Create a Chicagoland-focused seed fund, with capital from local VCs, local Fortune 500 companies, and City and State government (managed by a professional seed fund manger).

Encourage government pension funds and university endowments to invest in Chicago focused early-stage funds.

Improve technology transfer and commercialization from universities (e.g., research quality, university entrepreneurship, commercialization of ideas).”

McKinsey & Company study prepared in cooperation with the Mayor’s Council of Technology Advisors – February 2001

You may have noted of late that there is considerable interest in the role of the public sector in providing seed capital for technology investments in Chicago and in Illinois. Indeed, one of the potential priority actions listed in the City of Chicago’s report on A New Economy Growth Strategy for Chicagoland is, “Create Chicagoland seed funds with capital from private and potentially public sources”.

You might be interested to know that Illinois, along with California, were progenitors in analyzing the potential for public pension funds to invest in alternative investment vehicles, such as venture capital, for the purpose of promoting economic development in their respective states.

In March 1981, former Illinois Governor James R. Thompson created the Illinois Study Commission on Public Pension Investment Policies. The recommendations of the commission were enacted into legislation and signed into law by the governor on August 25, 1982.

I was privileged to serve on this commission-and, as a result of my work, wrote some articles (one of which I co-authored with Tom Galuhn, now with Mesirow Financial) and gave some speeches on the role of public pension funds in venture capital and economic development activities in Illinois.

While nearly twenty years old now, these articles and speeches still give a good, sound rationale and methodology for public pension fund investment in alternative investment vehicles, such as venture capital, and might provide some intellectual underpinning to the current discussion regarding this topic.

I have two of these articles and one speech following this introduction that might be of interest to you on this issue. Please contact me, should you require any additional information.

Paul A. Dillon
Former Chairman, Committee on Alternative Investments, Illinois Study Commission on Public Pension Investment Policies
(1981-1982)