Chicago comes up short in funding startups
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ThinkStockChicago still punches below its weight when it comes to venture capital investment.
Chicago has been getting a lot more venture capital investment in the past few years, and there's no question the startup scene is getting a lot stronger.
But it has a long way to go. New research from Ian Hathaway, a senior fellow at the Brookings Institution, makes clear something I've pointed out before: Chicago still punches below its weight.
According to Brookings, Chicago came in at No. 10 nationally last year in the number of early-stage deals, with 56. The problem is Chicago is the third-most-populous city in the country.
Sure, San Francisco, with 368 of the nation's 2,520 deals, is in a class by itself. And New York, the nation's largest city, was No. 2 with 319. It also makes sense that San Jose, Calif., was third with 220, and Los Angeles, the second-largest city by population, was No. 4 with 128 fundings. But Cambridge, Mass., rounded out the top five, with 76 deals, followed by its neighbor, Boston, at 74. Washington, D.C., Seattle and Austin, Texas, also bested Chicago.
The data mirror national figures I've reported before from Dow Jones VentureSource.
That's especially true when Hathaway looked at venture fundings per capita, shining a light on smaller cities with strong startup scenes that often get overlooked. Not surprisingly, university towns dominate the list, which included Urbana-Champaign at No. 9. Boulder, Colo., is third, followed by Cambridge and Ann Arbor, Mich. Chicago comes up short, dropping out of the top 20. New York is eighth.
Thanks largely to the University of Illinois, Urbana-Champaign is churning out more startups, such as videoconferencing company Personify and Rithmio, which makes motion-recognition software. Others include Autonomic Materials, Serionix and Diagnostic Photonics.
