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Land of Lincoln’s state treasurer to invest $220 mln in tech startups

Illinois will invest $220 million in 15 to 20 of the state’s emerging tech companies over the next three years.

State Treasurer Michael Frerichs said in late January that the Illinois Growth and Innovation Fund would focus on startups within the boundaries of the Prairie State.

Frerichs, who most recently was State Senator for eight years, said the money won’t come from the existing state budget, which has been embroiled in partisan politics in recent months.

“This investment recognizes Illinois’ emergence as a tech leader,” Frerichs said in a news release. “These dollars will fund promising entrepreneurs who will use the money to hire others in the furtherance of their dream and the betterment of our tech community and overall economy.”

The funds will represent about 2 percent of the state’s investable assets, Frerichs said.

He added that he expects the innovation fund to help lure in another $400 million from private sector investors.

The new money follows the $75 million Technology Development Accounts, or TDA I, program authorized by the state legislature in 2003.

The program will be administered by 50 South Capital Advisors LLC, the alternative investments subsidiary of Northern Trust.

Responsibilities will include finding, screening, performing due diligence, and recommending which venture capital funds to invest in. Other responsibilities will include monitoring and reporting on the fund’s progress as the investments are made.

Maura O’Hara, executive director of the 60-member plus Chicago-based Illinois Venture Capital Association, said the money will help maintain Illinois’ bustling startup sector.

“Entrepreneurial activity has been very high,” O’Hara said. “Over the past five years, we’ve seen an amazing renaissance in the activity.”

Frerichs said the one of the goals of the fund is to generate 3,600 new jobs over the three-year period, while earning positive investment returns for the state government.

He said the earlier fund help to create close to 4,000 jobs.

VCs invested $1.12 billion in the state’s tech sector, the highest amount since 2000, according to 2015 statistics from the National Venture Capital Association.

The $1.12 billion was invested across 96 total deals, with software at the top of the list representing 28 deals and $261 million.

Illinois now even has at least three unicorns, or companies valued at $1 billion or more. This includes Avant, an online consumer lending platform that crunches big data and machine-learning algorithms to approve loans. In September 2015, the company, which has offices in Chicago, Los Angeles and London, had raised $325 million in a series E round. The funding round gave Avant a $1 billion-plus valuation.

General Atlantic led the round, with participation from Balyasny Asset Management and J.P. Morgan.