ILLINOIS - Chicago Venture Summit€¦ · Pitchbook’s 2015 Illinois Venture Capital in Review tells a great story about the key role Chicago entrepreneurs play in the ... ($M) Round

VENTURE CAPITAL

VC ACTIVITY BY STAGE, MOST-FUNDED COMPANIES

ILLINOIS

IN REVIEW 2015

A DECADE HIGH IN CAPITAL INVESTED

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Credits & ContactPitchBook Data, Inc.

JOHN GABBERT Founder, CEO

ADLEY BOWDEN Vice President

Market Development & Analysis

ContentGARRETT JAMES BLACK Senior Analyst

BRIAN LEE Data Analyst

JENNIFER SAM Senior Graphic Designer

Contact PitchBook pitchbook.com

RESEARCH

[email protected]

EDITORIAL

[email protected]

SALES

[email protected]

MAURA O’HARA

Executive Director, IVCA

www.illinoisVC.org

COPYRIGHT © 2016 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systems—without the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.

Contents

Welcome Letter 3

Introduction 4

Activity Overview 5

Activity by State 6

Activity by City & Sector 7

Activity by Stage & Most-funded

Companies8

Exits Overview 9

Most Active Investors in Illinois 10

2 ILLINOIS VENTURE CAPITAL 2015 IN REVIEW

http://www.illinoisvc.org/

http://pitchbook.com/

mailto:[email protected]



Maura O’Hara

Executive Director, Illinois Venture Capital Association

www.illinoisVC.org

With thanks to our partners at PitchBook (which recently secured $10 Million in Series B Funding from Chicago investor

Morningstar), we can look back at a strong year for Great Lakes entrepreneurs, VCs and limited partners!

Pitchbook’s 2015 Illinois Venture Capital in Review tells a great story about the key role Chicago entrepreneurs play in the

Great Lakes region. With 40% of all 2015 Great Lakes venture dollars invested in Chicagoland companies, we are truly at

the vortex of Midwest venture investing.

The 2015 PitchBook report also clearly describes the impact of private investors in private companies and the sustainability

of the ecosystem we have developed over the past 15 years.

• Venture-backed exits hit an all-time high. This is important for our local ecosystem because as money is returned to

the Limited Partners that invest in venture funds, the dollars can be “recycled” into more/new investments.

• For growth equity (or later-stage VC) companies that have figured out the business model and are ready to rapidly

expand, 2015 was a banner year, with the second-most late-stage deals of the decade, tying 2011’s tally.

• Early-stage VC & angel/seed investments in Illinois were nearly 80% of deal flow and 50% of overall capital invested in

2015, thus ensuring a strong future flow of growth equity opportunities.

IVCA is proud to count Illinois’ most active VC investors (page 10) as members.

• Pritzker Group Venture Capital

• Hyde Park Angels

• Hyde Park Venture Partners

• OCA Ventures

• Dundee Venture Capital

• MATH Venture Partners

Welcome LetterA Great Time for Midwest Entrepreneurs


http://www.illinoisvc.org/

Introduction MAKE WAY FOR

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One of the more beneficial consequences of the venture capital boom over the

past half-decade has been the encouragement of more localized entrepreneurial

ecosystems. As the venture industry was awash in capital, investors naturally

sought outside of typical geographic realms for investment opportunities, while

limited partners seeking greater exposure to private equity also diversified their

range of commitments to domestic firms. At the same time, angel investing

grew more widespread and innovative with increased incidence of syndicates

and other, similar structures. These factors combined led to ramp-ups in venture

capital activity in fledgling startup hubs such as Denver and Austin, but also

helped promote higher rates of investment in already-substantial metros such as

Chicago.

The upshot of all the above, of course, along with the much-publicized wave of

late-stage round size and valuation inflation, is the massive rise in sums invested

as well as completed venture financings across the U.S. as a whole, and in nearly

every single U.S. region. 2015 may have been the high tide of venture investment,

given what has occurred across both private and public markets since, but it

is instructive to look back and break down the heights of VC trends, assessing

what appears most sustainable and consequently most likely to remain in

place as venture activity cools. Accordingly, in the following report we examine

VC investment across the Great Lakes region as a whole, as well as in Illinois

and the Chicago metro area in particular, seeking to provide context for your

decisionmaking over the coming months.

GARRETT JAMES BLACK

Senior Analyst




Although activity declined marginally, 2015 hit a new high in VC invested

Great Lakes VC activity by year

Record for VC investedFinancing overview

Source: PitchBook

Source: PitchBook

Chicago experienced a sharper downturn than the region as a whole

Chicago metro VC activity by year

$1.1

$1.6

$2.2

$1.2

$1.9

$3.1

$2.4

$2.0

$3.1

$3.2

198

271 292320

398

562

671712

741708

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Overall value ($B)

Round count

$0.4

$0.4

$0.9

$0.3 $1

.1

$1.9

$0.8

$0.6

$1.4

$1.3

59 56

80

48

117

150

183

212234

189

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Deal value ($B)

Deal count

All in all, 2015 was likely the year the

high tide of U.S. venture capital

investment peaked, at least in terms

of dollars invested. 2014 was the year

of peak activity in terms of closed VC

financings, with 2015 already seeing a

bit of a decline—albeit, not by much—

yet a crest in capital invested. The

Great Lakes region was no exception,

with a massive $3.2 billion invested

last year across 708 financings. The

former sum is a clear record for

the decade, while the 708 closed

rounds, although down from a peak

of 741 the prior year, is still more than

robust. Delving deeper into last year’s

numbers, as may be suspected by the

slight decline in activity coupled with

strong figures for capital invested,

the number of late-stage deals in

the Great Lakes region remained

essentially flat between 2014 and 2015.

