Kelly Reid | Forbes
Maybe it’s Midwest modesty or maybe it’s a blind spot in the eyes of the coastal media, but Chicago has never been considered a hotbed of digital startup activity. Silicon Valley’s reputation is decades old, fueled by many iterations of the 10-year cycle of entrepreneurial growth. It takes about 10 years for a first wave of startups to succeed or fail, and those that make successful exits begin investing their own money and mentoring the next generation. According to BuiltInChicago.org‘s president Maria Christopoulos Katris, it takes about two of these cycles – or 20 years – to build an entrepreneurship community. So where is my beloved Second City in that cycle?
Built In Chicago, launched in 2010 by serial entrepreneur Matt Moog, is an online community which promotes digital technology in Chicago. According to their brand new infographic, which I’m proud to unveil today, we’re right at the beginning of the boom. There were about as many digital startups founded in 2009 (72) as there were in the prior two years (73). In 2010, the trend continued; 107 between 2008 and 2009 and 98 in 2010. The 193 companies founded in 2011 bucks the trend; there were only 170 companies founded in the prior two years, indicating very positive growth. 193 startups in a year amounts to a new company founded every two days. While we might not have the raw numbers that the Valley has, we have the growth. We don’t have 4 generations of Stanford and MIT graduates and an established venture capital presence that has experience working with digital startups, but we’re figuring out the model pretty quickly.
When I attended Chicago TechWeek, I realized that the River North neighborhood had become the hot spot for Chicago’s startup scene. 71 of the top 100 digital companies are centered within a mile radius of the Merchandise Mart, an art deco masterpiece and one of the largest buildings on earth. It seems only fitting that such an icon of Chicago business and capitalism has become the focal point for the future of our city’s entrepreneurship community. Already home to startup hub and incubator 1871, the brainchild of some of Chicago’s savviest technologists and investors, news just broke that Google will be moving into River North’s temple of commerce along with its newly-acquired Motorola Mobility division. I’d say that’s a big win for the city’s startup scene.
Google barely beats out Groupon for the #1 spot on Built In Chicago’s Top 100 list. Again, maybe it’s Midwestern modesty but most people have no idea that companies they encounter every day, like Careerbuilder and Orbitz, maintain their HQ here. The most remarkable part of this list is how accessible these companies are for young hopefuls. I attended a discussion led by (15) GrubHub’s lead user experience developer last week at the AON Center. I sat directly behind (16) OptionsXpress founder David Kalt at Technori Pitch last night, at which he delivered an inspiring keynote speech to a room full of young entrepreneurs and investors. Barney Harford, CEO of (7) Orbitz presented at Chicago TechWeek and availed himself to the audience for discussion after his panel. I’ve also spent time with (26) thinkorswim founder Tom Sosnoff, now operating a daily financial network called TastyTrade, enjoying their new studios and even participating in an options-related game show. (52) Trunk Club was the focus of one of my previous Forbes.com columns, and were extremely responsive and available when I showed interest in learning more about their company. These top 100 companies are not just bringing jobs and revenue to our city, they’re bringing the support and mentorship that a nascent startup community desperately needs.
While we may never be the next Silicon Valley, there are many favorable factors for digital startups in Chicago. That’s one of the reasons I chose to relocate here; rents are about 30% lower relative to the Valley, and the other costs of living are similarly reduced. That goes a long way towards “Ramen Profitability” when you’re a scrappy 20-something startup founder. Our small but growing community believes, as a whole, that the rising tides will lift all of our boats. There is no sense of cutthroat competition among digital startups here, and programs like the Startup Leadership Program and places like NextDoorChi are providing amazing community resources for entrepreneurs of all ages and experience levels. I can’t wait to see BuiltInChicago.org‘s 2012 year in review and I’m willing to bet that we’ll see the “hockey stick growth” continue. Hopefully I can title next year’s article “A New Startup Every Day”.
If you love the Chicago startup scene and entrepreneurship, be sure to follow me, @ChiStartupScene, on Twitter!
Special thanks to Adam Calica for building this beautiful infographic and to Maria Christopoulos Katris and Matt Moog for helping me gather data on Chicago! BuiltInChicago.org generates a tremendous amount of data on our local startup scene and helps fuel my research on the city’s economic growth.