Chicago has a population of 2.5 million with a GDP of $670.5 billion, making it the third largest economy in the US. It received $2.19 billion in VC funding in 278 rounds in 2020, concentrated in fintech, education, healthcare, logistics, and AI/big data. While the startup ecosystem has seen success, experts note challenges including conservative midwest investors, a lack of support for experimentation, and limited later-stage funding opportunities. The report concludes Chicago has an innovative startup scene, especially in food and adtech, but is outpaced by other cities in total startups and VC investment annually.

1. Rebel One Ventures
Startup Ecosystem Analysis
Chicago, IL
By
Sergio Marrero (GP), Vrat Joshi (Analyst)
1

2. A Bird’s Eye View
City Snapshot
2
Population | 2.5M (9.7M Metro)
Unemployment | 17.6% (2020)
(historically 3.5%) (2019)
GDP | $670.5B, 3rd
largest in US
Education System
46 Colleges, 206K+ Students
Top Programs:
Chicago Booth | UC
University of Illinois
Northwestern University
University of Chicago
North Dame (feeds into Chicago)
Loyola University
Chicago, IL

3. Ecosystem Observations:
» Diversified venture economy: real estate, insurance, aerospace (value-wise), and
back-office efficiencies
» Residents have deep roots to Chicago; it has built a sticky culture (people want to
stay for long)
» 3rd largest metropolitan U.S. economy: similar venture capital investment total as
Miami, San Diego, and Seattle
The Macroeconomics of the VC System
Venture Capital Ecosystem
3
Funding Statistics
VC Investment: $2.19B, 278 rounds
U.S. Deal Share: ~2.42%
VC Investment per Capita: $876
Top Investment Sectors:
FinTech, Education, Healthcare,
Logistics, and AI & Big Data
Chicago, IL
Sources: Pitchbook, Bloomberg CityLab

4. Looking into the Investment Space
Funding Options
4
Angels / Angel Groups:
Hyde Park Angels, Angeles
Investors, Ron Levin, Eric
Lefkofsky, Brad Keywell, Mark
Tebbe, Stuart Larkins, Ira
Weiss, Jeff Weiner, Bill Miller,
Brett Hurt, Chris Galvin, David
Galvin, Dean Drako, Tony
Wilkins, Karen Kerr
Venture Capital:
Pritzker Group, Hyde Park
Venture Partners, Lightbank,
Jump Capital, ARCH Venture
Partners, OCA Ventures, Origin
Ventures, Chicago Ventures,
Illinois Ventures, MATH Venture
Partners, Method Capital, Serra
Ventures, Impact Engine,
Cleveland Avenue, Chingona
Ventures
Accelerators /
Incubators:
Healthbox, Techstars
Chicago, Polsky Center for
Entrepreneurship and
Innovation, Elmspring
Accelerator, UofC New
Venture Challenge
Chicago, IL

5. Founder Resources to Gain Knowledge
Other Resources
5
Meetups:
FinTank, Startup Grind Chicago, Chicago Lean
Startup Circle, FUND Conference Chicago
Co-Working Spaces:
1871, Assemble, Blue1647, Catapult Chicago, Colab
Evanston, The Coop, Industrious, MATTER, TechNexus,
WeWork Chicago, Lacuna Artist Lofts
Startup Media Channels:
Built In Chicago, ChicagoInno, Chicago Tribune Blue
Sky Innovation, Startup Digest Chicago, 1871
Newsletter, Chicago Tech Events, Tech.CO
Chicago, IL

6. Who Dominates the Chicago Economy?
Current Leaders & Rising Players
6
Largest Companies (Market Cap)*:
Walgreens, McDonald's, Kraft Heinz, Tyson,
Mondelēz International, Archer Daniels
Midland, Boeing, United Airlines Holding,
State Farm, Allstate, Exelon, Sears Holdings
*Major corporate HQ or regional offices
Notable High-Tech Ventures Started:
GrubHub (Food Delivery), Gogo (Airline Service), Orbitz
(Travel Agency), Groupon (E-Commerce), Narrative Science
(Productivity), Coyote Logistics (Logistics), Echo Logistics
(Logistics), Outcome Health (formally ContextMedia –
Healthcare), Belly (Productivity) Raise (Consumer), Uptake
(AI), SpotHero (Logistics), Braintree (FinTech)
Chicago, IL