In addition, there were more deals in

the $10 million to $25 million range

last year than in any other year dating

back to 2010. One might suppose

that the Chicago metro area drove

much of that investment, what with

the well-known effects of tight-knit

venture networks in dense urban areas

helping concentrate investment in

metro areas. At $1.3 billion, the total

sum invested in startups based in

Chicago was considerable, particularly

relative to the region as a whole, yet

it’s interesting to note the plunge

in closed rounds from 2014 to 2015.

That is attributable in part to timing,

as perhaps VCs funded most of the

companies they deemed viable in 2014,

and, as round prices and valuations

grew loftier, naturally slackened their

pace of investment.

Essentially, that also reflects one

of the key truths to note about

regional venture hotspots: They are, in

some ways, more subject to national

trends birthed in Silicon Valley than

even the Valley itself. For example,

although Chicago may not see venture

round sizes rise as high, any potential

downturn may unnerve outside

investors even more, consequently

leading to a decline in outside capital

and leaving primarily domestic

investors active. It remains to be seen

if this will bear out, in the shakeout or

pause in the U.S. venture industry that

has been occurring in the past several

months, but it is an important point to

bear in mind. What’s lucky for Illinois

and the Great Lakes region as a whole

is there is a fairly healthy and robust

local venture ecosystem in place,

which could sustain numbers.


Activity by stateIllinois accounts for the bulk of Great Lakes activity

Illinois VC activity by year

$0.5

$0.6

$1.1

$0.3

$1.1

$2.0

$0.9

$0.7

$1.4

$1.4

67 66

91

53

125

170

206

234259

222

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Overall value ($B)

Deal Count

Indiana’s round counts were relatively flat

Indiana VC activity by year

Source: PitchBook

$24.

4

$136

.0

$130

.4

$312

.5

$145

.2

$222

.1

$146

.9

$72.

9

$240

.0

$134

.6

13

29 27

51

35

5348

51

6663

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Overall value ($M) Round count

Source: PitchBook

Michigan numbers were skewed by a few huge rounds

Michigan VC activity by year

Minnesota remained remarkably robust

Minnesota VC activity by year

$83.

6

$96.

6

$162

.8

$129

.0

$144

.0

$143

.7

$336

.3

$240

.0

$262

.6

$410

.520 24

3741

5463

89

115

95 99

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Overall value ($M)

Round count

$328

.2

$479

.0

$488

.3

$338

.9

$220

.9

$405

.3

$424

.2

$472

.6

$551

.7

$586

.0

43

6351

61 64

8893 88

116108

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Overall value ($M) Round count

Ohio chalked up another strong year overall

Ohio VC activity by year

A clear high of the decade for Wisconsin in VC invested

Wisconsin VC activity by year

$65.

7

$221

.6

$182

.0

$152

.5

$208

.6

$208

.8

$533

.3

$433

.1

$469

.9

$500

.2

37

59 59

87 88

112

155 161

139 143

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Overall value ($M)

Round count

$69.

5

$79.

7

$70.

4

$27.

3

$124

.7

$142

.4

$128

.4

$112

.8

$121

.5

$208

.0

18

3027 27

32

7680

6366

73

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Overall value ($M)

Round count

Source: PitchBook

Source: PitchBook

Source: PitchBookSource: PitchBook


Activity by city & sector in IllinoisAs to be expected, Chicago dwarfs the competition

Illinois VC activity (#) by year and city

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Skokie

Schaumburg

Northbrook

Evanston

Chicago

Champaign

Skokie made a bit of a blip in terms of dollars invested

Illinois VC activity ($M) by year and city

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Skokie

Schaumburg

Northbrook

Evanston

Chicago

Champaign

Interestingly, software’s relative percentage declined

Illinois VC activity (#) by year and sector

But in terms of capital, software still predominated

Illinois VC activity ($M) by year and sector

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Commercial Services

Consumer Goods &Recreation

Energy

HealthcareSvcs/Supp.s/Sys.

IT Hardware

Media

Other

Pharma & Biotech

Software0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Commercial Services

Consumer Goods &Recreation

Energy

HealthcareSvcs/Supp.s/Sys.

