Startup support on the rise?
Alex White tried to start his company in Chicago. Three years ago, he and a pair of Northwestern classmates scoured the city seeking seed funding for their online music analytics service, Next Big Sound. What they found is all too familiar.
EVERYONE WAS SUPER NICE BUT IN TERMS OF WRITING A CHECK IT JUST DIDN'T HAPPEN. AND WE NEEDED ANY KIND OF FUNDING AND IT NEVER CAME THROUGH AND WE WENT TO BOULDER THROUGH THE TECH STARS PROGRAM AND OUR LEAD INVESTOR IS FROM THERE SO WE ENDED UP HAVING TO LEAVE THE CITY.
[Alex Smith, Cofounder, Next Big Sound]
It's been a common story in Chicago for years. Entrepreneurs, especially in technology, say it's hard to raise money here. They bemoan the lack of Silicon Valley-type support and networking. They complain that entrepreneurship just doesn't run in the city's blood.
But here's the thing about entrepreneurs. When they see something they don't like, sooner or later they're gonna try to fix it. With a handful of Chicago's most prominent entrepreneurs doing just that, the city's startup support system seems to be on the upswing.
Among those leading the charge are some Chicago heavyweights. A new incubator-slash-boot-camp called Excelerate offers up to $20,000 in funding to startups chosen for an intensive 10-week program to start this summer. It also offers access to a group of mentors that includes entrepreneurial icons like Howard Tullman, Michael Ferro and Genevieve Thiers. Excelerate is taking applications through March 18.
Also throwing their weight behind startup support are two of the city's most prolific and proficient technology entrepreneurs. Brad Keywell and Eric Lefkofsky emerged from the dot-com boom-and-bust to build InnerWorkings, Echo Global Logistics and now Groupon. Flush with those successes, the pair has ponied up 10 million dollars to launch Lightbank, an incubator that could invest in as many as 10 companies a year. Lefkofsky and Keywell have ponied up 10 million dollars for the first round of Lightbank investments. Just as importantly, the companies they fund will get access to Keywell and Lefkofsky themselves, who promise to personally get down in the day-to-day muck with the entrepreneurs they back.
THIS IS PREDOMINANTLY BUILT AROUND THE IDEA THAT COMPANIES IN CHICAGO AND THE MIDWEST NEED CAPITAL, BUT THEY NEED MORE THAN CAPITAL. THEY ACTUALLY NEED PEOPLE TO GET IN THERE, ROLL THEIR SLEEVES UP AND ACTUALLY HELP THEM ACTUALLY RUN THE BUSINESS.
[Eric Lefkofsky, Founder, Lightbank]
Lightbank and Excelerate should help compliment existing Chicago angel funds, nonprofits and incubators like the Illinois Technology Association. In its West Loop offices the ITA runs TechNexus, a collaborative meeting and office space that is currently home to 38 startups and 110 high-tech entrepeneurs and workers.
And at the very smallest level, there's a new venture called Scalewell. Founded by a trio of young Chicago entrepereneurs, it hopes to provide a tiny bit of funding and a wealth of support to businesses at the gleam-in-the-eye stage.
AND SO WE WANTED TO FILL THAT VOID IN CHICAGO OF NOT REALLY HAVING A PLACE TO GO WHERE IF YOU WANNA START SOMETHING IMMEDIATELY THAT DOESN'T REALLY HAVE A LOT OF REQUIREMENTS OR YOU HAVE A PASSION PROJECT YOU WANNA TURN INTO A BUSINESS YOU CAN TURN AND GET RESOURCES, SUPPORT AND A COMMUNITY AROUND YOU TO HELP YOU GROW THAT INTO SOMETHING THAT MAYBE IS FUNDABLE OR THAT YOU CAN QUIT YOUR DAY JOB ETC.
[Andy Angelos, Co-Founder, Scalewell]
Scalewell is the brainchild of Andy Angelos, Sean Corbett and Ziad Hussain. They've recruited 42 trustees--entrepreneurs and business people who pledge a hundred dollars apiece toward thousand-dollar grants that Scalewell will award to the winners of quarterly business-plan competitions. The winners also get free office space in the Loop. But again, the most valuable prize is access to the trustees--an instant network of experienced supporters.
Earlier this month the first Scalewell grant was awarded to Michael Una, who invents and builds quirky musical instruments in his Albany Park workshop and has the modest goal of turning that side business into a full-time gig. He'll use the thousand bucks to bring two new products to market. The money will probably be gone in a few months. But long after that, he hopes the Scalewell trustees will be helping him shape a business plan, set realistic goals and connect with people in their networks.
YOU KNOW I'VE BEEN TOILING AWAY BY MYSELF IN MY LABORATORY CREATING THESE THINGS GETTING OUT THERE SELLING THEM ON MY OWN HITTING THE STREET, BUT THESE PEOPLE HAVE SKILLS IN THOSE AREAS, AND ARE OFFERING THEMSELVES UP AS A RESOURCE TO DRAW UPON. SO I THINK THE SCALEWELL GROUP, WHILE THEY HAVE THESE GRANTS THEY GIVE AWAY TO SMALL BUSINESSES, I THINK THE REAL VALUE HERE IS IN THE COMMUNITY IT CREATES AND GETTING ALL THESE PEOPLE IN THE SAME ROOM, TALKING TO EACH OTHER.
[Michael Una, Founder, Una Electronics]
Getting them talking is just a first step. But for the city's would-be entrepreneurs, it's a step in the right direction.
