Written by: Dan Lyne
Director, Technology Development
World Business Chicago
A few weeks back, Matt McCall of New World Ventures hoisted up the Chicago flag during an interview with Fast Company’s Laura Rich entitled, “Why You Should Start a Company in…Chicago.” And for those wondering what it’s like to sit down with Matt to hear him make the case, believe me when I tell you that it is hard not to walk away feeling seriously energized, slightly amazed, and absolutely convinced that our good city’s tech scene currently sits at the epicenter of cool.
But make no mistake, Matt has some good data to support his gospel. And in typical Chicago form, our spot at the top is the direct result of hard work, big brains and a healthy influx of generational entrepreneurs mixing with smart seed capital to get the “ecosystem” kicked into high gear.
For starters, big tech companies are active and continuously spawning talent to nurture emerging companies and attract newcomers to do business here. Technology powerhouses, from NAVTEQ, CareerBuilder, Google, Orbitz, Morningstar, Motorola and countless others contribute muscle and minds to the greater good.
But, there is much more going on in this ecosystem. It’s hard to ignore the rocket-like rise of Groupon. In less than 18 months, Groupon has managed to snag over $170 million in venture capital from both coasts and as far as Russia. It is both innovating and acquiring its way to the summit at a feverish pace, stockpiling cash and knocking out competition in the race to the top of the social-minded and bargain-seeking collective of the online universe. But Groupon, and CEO Andy Mason, like many of his other “start-up” peers in Chicago, have had a bit of help along the way; Enter - Brad Keywell, Erick Lefkofsky and Lightbank.
Keywell and Lefkofsky have been fine tuning their entrepreneurial chops for decades, enjoying a relationship spanning back to their teenage years. As one might imagine, they’ve developed quite a unique partnership. And over the past 7 years or so, they have been quietly growing that partnership into a finely tuned mini empire, successfully seeding and nurturing company after company in the midst of what can generously be described as a turbulent economy.
The result is a microcosm of Matt McCall’s ecosystem in motion. At current, Keywell and Lefkofsky are all at once the founders-in-residence / investors / mentors of Groupon, InnerWorkings, Echo Global Logistics, Sprout Social, mediaBank, poggled and Where I’ve Been. All of these companies are at various stages in their growth cycle, some post-IPO, others in their initial round of financing. But they represent an incredible arc of almost 4,000 employees on an ever-growing landscape of burgeoning Chicago-based tech champions. On InnerWorkings and Echo Global Logistics, McCall muses, “It’s a classic Midwest play. Go after boring B2B industry with an internet infrastructure and disrupt it.”
So as to keep the disruption in place, Keywell and Lefkofsky have plans to invest in and mentor as many as 10 companies per year through a new $100 million fund called LightBank. "The untapped demand around here is nuts," Lefkofsky says. "Even if we don't have success, somebody will. We are going to stay focused on mining the potential of this area.”
And, apparently many others see that same potential, as a ton of new programs and companies have come online in full force throughout Chicago, many focused on bridging entrepreneurs with mentors, seed capital and customers, and others focused on celebrating the tech leaders of today and the upcoming class of new minds for tomorrow.
Although a non-exhaustive list, here are a few to keep your eyes on:
- Start-up Capital - Up to $20,000 in seed funding and access to other angel and institutional investors
- Expertise - Rigorous educational forums and dedicated mentors
- Connections -Access to other Excelerate founders, experienced entrepreneurs, seasoned investors, corporate partners, universities, and legal and business services
- Sandbox Ventures: Invests in seed stage businesses in a variety of industries, focusing primarily on software applications and technology-enabled businesses. Typical initial investment ranges from $50K to $2M. Everyone at Sandbox is an entrepreneur and understands how hard it is to build a new business. They work with portfolio companies to be helpful in any way possible, whether through a network of contacts, industry expertise, or their experience building successful businesses.
- Incubator: The Sandbox Industries Incubator is in the business of creating, developing and investing in new businesses. Sandbox employs a comprehensive business development process that takes new businesses from conception to successful operation and liquidity.
