Startup Guide: Chicago

Startup Guide: Chicago Compiled by Adam London + Marina Dedes

Photo credit: The Chicago Neighborhood Project

@al0nd0n // @marinadedes // @lightbank

Startup Guide; Chicago

Let’s start with a few quotes to set the tone

I think Chicago could be a great place for building bootstrap companies; long-term companies; companies that are focused on selling stuff – revenues and profits. That represents the City of Big Shoulders, the Midwest, the whole ethos here.

- Jason Fried (Founder & CEO 37Signals)

Unlike New York, and its connection to the financial sector or Los Angeles with the entertainment sector, Chicago’s economy is built on

its diversity. That allows us to be a world leader in many different areas all at once.

- Mayor Rahm Emanuel

There are enough successes now in our community that young entrepreneurs can look at those successes and say to themselves I can absolutely do it here, I can do it here in a unique way that I probably couldn't do it on the West Coast, and time to go, let's do it.

- Brad Keywell


Who we are

Adam London

@al0nd0n

Marina Dedes

@marinadedes

§  Associate at Lightbank §  Associate at the Boston Consulting

Group §  Founder: Letters to Success

(education-focused, non-profit) and @TheLunchRead

§  University of Michigan’s Organizational Studies Program

§  VentureUP and Chicago Tech Academy Launch boards

§  VP at Lightbank §  Senior Associate at Duff & Phelps §  B.S. Materials Science and

Engineering, University of Illinois at Urbana-Champaign

§  Chicago Tech Academy’s Launch Advisory Counsel, 1871 Mentor, VentureUp

§  Junior Board of Lawrence Hall Youth Services


The Table of Contents

A note to start Over the past decade, the Chicago startup community has seen incredible growth. More than ever, it’s possible to build a business anywhere and Chicago has become a uniquely vibrant tech community. The Windy City has a phenomenal combination of talent, experience (larger startups / corporations), and financing and service providers. We’re often asked (by visiting investors, recent college graduates, new founders) for advice navigating the growing Chicago community. This interest intensified in recent years with three highly visible—nearing a billion dollars each—liquidity events (Groupon, Grubhub, and Braintree). "The following is an attempt to write all that navigational information down. While we tried to be exhaustive, many wonderful people, companies, and places will surely be left out. We hope to revisit, revise, and update the guide as the community continues to grow.

-Adam and Marina

1) About the Windy City

Startup Guide: Chicago by Section

2) Who’s here?

3) Where to start?

4) How will we scale?

A bit of background information on the history of the city / tech community and the current state of the market.

A guide to the startups actively building businesses here - who they are and where they work.

A collection of lists highlighting things to know when getting involved with the community or starting a business—places to learn, collaborate, study, and build, etc.

The angels, VCs, and large companies (strategic investors, strong corp dev groups, etc.) who call Chicago home.


Section 1: About the windy city


History of innovation and technology

Many people remember the Great Chicago fire for the destruction it caused. In reality, after the 1871 fire, architects and entrepreneurs flocked to Chicago to rebuild the city. Centrally located, the city was a major transportation hub and center of business for agriculture, trading, and industrial goods companies.

Case Study: Chicago has deep roots in technology

In 1928, the Galvin Manufacturing Corporation (now, Motorola) began making radio-related products, including the first walkie-talkie and the first commercially successful car radio. Following the success of the Motorola Radio, the company went public in 1943. In 2012, it was acquired by Google for $12.5b


A community that builds

And many big Chicago businesses have roots in tech

Chicago has always built big companies

-  Illinois is home to 30+ Fortune 500 companies (4th behind California, Texas, and New York)

-  Many of those Fortune 500 companies are located in the heart of downtown Chicago: ‘The City That Works’ { A few examples… }

Snapshot of the market


According to Built in Chicago, 367 startups launched in Chicago in 2012—that’s 1 every 24 hours.

40,000 people work for 1,500+ digital companies in 2013, an increase of 21% over 2012. Mayor Rahm Emanuel wants to double that number.

