The Future of Illinois: Investing in Entrepreneurs for Economic Growth
In a recent op-ed published in the Chicago Tribune, Jim Nowlan discussed the future of Illinois and proposed a new approach to attract economic development. Michael Frerichs, the treasurer of Illinois, agrees with Nowlan’s ideas and has been implementing a similar strategy for the past eight years. Frerichs believes that investing in entrepreneurs and innovative ideas is the key to creating better jobs and stronger communities in the state.
Instead of spending $500 million on incentives to attract big employers, Nowlan suggests providing smaller amounts, ranging from $50,000 to $500,000, to a larger number of entrepreneurs. The goal is to give these individuals the capital they need to pursue their ideas and concepts, while also organizing investors to support their commercial development. Frerichs fully supports this approach and has been doing exactly that through the Illinois Growth and Innovation Fund, a $1.5 billion investment fund.
The Illinois Growth and Innovation Fund focuses on making targeted investments in technology-enabled businesses based in Illinois or with a significant Illinois workforce. These investments span various sectors such as agriculture, logistics, financial technology, food, life sciences, consumer green businesses, manufacturing, and healthcare. So far, these investments have been a catalyst for creating at least 19,000 jobs, according to reports from 50 South Capital, a subsidiary of Northern Trust that administers the program.
Moreover, for every direct job created, there is an indirect creation of 2.2 jobs through a multiplier effect, as determined by a study conducted by the Illinois Venture Capital Association. This means that Frerichs’ investments have resulted in approximately 36,000 indirect jobs through suppliers and service providers. The fund has made over 625 investments in Illinois companies, ranging from small startups to companies with thousands of employees, leading to the opening of 78 new offices in the state.
Not only do these investments have a significant economic impact, but they also generate competitive returns for taxpayers. For each dollar invested, the original investment has grown to be worth more than 1.4 times. This increase in value allows the treasurer’s office to reinvest the returns in other crucial areas, such as schools, universities, roads, and infrastructure.
These targeted investments have supported various successful companies, including SpotHero, Farmer’s Fridge, and ShipBob. SpotHero offers a parking reservation app, Farmer’s Fridge provides healthy food options, and ShipBob helps businesses streamline their shipping processes. Furthermore, Frerichs has prioritized diversity in investments by actively supporting minority-, women-, veteran-, and disabled-owned investment fund managers and founders. Over 42% of capital has been invested with diverse-operated investment managers, encompassing 356 investments in diverse-owned businesses.
Frerichs acknowledges the importance of retaining Illinois entrepreneurs and fostering their growth within the state. While tax incentives alone are not sufficient, providing access to capital, customers, and a strong support system are crucial. Illinois possesses several advantages over other states, such as world-class universities, an extensive transportation network, business incubators, accelerators, local investors, and grassroots groups supporting entrepreneurs. These resources instill founders with confidence, enabling them to tackle the challenges of starting a business in Illinois, reinforced by the investment from the treasurer’s office.
Recognizing the success of these initiatives, other states, including Indiana, North Dakota, and Virginia, have taken notice and attempted to emulate Illinois’ approach. Yet, Frerichs remains confident in the state’s numerous advantages and wishes these states luck in catching up.
Illinois is indeed a great state with immense potential. While challenges persist, Frerichs emphasizes that successful enterprises always encounter hurdles. Nonetheless, the treasurer’s office is committed to being part of the solution, even if it cannot address all of Illinois’ problems immediately.
In conclusion, Frerichs and Nowlan share a common vision for the future of Illinois. By investing in entrepreneurs and innovative ideas, Illinois can create better jobs, stronger communities, and a thriving economy. With a track record of success and a commitment to diversity, the Illinois Growth and Innovation Fund, led by Frerichs, is contributing to the state’s economic growth and ensuring that Illinois remains a hub for entrepreneurial activity.