Reprint permission from the June 4, 2001 issue of Crain's Chicago Business.
Chicago beat out Denver and Dallas and won the contest for Boeing Co.'s global headquarters partly because of an ambitious financial package valued as high as $64 million.
But more than bragging rights are at stake. The aerospace giant represents an enormous economic development opportunity for Illinois and a huge catalyst for entrepreneurial growth here. And savvy local officials are now poised to lure a slew of other big technology companies, too.
The benefits of the bargain seem obvious, especially since the state's biggest investment in Boeing will be Economic Development for a Growing Economy (Edge) corporate income tax credits worth up to $28 million, directly tied to the amount of state income taxes its employees will eventually pay. Yet some Illinois legislators still argue that the state has no business making "high-risk" investments, no matter how much promise they show.
Courting Boeing should have taught old-school legislators a new calculus. Dipping into the state's treasury to promote business makes good sense, and policymakers would be smart to build on the strengths of the Boeing deal.
The positive impact of the Boeing incentives on entrepreneurship and the example they set deserve special mention.
Buried in the long list of perks that state and city officials awarded Boeing are "technology challenge grants" of up to $500,000 for seed money the first dollars invested in a venture after family and friends have been tapped to facilitate the company's research relationships, including those with the University of Illinois.
The technology challenge grant program helps secure federal research and development projects for Illinois, identifies and develops technology programs capable of being commercialized and establishes initiatives to develop, transfer or commercialize new technologies.
The grants' importance was not lost on Boeing and ought not be lost on any of our legislators. State funds invested to support tech entrepreneurs can pay extraordinary dividends for all of us.
Take the Illinois Technology Development Bridge (TDB). TDB is a partnership of the Illinois Development Finance Authority the state's premier issuer of industrial development revenue bonds and the Illinois Coalition a non-profit organization of leaders in business, government, academia and labor dedicated to encouraging technology-based economic development.
TDB provides early-stage equity financing for applied research, development, commercialization, testing or initial marketing of a technology, product, process or invention. It matches private investments in privately owned enterprises that are operated in Illinois and have fewer than 50 employees.
Since its launch in 1996, TDB reports that it has invested $3.6 million in 14 companies and boasts an impressive internal rate of return of 37.65%.
Yet despite its results, TDB is woefully underfunded.
Let's follow Boeing's unprecedented lead and help high-tech companies in Illinois realize their promise and compete successfully in world markets by expanding their access to the state's capital.
Marc J. Lane is a Chicago lawyer and financial planner and an adjunct professor of law at Northwestern University School of Law. His recently published book is "Advising Entrepreneurs: Dynamic Strategies for Financial Growth" (John Wiley & Sons).
Copyright © 2001 by Crain Communications Inc.