Chicago VC & Startup Ecosystem - RBL1 - Rebel One Research

1. Rebel One Ventures Startup Ecosystem Analysis: Chicago, IL Sergio Marrero, Managing Partner Vrat Joshi, Analyst

2. City Snapshot Population | 2.5M (9.7M Metro Area) Unemployment | 16.4% (2020) (~3.6% historically | 2019) GDP | $689.5B (3rd largest, US) Education System 46 Colleges, 206K+ Students Top Programs: Chicago Booth | UC Chicago Law | UC University of Illinois Northwestern University University of Chicago (UC) North Dame (feeds into Chicago) Loyola University A Bird’s Eye View RBL1.COM Sources: Federal Reserve Bank of St. Louis, US Bureau of Labor Statistics Chicago, IL

3. Venture Capital Ecosystem Funding Statistics VC Investment: $2.19B, 278 deals U.S. Deal Share: ~1.6% VC Investment per Capita: $226 Top Investment Sectors: Fintech, Education Tech, Healthtech, Logistics, AI & Big Data Macroeconomics of the VC Space Sources: Pitchbook-NVCA Venture Monitor), Startup Genome RBL1.COM 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) » 3rd largest metropolitan U.S. economy: similar venture capital investment total as Miami, San Diego, and Seattle » Chicago’s startups create larger impacts locally than they do in the global scale, similar to ventures in Austin, TX » Number 1 ecosystem for female founders: 25+% of all startups are female founded Chicago, IL

4. Funding Options Looking into the Investors RBL1.COM Venture Capital Angels & Angel Groups Accelerators & Incubators 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 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 Healthbox, Techstars Chicago, Polsky Center for Entrepreneurship and Innovation, Elmspring Accelerator, UofC New Venture Challenge Sources: Founder Institute Chicago, IL

5. Startup Media Channels: Built In Chicago, ChicagoInno, Chicago Tribune Blue Sky Innovation, Startup Digest Chicago, 1871 Newsletter, Chicago Tech Events, Tech.CO Meetups / Community Organizations: FinTank, Startup Grind Chicago, Chicago Lean Startup Circle, FUND Conference Chicago Other Resources Co-Working Spaces: 1871, Assemble, Blue1647, Catapult Chicago, Colab Evanston, The Coop, Industrious, MATTER, TechNexus, WeWork Chicago, Lacuna Artist Lofts Founder Resources to Gain Knowledge RBL1.COM Sources: Founder Institute Chicago, IL

6. Current Leaders & Rising Players Largest Companies (Market Cap)*: Allstate, Archer Daniels Midland, Boeing, Caterpillar Inc, Conagra Brands, Exelon, Kraft Heinz, McDonald's, Mondelēz International, Sears Holdings, State Farm, Tyson, United Airlines Holding, US Food Holdings, Walgreens Boots Alliance *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) Who Dominates the Chicago Economy? RBL1.COM Sources: Founder Institute Chicago, IL

8. Map / Region Insights: » Major startup spaces and players are highly concentrated in the “River North” and Loop area, 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 Area Insights Venture Capital Accelerator / Incubator Co-Working Sources: Startup Genome RBL1.COM Analyzing the Geographic and Economic Reach Chicago, IL

9. Analysis Feedback from locals immersed in the ecosystem: » Many Midwest investors are considered “old money” that perpetuate a culture of more conservative investment risk tolerance » Local community has a lack of institutional support for experimentation (e.g. free cohorting spaces such as AWS Loft) » Local entrepreneurs while interested in entrepreneurship are less focused on high growth tech ventures » More capital exists than skilled talent with the experience and management training » Limited funding opportunities leading Seed and Series A investments and beyond between the pre-seed and growth phase Subject Matter Expert: Julie Martin, Dan Eidell, Samara Hernandez, 1871 RBL1.COM Insight from Local Subject Matter Experts Chicago, IL

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, 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. The reason for this is a tight local connection, but a weaker link to the global scale. Many exits are with large corporations within the city, rather than well-broadcasted IPO’s or other acquisitions outside of Chicago: this indicates a strong link within the local community. For Chicago to continue expanding, it is imperative the city looks to scale. In other news, there is movement linked with major tech companies such as Google, Salesforce, Amazon, and Facebook which have been establishing operations in the city over the past 5-10 years. We believe this will result in more trained executives with capital leaving those institutions to start companies in the coming years. State of the Market 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.bizjournals.com/chicago/news/banking-and-financial-services/mergers-and-acquisitions, 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%20 billion%20in%202016, https://www.flaticon.com/, https://www.bls.gov/eag/eag.il_chicago_md.htm, https://fred.stlouisfed.org/series/NGMP16980, 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. https://startupgenome.com/reports/global-startup-ecosystem-report-2019, https://startupgenome.com/reports/gser2020 Analysis Chicago, IL

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