IT Hardware

Media

Other

Pharma & Biotech

Software

Source: PitchBook Source: PitchBook

Source: PitchBook Source: PitchBook


Activity by stage & most-funded companies

Angels & seed investors have been increasingly active

Illinois VC activity (#) by year and stage

Early stages captured an impressive share of VC in 2015

Illinois VC activity ($M) by year and stage

Source: PitchBook

Source: PitchBook

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Angel/Seed Early-stage VC Late-stage VC

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Angel/Seed Early-stage VC Late-stage VC

Firm nameTotal raised ($M)

Groupon $1,102.2

Avant $654.2

Elevance Renewable Sciences $282.9

Gogo $276.1

LanzaTech $186.4

Naurex $161.9

Mu Sigma $133.8

SilkRoadTechnology $130.1

ExteNet Systems $128.4

SMS Assist $107.0

Coskata $104.5

Cleversafe $92.2

NanoInk $88.0

Chromatin $83.4

GrubHub $81.3

Raise Marketplace $76.8

AveXis $75.0

Brauvin Real Estate $74.5

Health Intelligence Company $70.6

Braintree $70.2

Most-funded companies based in Illinois

since 2010

Source: PitchBook

Angel & seed activity has increased in both dollars invested and rounds closed by a significant amount.

Note: PitchBook takes into account multiple criteria to classify

financings, including company age and investor type, and

accordingly certain fundings have been excluded from this list.


Skewed by outliers, venture-backed exits hit a new highExits

Source: PitchBook

Several huge deals pushed Illinois sums exited to an unprecedented high

Illinois venture-backed exit activity by year

$0.7

6

$0.4

9

$0.3

0

$0.1

2

$0.7

4

$1.1

5

$2.3

7

$1.5

7

$0.7

1

$4.3

3

12

16

11

7

17

13

19

2219

24

0

5

10

15

20

25

30

$0

$1

$1

$2

$2

$3

$3

$4

$4

$5

$5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Exit value ($B) # of exits closed

To little surprise, corporate buyers are VCs’ primary route to liquidity

Illinois venture-backed exit activity (#) by year and type

Source: PitchBook

0%

20%

40%

60%

80%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Acquisition IPO Buyout

Illinois VC exit activity (#) by year and sector Illinois VC exit activity ($M) by year and sector

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Commercial Services

Consumer Goods &RecreationEnergy

HealthcareSvcs/Supp./Sys.IT Hardware

Media

Other

Pharma & Biotech

Software0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Two billion-dollar-plus exits helped

produce the $4.3 billion total of exit

value in 2015: IBM’s buy of Cleversafe

and ExteNet Systems’ buyout by

Stonepeak Infrastructure Partners,

Goldman Sachs and others. Allergan’s

buy of Naurex for $560 million in

August also stands out, primarily as

it accounts for the big boost in total

exit value for pharma & biotech last

year. As such deals indicate, corporate

buyers remain Illinois VCs’ primary

route to liquidity, as has been the

historical case, particularly with the

IPO window essentially closing in the

back half of 2015.


League tables

Firm name Deal count

Pritzker Group Venture Capital

14

Hyde Park Angels 13

Serra Ventures 9

Chicago Ventures 8

Hyde Park Venture Partners 7

OCA Ventures 6

KGC Capital 6

Tribal Ventures 5

Dundee Venture Capital 4

Pallasite Ventures 4

Lightbank 4

Advantage Capital Partners 4

2015’s most active VC investors in

Illinois overall

Source: PitchBook


Hyde Park Angels 5

Serra Ventures 4

New Media Ventures 2

G2T3V 2

KGC Capital 2

NewGen Venture Partners 2


Marcin Kleczynski 2

Tribal Ventures 2

Kapor Capital 2


Illinois at seed/angel

Source: PitchBook



6

OCA Ventures 3

Chicago Ventures 3

Hyde Park Angels 3

MATH Venture Partners 2

Amicus Capital 2

Great Oaks Venture Capital 2

Jumpstart Ventures 2

KGC Capital 2



Illinois at Series A

Source: PitchBook



3

Chicago Ventures 3

Serra Ventures 2

Draper Associates 2

Greycroft Partners 2


Illinois at Series B

Source: PitchBook


Gates Ventures 5

Advantage Capital Partners 3

Pritzker Organization 3

Bessemer Venture Partners 3

Merrick Ventures 3


Illinois at Series C

Source: PitchBook



RA Capital Management 1

WhiteRock Capital Partners 1

August Capital 1

Balyasny Asset Management 1

Plymouth Ventures 1

Beringea 1

Rock Springs Capital 1

Deerfield Management 1

Tiger Global Management 1

DFJ Growth 1

Foresite Capital Management 1

QVT Financial 1

General Atlantic 1

Roche Venture Fund 1

Hyde Park Angels 1

RRE Ventures 1

RTW Investments 1

T. Rowe Price 1

Tavistock Group 1

J.P. Morgan 1

Venrock 1

Janus Capital Group 1

Adage Capital Management 1

JDH Investment Management 1


Illinois at Series D or later

Source: PitchBook

Note: For better clarity, these league tables only rank

institutional investors’ activity, so angel investors’

tallies are excluded.


Contact PitchBook

pitchbook.com

RESEARCH [email protected]

EDITORIAL [email protected]

SALES [email protected]





Documents

ILLINOIS - Chicago Venture Summit€¦ · Pitchbook’s 2015 Illinois Venture Capital in Review tells a great story about the key role Chicago entrepreneurs play in the ... ($M) Round