Illinois is a National Leader in the Business of Investing Private Dollars into Private Companies

Illinois is a National Leader in the Business of Investing Private Dollars into Private Companies

June 22, 2016

Two recent research reports confirm that Illinois is a great place for both venture capital (VC) and private equity (PE) investing.  Simply put, venture capital investments are generally made in high growth early stage companies while private equity investments target more mature companies that can benefit from an inflow of capital and new management tools and strategies to accelerate growth.

A VC focused Pitchbook report  recently looked at which companies that had a liquidity event (a merger, purchase, sale, or initial public offering) had the best return to investors. The data indicates that 81 percent of the companies that had a liquidity event returned 3 to 10 times the amount invested.  This means that if a company received $100 from investors, when the company was sold or went public, those investors received between $300 - $1,000.  A whopping 45 percent of Chicago venture capital-backed sales produced returns of more than 10 times the total amount of money invested!

Illinois currently has 494 venture-backed companies headquartered in our state.

A report released by the American Investment Council shows that private equity firms invested over $625 billion in more than 3,700 U.S.-based companies in 2015 alone. And which state topped the rankings? For the first time ever, it was Illinois, with over $94 billion invested in 193 Illinois companies last year alone.  

Currently, Illinois has 672 PE-backed companies in our state.

Of the top 25 deals referenced in the report, 6 included Illinois Venture Capital Association (IVCA) member firms as either investor or seller.

Entrepreneurship has long been a symbol of the best of the American spirit. Innovation and reinvention is core to the business of investing in in private companies.  Whether it is a new-to-the-world company or a mature company shifting to a new way of doing business, entrepreneurs must seek partners who are willing to take the risk of providing capital, financial resources, and managerial expertise to a burgeoning enterprise.

With the Illinois economy facing so many challenges, we need to grow and strengthen our investment base. For entrepreneurs and job creators, venture capital and private equity firms serve as important partners for long-term, responsible investing. Fortunately, this type of capital has grown substantially in recent years throughout our nation.

Illinois businesses which partner with these private investment firms receive more than just money; they receive committed, long-term partners. Investing partners develop strategic business plans, sit on boards, and work to strengthen the companies they own over many years. These partnerships are long-term endeavors that promote sustainability and drive growth and strengthened operations.

From an entrepreneur's idea to an established business, venture capital and private equity firms are committed to growing Illinois’ economy. The partnerships created between these firms and Illinois’ companies are ones that will continue to bolster the American entrepreneurial spirit and give rise to new innovations in the future.