SB1900 104TH GENERAL ASSEMBLY

LRB104 11832 SPS 21922 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB1900

Introduced 2/6/2025, by Sen. Elgie R. Sims, Jr.

SYNOPSIS AS INTRODUCED:

New Act

Creates the Inclusive Venture Investment Act. Provides that the State Treasurer shall create a Direct Matching Funds Program. Provides that the purpose of the program shall be to leverage State-managed funds for investments in minority-owned venture capital firms, minority-owned financial managers, and minority-led startups. Sets forth provisions for investment requirements and incentives; administration; transparency and reporting; oversight and compliance; confidentiality; and rulemaking. Effective July 1, 2026.

A BILL FOR

AN ACT concerning State government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Illinois Inclusive Venture Investment Act.

Section 5. Findings. The General Assembly finds and declares:

(a) Illinois has a vibrant entrepreneurial ecosystem but lacks equitable access to capital for minority entrepreneurs, venture capital firms, and financial managers.

(b) Minority-owned financial management firms, such as Ariel Investments, face systemic barriers to accessing institutional portfolios despite proven track records of success.

(c) Programs such as Chicago's 1871, Discovery Partners Institute, and minority-owned financial firms play a crucial role in fostering entrepreneurship, innovation, and economic growth among underrepresented groups.

(d) This Act will drive equitable economic growth by ensuring significant institutional capital flows to minority-led startups, minority-owned venture capital firms, and minority-owned financial management firms.

Section 10. Definitions. As used in this Act:

"Covered institution" means:

(1) public and private universities, colleges, and institutions of higher education with endowments or investment portfolios exceeding $50,000,000;

(2) museums, cultural centers, and nonprofit organizations with endowments or investment portfolios exceeding $25,000,000 or receiving cumulative State funding or tax exemptions exceeding $1,000,000 annually;

(3) nonprofit hospitals and healthcare systems with investment portfolios exceeding $50,000,000; and

(4) public pension funds or retirement systems of State or local governments.

"Minority-led startup" means a business that:

(1) is headquartered in this State or has significant operations in this State; and

(2) is at least 51% owned and controlled by one or more minority persons, women, or persons with disabilities, as those terms are defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act.

"Minority-owned financial manager" means a financial firm, asset manager, or investment manager that:

(1) is at least 51% owned by one or more minority persons, women, or persons with disabilities, as those terms are defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act; and

(2) the management and daily business operations are controlled by one or more of the owners described in paragraph (1) of this definition.

"Minority-owned venture capital firm" means a financial firm or investment manager that:

(1) is at least 51% owned by one or more minority persons, women, or persons with disabilities, as those terms are defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act; and

(2) the management and daily business operations of which are controlled by one or more of the owners described in paragraph (1) of this definition.

"Special investment initiative" means a program, incubator, accelerator, or similar initiative that:

(1) provides resources, mentorship, training, or capital to entrepreneurs who are minority persons, women, or persons with disabilities, as those terms are defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act; and

(2) operates in this State or primarily supports businesses located in this State.

"Special Investment Initiative" includes, but is not limited to, university-led startup programs, nonprofit entrepreneurship accelerators, and private-sector incubators aimed at supporting underrepresented founders.

Section 15. Investment requirements and incentives.

(a) The State Treasurer shall create a Direct Matching Funds Program. The purpose of the program shall be to leverage State-managed funds for investments in minority-owned venture capital firms, minority-owned financial managers, and minority-led startups.

(b) For every dollar invested by a covered institution in an eligible minority-owned financial manager, venture capital firm, or minority-led startup, the State Treasurer shall provide a matching contribution of up to 50 cents per dollar using existing funds managed by the State Treasurer.

(c) Investments that exceed annual performance benchmarks, as determined by historical market returns for venture capital or institutional portfolios, shall receive an additional 25 cents per dollar in matching funds from the State Treasurer.

(d) An institution whose participating portfolio underperforms the benchmarks for a period more than 5 years may be prohibited from participating in the program until the institution can demonstrate significant improvement with performance above the benchmark for 8 consecutive quarters.

(e) The matching funds provided in accordance with this Section shall be:

(1) capped at $10,000,000, subject to available State resources;

(2) restricted to investments made in firms or businesses based in this State with significant operations in this State; and

(3) allocated based on a review and selection process established by the State Treasurer by rule.

(f) To be eligible to participate in this program, covered institutions shall allocate at least 20% of their investment portfolios to:

(1) minority-owned venture capital firms;

(2) minority-led startups;

(3) minority-owned financial managers; or

(4) special investment initiatives supporting diverse founders, including:

(A) university startup incubator programs aimed at supporting underrepresented entrepreneurs; and

(B) nonprofit business accelerator programs providing mentorship, training, and resources for minority founders.

(g) All qualifying investments shall serve the purpose of fostering diversity, equity, and inclusion in this State's financial and entrepreneurial ecosystem.

(h) All participating covered institutions shall submit documentation of qualifying investments, including detailed reporting on recipients' diversity status and operations in this State.

Section 20. Administration. The State Treasurer shall administer the Direct Matching Funds Program, including:

(1) verifying eligibility of institutions and recipients;

(2) distributing matching funds to qualifying institutions;

(3) publishing an annual report detailing the matching funds distributed, recipients, and outcomes, including jobs created, capital raised, and economic impact; and

(4) reallocate unused matching funds at the end of the fiscal year proportionally among participating institutions based on documented investment needs.

Section 25. Transparency and reporting.

(a) A covered institution participating in the program shall submit an annual report to the State Treasurer, including:

(1) the total value of their endowments or investment portfolios;

(2) the percentage of investments allocated to minority-owned venture capital firms, minority-owned financial managers, minority-led startups, and special investment initiatives;

(3) the names of minority-owned financial managers, venture firms, and startups supported; and

(4) year-over-year changes in investment diversity.

(b) The State Treasurer shall make the reports submitted under subsection (a) publicly accessible, including detailed scorecards that ranks institutions based on the percentage of investments allocated to minority-owned financial managers, venture capital firms, startups, and special investment initiatives.

(c) A special investment initiative receiving funds under this Act shall submit an annual performance report to the State Treasurer, including:

(1) the number and percentage of minority-led startups supported; and

(2) outcomes such as capital raised, jobs created, and businesses launched.

Section 30. Oversight and compliance.

(a) The State Treasurer shall oversee the implementation and enforcement of this Act, including the collection and publication of reports.

(b) The State Treasurer may conduct audits of covered institutions and special investment initiatives to ensure compliance with this Act. A covered institution participating in the program shall comply with an audit conducted by the State Treasurer.

(c) An institution that participates in this program shall meet reporting and compliance standards to retain program eligibility.

(d) An institution that fails to meet the 20% investment allocation requirement over 2 consecutive years shall lose eligibility to participate in the program for a period of no more than 5 years.

(e) An institution that fails to meet reporting requirements or misuses matching funds may be required to repay any funds distributed under this Act.

Section 35. Confidentiality. The State Treasurer may redact sensitive or proprietary financial information that does not further the intent of this Act.

Section 40. Rulemaking. No later than 6 months after the effective date of this Act, the State Treasurer shall adopt any rules necessary to implement this Act.

Section 99. Effective date. This Act takes effect July 1, 2026.