
enterprise has the potential to create substantial employment within the State
per dollar invested and that this employment, so far as feasible, may be
expected to be for residents of areas of critical labor surplus;
(d) The entrepreneur, investors, shareholders, and other founders of the
enterprise have already made or are obligated to make a substantial financial
and time commitment to the enterprise;
(e) The securities to be purchased are qualified securities;
(f) The Authority determines that the possible gains on the investment are
at least commensurate with the risk of loss and that there is a reasonable
possibility that the Authority will recoup its investment, within 10 years
after
the investment or such other time period as negotiated by the Authority,
through the receipt of interest payments, dividends, capital gains, or other
distribution of profits, or royalties on investments made by the Authority; and
(g) Binding commitments have been made to the Authority by the enterprise
for
adequate reporting of financial data to the Authority and any participating
professional investors or seed capital investors. The report shall include an
annual audit of the books of the enterprise by an independent certified public
accountant if the Authority so requires. The Authority and any participating
professional investors or seed capital investors shall secure sufficient
contractual rights from the enterprise as the Authority shall consider prudent
to protect the investment of the Authority, including, at the discretion of the
Authority and without limitation, a right of access to financial and other
records of the enterprise.
The Authority's interest in qualified securities from investments shall not
represent more than 49% of the voting stock of any single enterprise at the
time of purchase after giving effect to the conversion of all outstanding
convertible
securities of the enterprise. In the event of severe financial difficulty that
in the judgment of the Authority threatens the investment of the Authority
therein, a greater percentage of those securities may be owned or acquired by
the Authority.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/810-30)
Sec. 810-30. 
		Investment in Pools of Funds. 
		Proposals for the establishment
of pools of funds under paragraph (b) of
Section 810-20 of this Act shall be
submitted on a form, contain the information, and be accompanied by a fee as
prescribed by the Authority.
The Authority shall not enter into any agreement or contract under paragraph
(b) of Section 810-20 of this Act unless the agreement or contract provides
that the
pool of funds will be invested in an enterprise only if the manager finds all
of the following:
(a) The enterprise has a reasonable chance of success.
(b) The technology, product, process, or invention for which the investment
is
being made is feasible and has the potential to achieve commercial success.
(c) The enterprise has the potential to create substantial employment within
the State.
(d) The entrepreneur, investors, shareholders, or founders of the enterprise
have made or are obligated to make a substantial commitment of time and funds
to the enterprise.
(e) The possible gains in the investment are at least commensurable with the
risk of loss and there is a reasonable possibility that the investors,
including the Authority, will recoup their investment within 10 years after the
investment, through the receipt of interest, dividends, capital gains, or other
distributions of profit or royalties.
(f) The enterprise shall have made binding commitments for adequate
reporting of and access to financing data of the enterprise.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/810-35)
Sec. 810-35. 
		
		Documentary materials concerning trade secrets; Commercial or
financial information; Confidentiality. Any documentary materials or data made
or received by any member, agent or employee of the Authority, to the extent
that such material or data consist of trade secrets, commercial or financial
information regarding the operation of any enterprise conducted by an applicant
for, or recipient of, any form of assistance which the Authority is empowered
to
render, or regarding the competitive position of such enterprise in a
particular
field of endeavor, shall not be deemed public records; provided, however, that
if the Authority purchases a qualified security from such enterprise, the
commercial and financial information, excluding trade secrets, shall be deemed
to become a public record of the Authority after the expiration of 3 years from
the date of purchase of such qualified security, or, in the case of such
information made or received by any member, agent or employee of the Authority
after the purchase of such qualified security, 3 years from the date such
information was made or received. Any discussion or consideration of such trade
secrets or commercial or financial information may be held by the Authority, in
executive sessions closed to the public, notwithstanding the provisions of the
Open Meetings Act; provided, however, that the purpose of any such executive
session shall be set forth in the official minutes of the Authority and
business which is not related to such purpose shall not be transacted, nor
shall any vote be taken during such executive sessions.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/810-40)
Sec. 810-40. 
		Tax Exemption. 
		The Illinois Venture Investment Fund and all
its
proceeds shall be and are hereby declared exempt from all franchise and income
taxes levied by the State, provided nothing herein shall be construed to exempt
from any such taxes, or from any taxes levied in connection with the
manufacture, production, use or sale of any technologies, products, processes
or
inventions which are the subject of any agreement earned by any enterprise in
which the Authority has invested.
(Source: P.A. 93-205, eff. 1-1-04.)