Union league club presentation may 2014

The Startup Climate In Chicago

It’s Hotter than Global Warming! How You Can It Make it Great

Rules For Success in Chicago

• Chicago is Unique-We aren’t Silicon Valley and don’t want to be Silicon Anything: Be Chicago!

• Innovate Around Strengths and Around MacroTrends

• Celebrate and Publicize Success!!• Don’t Dwell on or Ridicule Failure• Collaborate “Give Before You Get”• Take The Long View

What Does Chicago Have?

Seed Funding, Some Venture CapitalTalented People

Fortune 500 CompaniesUniversities, Culture, History

Roadblocks to Success

• Culture That Takes Tolls (Hand Out Not Up)• Want To Work With Friends-Friends Aren’t Here• Understanding Risk, And When to Take It• Fear of Failure; Risk is a 4 Letter Word• Risk Averse Corporate Customers• Money, Money, Money, Money• Violence, Not the Weather

Evidence of Success

• In 2013, Chicago startups raised over $1B in venture capital, up 169% from 2012

• 78 companies raised $1M in early stage capital (Means they will need second stage!!)

• 2 University of Chicago NVC companies exited for over $3.4B in valuation (Braintree 2007, GrubHub 2006) Fieldglass aquired by SAP for $1B

• Some Acquisitions of Startups by Local Companies

27 Total Investments: 2007(1), 2008(2), 2009 (1), 2010 (5), 2011(5), 2012(7), 2013(6)

In 2013 HPA did 6 new investments and 10 follow on rounds with 1 exit

Track Record: 3 failures, 5 exits and the 19 operating

How Startups See The World

How Outsiders See Startups

Characteristics of Successful Startups

When Successful Investors Invest?

“Startups are transforming our society. Over the past 100 years, we’ve gone from an industrial era to a post information era where the network is rapidly disrupting

the hierarchy and transforming the way we work and live.”

-Brad Feld, Foundry Group

Society is Rapidly Changing

Networks not HierarchiesOrganizations operate from top down. Software and technology enables them to be flatter, fleeter, and first.

Everything Will Be UnbundledOrganizations that are generalists will be disintermediated by focused competitors that engage specialized business silos

Everyone is a Node on the NetworkMobile technology makes everyone a node on the network they operate in. This has deep ramifications for companies and society

Software is Eating the WorldTechnological changes are changing the way we produce, interact and transact enabling flatter, customized chains of distribution and peer to peer networks.

“What’s different today is that we are seeing on a daily basis revolutionary new ideas, devices, and form factors, not evolutionary enhancements.”-Arvind Sodhani Intel Capital in the WSJ (Jan 1. 2014)

The MegaTrends

What Makes A Good Investment?

It’s All About Perspective

When Startups Are Successful

Would You Have Invested?

• Service that lets you profit from unused office space (2012 Desktimeapp.com)• Company that creates memorable experiences for customers and employees

(2012, KapowEvents.com)• Company that does performance reviews in 15 minutes (2014 JuvodHR.com)• Company that recycles children’s clothes? (2012, MoxieJean.com)• Social network for math and science nerds (founded 2012, Brilliant.org)• Company that provides free stock market charts (2008, Ycharts.com)• Company that finds you discounted parking (2007 ParkWhiz.com, 2011

SpotHero.com) • Company that uses an algorithm to provide fair market value for used IT

equipment and allows you to trade it (2011, MarkitX.com)• Company that manages public grants and employs big data analytics and

automates compliance (2013 StreamLinkSoftware.com)• Social network for Fishing (2013 Fishidy.com)

What Can You Do?

1. Become A Customer of A Startup-Even if it means taking some risk

2. Make an Introduction to a Potential Customer3. Mentor Entrepreneurs for FREE utilizing Ohours.org4. Give Startups Feedback5. Talk about the local Startup Community with your

friends, neighbors and work associates6. Invest via a local early stage VC fund or angel group7. Encourage local government to support startups by

becoming a customer and easing regulations