When many people think of hotbeds for startup activity, their minds instinctively drift toward places like Silicon Valley and San Francisco. But on the other side of the country, Chicago is forging its own path in the startup world. The winds of change are blowing in the Windy City, and there are several reasons why Chicago startups should put down roots in the city instead of joining their counterparts on the West Coast.
Launching a Startup in Chicago is More Affordable
According to Nick Moran (General Partner of New Stack Ventures, fnInvestor), “Infrastructure and services costs to ‘start-up’ have dropped precipitously, however the cost for talent has grown exponentially. As Jeff Clavier recently articulated on The Full Ratchet podcast, “The cost to launch a startup in San Francisco is far greater now than it was a decade ago.” Moran continues, “If one can launch and grow a team in cities like Chicago, they can allocate more dollars to growth, maintaining better capital efficiency. In tech centers outside of SF and NYC, more equity value remains with the founders and employees, instead of the venture capitalists.”
Chicago makes an alluring spot for entrepreneurs. For one, Chicago has a solid and diverse business climate. Everything from aerospace and agriculture to technology and medicine has made a name for itself here. For example, two of the three founders of Groupon (originally founded in Chicago) have launched their own startups in Chicago: one a medical data company and the other an analytics company for the aviation, construction and mining industries.
Although they had enough funding to go elsewhere, there’s something to be said for being true to your roots. In addition, there’s less reliance on venture capitalists gobbling up pieces of the business once it gains traction, plus, Chicago has plenty of talent, a startup-friendly culture and a lower cost of living.
Chicago is Conveniently Located to Other Major Hubs
Being on the West Coast limits your options in terms of meeting with partners, networking or formulating new ideas with like-minded people across the country. On the other hand, being in the Midwest, Chicago is centrally located, making it convenient for people from both sides of the country to “meet in the middle”.
Technology companies including Google and Facebook have satellite offices in Chicago, but Ira Weiss (General Partner of Hyde Park Venture Partners, fnInvestor) is looking for more. Weiss notes, “The biggest companies in the world are all tech companies, and we need some of them to be built here in Chicago. 30 years ago, the biggest retailer and cell phone companies in the world were based in Chicago, called Motorola and Sears. Now instead there is Apple and Amazon. We need the next huge tech company to be built here in Chicago.”
A Unique Trifecta of Advantages
While Silicon Valley may be the apple of the technology sector’s eye, Chicago trails only New York City as one of the most attractive cities for startups. But what is it about the Windy City that’s got so many startups looking to take the plunge? According to Saurabh Sharma (Partner at Jump Capital, fnInvestor) there are three key reasons. “Chicago has unique trifecta – i) a key business hub for various industry sectors ii) accessible to top engineering schools in Midwest and iii) hard working / hustling ethos.”
Sharma continues. “As an investor, I love that combination. I also truly believe that due to [the] above cited reasons, and technology being more and more affordable and accessible, Chicago is as good a city as any to start a company.” While it’s true that this is a combination like no other, it’s also worth noting that these three points come together in Chicago in a way that you can’t find in other technology hotbeds.
You can’t “buy” a city’s personality, and in addition to the access to top engineering talent, the “work hard, play hard” mannerisms of Chicagoans cannot be ignored. Chicago is a city where people are unafraid to put their noses to the proverbial grindstone and make their dreams into reality. With this drive and determination permeating the city’s culture, founders cannot help but fall in love with the city, and quickly find themselves joining many other hopefuls looking to capitalize on the city’s abundant resources, talent, skill, and growth potential.
Here’s Your Chance to Grow Your Startup in Chicago
If you’re looking for growth opportunities for your Chicago-based startup, Founders Network wants to help.
“Now in our 8th year, FN has grown to include over 600 lifelong members across 9 global chapters,” states Founders Network Founder and CEO, Kevin Holmes, “With the launch of our Chicago Chapter, we look forward to providing a global compliment to the local Chicago startup ecosystem by bringing together full-time tech founders to help each other raise funding, launch products, recruit top talent and unlock growth. Our Membership Committee has allocated 20 spots for full-time tech founders who exemplify FN’s core values of authenticity, reciprocity, humility and inclusivity to start off the Chapter. If you’re a full-time tech founder in Chicago who understands the important role of networks in your startup success, please join us at our Chapter Launch on Sept. 10th.”
The Launch will include a Pitch Competition featuring the Investors quoted in this article and sponsorship from Microsoft for Startups, StackPath and Winestyr, who have graciously contributed thousands of dollars in prizes to the winning founder.
“I’m thrilled that Founders Network is launching in Chicago,” said Raman Chadha, Founder & Managing Partner of The Junto Institute, and Ecosystem Advisor for our Chicago Chapter, when asked about the launch, “Their presence strengthens our ecosystem with Silicon Valley experience, further validates Chicago’s continued growth in tech, and brings a global community for our founders to plug into. I’m proud that The Junto Institute is a partner, especially given our shared values and interests.”
Please read more about the competition and RSVP here. We look forward to meeting you there!
Thanks to Sponsors
Founded in 2011, Founders Network offers lifelong peer mentorship to over 600 tech startup founders globally. Our platform, programs and high-touch service facilitate authentic experience sharing, warm introductions and long-term professional relationships. Additional benefits include over $1M in startup discounts and mentorship from 50+ Institutional Investors. Members are located in San Francisco, New York City, Los Angeles, Vancouver, Toronto, London and other tech hubs. Each month our Membership Committee admits a new cohort of full-time tech founders who are nominated by an existing member.