7. Top Ranked Startups:
» Lightstream | Multimedia & Design Software
» FanFood | Food Products
» Livly | Real Estate Services
» HealthJoy | Healthcare Technology
» Upshow | Media & Information Services
» Capital Markets Gateway | Financial Software
» SpotHero | Automotive
» Cresco Labs | Cannabis
» Cameo | Entertainment / Social Media
» Fooda | Food Products
» CashDrop | FinTech + Food
Healthtech Leads the Way
Economic Activity
7
Recent M&A & IPO’s:
» GrubHub, Just Eat Takeaway* | $7.3B
» Give & Go, Mondelez International | $1.3B
» Tapingo, GrubHub | $150M
» KLX, Boeing | $3.2B
» Braintree, Paypal | $800M
» Venmo, Braintree | $26.2M
» Agribel, Nutrine | $63M
» GrubHub IPO | $26 (market), $2.03B Valuation
» Sprout Social | $17 (market), $814M Valuation
(Acquired, Acquiree | Deal Value )
*deal has yet to complete, (current date: Q1 2021)
Chicago, IL

8. Analyzing the Geographic and Economic Reach
Area Insight
8
Insights:
» Major startup spaces and players high
concentrated in “River North” and Loop,
specifically in Merchandise Mart building (houses
1871 and MATTR). Other budding communities
include Wicker Park, West Loop, and Pilsen.
» While educational institutions are entrepreneurially
focused, they mostly exist in different parts of the
city (e.g. Northwestern University in Evanston, IL)
» Most Chicago startups are being acquired by
larger corporate firms in the city
» About ⅓ of startups are founded / run by women
» 45% of Chicago's investments have a 10X ROI
compared to 25% for the Bay. Also, highest MOIC
of all cities 5.5X from 2006 – 2018.
» Raised $351 million Q1 2020, down -3.8% YoY
Co-Working Venture Capital Accelerator / Incubator
Chicago, IL

9. Insight from Local Subject Matter Experts
Analysis
9
Feedback from locals immersed in the ecosystem on varying obstacles
limiting Chicago’s startup ecosystem:
1. Many Midwest investors are considered “old money” that
perpetuate a culture of more conservative investment risk tolerance
2. Local community has a lack of institutional support for
experimentation (e.g. free cohorting spaces such as AWS Loft)
3. Local entrepreneurs while interested in entrepreneurship are less
focused on high growth tech ventures
4. More capital exists than skilled talent with the experience and
management training
5. Limited funding opportunities leading Seed and Series A
investments and beyond between the pre-seed and growth phase
Chicago, IL

10. Sources
Interviews: Julie Martin, Dan Eidell, Samara Hernandez, 1871
https://fi.co/insight/the-chicago-startup-ecosystem-canvas-a-giant-list-of-startup-resources-in-chicago
http://www.worldbusinesschicago.com/data/chicago-business-overview
https://www.bloomberg.com/news/articles/2018-03-27/the-extreme-geographic-inequality-of-high-tech-venture-capital
https://files.pitchbook.com/website/files/pdf/2018_Chicago_Venture_Ecosystem_AHH.pdf
https://www.americaninno.com/chicago/inno-insights-chicago/chicago-sees-strong-year-in-vc-funding-with-2-2b-raised-in-2019/#:~:text=Chicago%20companies%20raised%20%
242.186%20billion,and%20%241.3%20billion%20in%202016.
https://www.flaticon.com/
https://www.bizjournals.com/chicago/news/2020/05/31/chicago-startups-raise-68m-in-may.html#:~:text=Chicago%20startups%20raised%20%24351%20million,economy%20due
%20to%20Covid%2D19.
State of the Market
Analysis
10
The startup ecosystem in Chicago has been a source of innovation across industries
with an increasingly strong presence in the Food and AdTech space among many
others. Reviewing the profile of the metropolitan area compared to other major
cities, while the economy is diverse and large (3rd largest metropolitan market in
the U.S.), it is ranked lower than other entrepreneurial ecosystems in terms of total
startups and venture capital dollars deployed annually. Moreover, it seems many
exits are within large corporations within the city, rather than IPO’s or other regional
acquisitions. It is also speculated with major tech companies such as Google,
Salesforce, Amazon, and Facebook establishing operations in the city over the past
5-10 years will result in more trained executives with capital leaving those
institutions to start companies in the coming years.
Chicago, IL