Built In Chicago’s 2012 Digital Startup Report:

$698m+ from exits with disclosed

dollar amounts

26 acquisitions 1 IPO

Fund

ing

A peak at 2013, a year of incredible growth.

§  39 companies raised $265m, incl. Cleversafe’s $55m Series D §  44 new startups founded, 4 companies acquired §  $864m dollars in exits (led by Braintree’s $800m exit to Ebay)

Exits

In Q3 of 2013…

59 companies raised >$1m in 2012, a 34% increase over 2011

$391m raised from VCs

and angels in 2012 50+ VC firms

outside of Chicago invested in local companies

A link to the Midwest

Detroit

Ann Arbor

Columbus

Des Moines

Minneapolis

Milwaukee Madison

Kansas City

Cincinnati

Omaha

A sample view of a few startup friendly funds, co-working spaces, accelerators, etc. scattered throughout the Midwest…


St. Louis

Often referred to as Silicon Prairie, the Midwest has a booming startup ecosystem. Chicago is located at the center of many great Midwestern cities committed to growing innovation and technology.


Section 2: Who’s here?

A few notable (or, sizable) Chicago companies + exits


A few Chicago companies on the rise (look out for the next exit)


Note: An advantage to being part of a fast-moving industry and quickly growing tech community is that startups are launched (and gain significant traction) every day. This list is just a glimpse into a few of those companies that are known to have achieved impressive metrics and / or raised significant financing.

Case studies: Deep dive on a few companies on the rise


Note: We picked two companies to profile so that you wouldn’t have to stare at logos all day. Obviously, we’re slightly biased and know a few of these better as investors but tried to pull information together only based on public sources.

§  Sprout Social was founded in Chicago in 2010 as a, ‘management and engagement platform for social business’

§  Software is used by leading international brands, such as: McDonalds and Yahoo! §  Series A from Chicago investors (Lightbank), then raised a $10m Series B from NEA

§  BrightTag was founded in Chicago in 2009 and is a leading marketing technology platform, allowing brands to connect and act on cross channel customer data

§  Named one of 2011’s 50 most innovative tech co’s by Venture Wire / Dow Jones §  Raised money from local + other investors: Pritzker Group, TomorrowVentures, Baird

Capital, I2A, EPIC Ventures, and Yahoo Japan!

A glimpse at more great teams currently building in the Windy City


Pro-tip: Check out Built in Chicago, Crafted in Chicago, or Crunchbase for frequently updated lists of Chicago startups.

Where do all these startups work?


Spotlight on: two neighborhoods—River North and the West Loop—with growing tech communities

Map courtesy of Built In Chicago

§  Google announced move to former cold storage warehouse by 2015

§  Home to: Threadless, Sandbox Industries, Crowdspring

§  The stretch of the Brown Line (from Merch Mart to Chicago) is home to many Chicago startups / co-working spaces

§  1871, Starter League, Chicago Ventures, and Motorola Mobility call the Merch Mart home

§  Spot Hero, Trunk Club, and countless others are spread along the Brown line

§  Groupon, Lightbank, and many early stage co’s are based out of 600W near the Chicago stop


Section 3: Where to start?

Getting to know the community through events


For many folks, events / organizations / meet-ups / etc. function as a great starting point to understand a community.

The Chicago startup community is powered by, but much larger than, the entrepreneurs and teams building great products and businesses. The following is a glimpse at a few of the key organizations and events in the community—a starting spot for those looking for ways to learn more, get involved for the first time, or build deeper relationships in the Windy City à

§  Technori Pitch §  Entrepreneurs Unplugged §  1871 Chicago Founder Stories §  TechWeek §  Chicago Ideas Week §  StartupWeekend Chicago

§  Built In Chicago §  Refresh Chicago §  Chicagoland Entrepreneurial Center (CEC) §  Illinois Technology Association §  Illinois Venture Capital Association

