Venture Capital in Illinois

Venture capital, though a comparatively small contribution to private equity activity in Illinois, funds the creation and expansion of many dynamic, high-growth companies.

The Challenge

Due to Illinois’ low level of venture capital activity, the industry has a less significant impact on state economics than one might hope. The $969 million of venture capital invested in Illinois since January 2002 is just 1.5% of the national total—a bleak figure considering that 4.4% of the nation’s population resides in Illinois and the gross state product equals 5% of the national total.

Statewide, venture capitalists are doing their part to address this shortfall. Forty-six percent of the Illinois companies that have received private equity funding since January 2002 had at least one in-state firm among their investors. According to the same study, Illinois-based venture capital firms invested in in-state companies three times more than their Midwestern neighbors. Yet Illinois’ rate of venture capital investment remains well below the national average.

Illinois Statistics

• Illinois-based venture capital funds manage about $8.5 billion of assets.
• Since January 2002, Illinois-based companies have received $969 million in venture capital funding.
• On average, two-thirds of venture capital investment is spent on payroll for jobs that have an average annual total compensation of $100,000, meaning that every million dollars of venture capital directly creates or sustains more than 6.5 skilled, high paying jobs. For each new job, another 2.2 opportunities are created indirectly.
• Using the above statistics as multipliers, IVCA estimates that the $969 million of venture capital received by Illinois companies since 2002 has directly created 6,300 jobs and indirectly produced an additional 13,860—a total of 21,160 jobs in the state.
• Statewide, venture capital makes a substantial economic impact. According to “Venture Impact 2004,” a study conducted by Global Insight for the National Venture Capital Association, 236,000 people are directly employed by Illinois companies that were originally venture backed. Venture-financed companies headquartered in Illinois generate sales of $34 billion per year.
• The same study’s nationwide findings showed that for each $1,000 of assets, venture-backed companies have roughly twice the sales, pay almost three times the Federal taxes, generate nearly twice the exports, and invest almost three times as much in research and development as the average non venture-financed company.