- About: The ITA | TechNexus facility provides a home to the local technology community; a meeting space for member-companies and guests, office space for small to medium sized firms, and a general gathering venue, used by a variety of groups focused on growing the technology community.
- About: ScaleWell is a catalyst for startup traction. By providing one team or an individual entrepreneur with a $1000 grant and co-working space on a quarterly basis entrepreneurs are encouraged to explore important questions like: How many customers can be acquired for $1000 or how far will a small sum move a company toward profitability? The best way to develop answers to these questions is to DO IT. Build the product, get customers, and collect metrics along the way.
The small amount of capital ScaleWell injects into a startup takes the company to its next milestone or iteration on its business plan. They call it Iterative Capital, just enough money, motivation, and support to successfully iterate in a startup.
- Mission: To better connect, educate and amplify the startup technology signal and have fun doing it.
TECH cocktail is a media & events company started in Chicago as a community building event, TECH cocktail is aimed at helping build and strengthen local tech start-up communities both online and off. The informal gatherings have garnered big traction from companies in search of good tech minds, entrepreneurs seeking partners, funding or even acquisition.
- About: Spearheaded by the great leadership at the Metro Chicago Information Center, this program and event brings together the big minds and developers mashing up and collaborating with open data.
- Company Overview: Winning students are recognized at a ceremony attended by the award judges who are leaders in Illinois technology, and distinguished technology educators. Winners and nominees have access to a range of programs designed to help students develop necessary skills to enter the workforce and an opportunity to network with potential employers. Nominations will open in early February
- Mission: 50 For The Future, sponsored by the Illinois Technology Foundation, recognizes the top technology students pursuing post-high school degrees and certification in Illinois.
- midVentures25 is a demo day and conference that showcases 25 of the hottest technology startups for an evening of pitches, ideas, networking and deals. The startups demo their products and services to a room full of over 250 investors, entrepreneurs and the Chicago tech community.
- About: Launched to identify, prepare and connect high-growth entrepreneurs.
- Industry Cluster Forums: At the broadest level of community outreach, CAP will sponsor industry conferences that will engage 1,000 entrepreneurs and business professionals.
- “CAP 200" Circle of Entrepreneurial Ventures: The program will assist 200 entrepreneurs who are doing business in target clusters with educational events, coaching on near-term sales and financing opportunities, as well as network introductions, with an emphasis on mentoring and resource sharing.
- “CAP 20" Circle of High-Growth Entrepreneurial Ventures: The program will provide strategic planning and mentoring assistance to 20 of the most promising ventures in target industries.
- About: The event brings together the local entrepreneurial community for a weekend to meet new people, have fun, and start companies. Over the weekend, groups of people go from idea to proof‐of‐concept and creation of a demo. Startup ideas are submitted prior to the weekend. Startup teams are organized based on popularity of idea and experience needed to get the startup to market. Teams present before a panel of guest judges with the winner receiving a package of cash and services.
- About: Chicago’s annual celebration of vitality and innovation in the technology community. CityLIGHTS provides an opportunity to recognize some of the leading technology companies and individuals in our community whose innovation and success are driving change. The Awards Gala is also an opportunity for the industry to connect with other technology executives, entrepreneurs, corporate executives and investors in the region for an evening of dining, socializing, celebration and partnership.
Clearly, the Chicago tech community is benefiting from some huge momentum these days. Leadership is taking the reins big time, with national platforms being shared by minds like Jason Fried (37signals), Adrian Holovaty (EveryBlock), Matt Moog (Viewpoints), Chris Gladwin (Cleversafe) and now...Andy Mason (Groupon). Our big lifters remain steadfast: J.B. Pritzker and Matt McCall with New World Ventures, Lon Chow with Apex Venture Partners, and the myriad other angels and early-stage investors and networks that are peppering Chicago with intelligent capital and a fleet of experienced and supportive mentors.
Our challenges are not insignificant, but all signs point to a Chicago tech community that has matured to a critical stage. Our mission is to continue to work with one another, hold the flag high, encourage new leadership, and above all, participate.