§  Chicago Tech Meetup §  Tech in Motion §  ChicagoRuby §  Tech.li §  TechCocktail

§  ITA CityLights §  Built In Chicago Launch §  Uncubbed §  Social Media Week §  Health 2.0 §  CUSP

Events

Meet ups, + other

groups

§  Moxie Awards §  Momentum Awards §  Chicago Innovation Awards

Where to learn (on getting a tech education in Chicago)


Education “Where to learn”

So you want to building something? Chicago has an abundance of places / resources to help you out at the earliest stages – the following is our round-up broken down into phases: 1) Education 2) Ideation 3) Incubation

- ‘The Garage’

- Innovation Center

- Enterprise Works - Health, Technology, & Innovation

- UI Labs

- Chicago Innovation Exchange

- Polsky Center for Entrepreneurship and Innovation

Tech in traditional centers of education:

New school

programs:

- Learn to code, design, and ship web apps at this beginner-focused software school (ft. classes in: HTML/CSS, JavaScript, Ruby, Visual design, UX design) - 10 week digital design school focused on UX, visual design, and front-end development, (HTML/CSS/JS) - ‘Career accelerator’ helping students gain the skills, mindset, and network to success in startups (ft. tracks in sales, technical marketing, web dev., product / design)

- ‘Full-time, 8-week iOS bootcamp to start careers as an iOS developer

- ‘9-week intensive program teaching professional web development using Ruby on Rails

Where to think (or, a list of great early stage work environments)


Ideation “Where to think”


Co-working spaces

A more casual

atmosphere (aka the

coffee shop)

Buzz Kill (Wicker Park)

A list of some of our favorite, Wifi-providing coffee shops in Chicago.

NextDoor (Lakeview)

Dollop (Multiple)

Wormhole (Wicker Park)

Intelligentsia (Multiple)

Heritage General Store (Lakeview)

Caffe Streets (Wicker Park)

Star Lounge (Humbolt Park)

Where to build (early stage incubators and accelerators)


Incubation “Where to build”


Searching for a Chicago-based incubator to accelerate your company / idea? Here are a few ideas of local incubators and

accelerators.

Resources to help your company grow (part 1)


Now that you’ve started building a product or business, you might need a bit of help. The following are a few serviced providers we’ve used at Lightbank.

And as that business grows, you’ll likely need to find (more) talent. In addition to Lightbank’s internal talent scout, we’ve seen the following agencies recruit employees for strong startups across Chicago.

(Law) (HR) (Accounting) (Insurance) (Hardware)

Tech / Design-centric recruiting Technology and General recruiting

(We have an in-house talent team – so if you’re looking for a

job: reach out!)

Resources to help your company grow (part 2)


As you grow, you’ll want to get the word out. Here are a few Chicago-specific tech publications.

And if you need help reaching out to, or strategizing about, media outreach – here are a few local, tech PR firms.

Contact: John Pletz Contact: Amina Elahi Contact: James Janega Contact: Matt Present

Early-stage PR agencies Later stage (or bigger budget) agencies


Section 3: How to scale?

A non-exhaustive list of Chicago-based sources of capital


Angels Seed Series A & B Growth

There’s more to Chicago than (just) early stage tech financing


Here are a few examples—and a lot of logos—of larger local companies with active strategic funds, business development groups, and corporate development units.


Questions? Additions? Things that we missed? Reach out à Adam [at] Lightbank + Marina [at] Lightbank


It is hopeless for the occasional visitor to try to keep up with Chicago—she outgrows his prophecies faster than he can make them. She is always a novelty; for she is never the Chicago you saw when you passed through the last time.

- Mark Twain (Life on the Mississippi)

Sources


Big thanks to the entire Lightbank team* for their help, thoughts, and feedback.

Also, credit is due to many sources for information used

throughout the presentation, including:

The Chicago Neighborhood Project, Built In Chicago, Crafted in Chicago, RedRocket Venture Blog, The

Economist, Blackline Review, The Chicago Tribune, and Fast Company