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Holding down the proverbial fort for the mid-west, Chicago, the Windy City, is the third largest city in the U.S. and the most populous city that doesn't sit on an ocean coast. The city, which does, however, rest on the shore of Lake Michigan, is home to a unique culture of nearly 3 million people and countless numbers of Fortune 500 companies condensed into its 234 square miles of city. Though the city is often passed over for Silicon Valley and New York in terms of startup cultures, Chicago has a expanding repertoire of companies, entrepreneurs, investors and organizations helping put the city on the startup map. Sponsor RWW's Never Mind the Valley series: The site Freshwater Venture has begun to profile Chicago companies and people involved in the city's startup scene, and thus far has created an extensive list. Among some of the most popular startups to come from Chicago include Basecamp developers 37Signals , travel booking site Orbitz , FeedBurner , Apartments.com , and more recently, the hyper-local news site EveryBlock . Chicago startups suffer from the same difficulty that other cities without a rich startup culture do: a lack of venture capital. EveryBlock was funded by a grant from the Knight Foundation, Orbitz was funded by airlines looking to compete with Expedia , and 37Signals was originally funded by the founders themselves. Before being acquired by Google , FeedBurner raised funding from multiple venture capital firms, but only one of their funders, Draper Fisher Jurvetson Portage (which is actually just one of over a dozen arms of DFJ) was from the Chicago area. Chicago does, however, have its own native venture capital firms, such as Origin Ventures , OCA Ventures and Illinois Ventures , but a majority of Chicago-based VC firm investments are aimed at companies in other cities. The growing problem in Chicago over the last several years has not been dissimilar to other fledgling startup communities; the talent and the ideas are there, but entrepreneurs are drawn to places like Silicon Valley, New York or Boulder where funding is more readily available for startups. "Chicago is a great town, but there isn't really a startup culture here. The majority of people that have done well have left Chicago and found more success elsewhere," said Brenden Mulligan of ArtistData in an article on the Northwestern University blog Medill Reports . "We've lost some great entrepreneurs to other cities." But things are not entirely dire for Chicago; new incubators, venture firms and second and third generation entrepreneurs are helping the city grow its startup culture. It also doesn't hurt that Chicago, the third largest city in the U.S., has not only a massive community of customers to provide services to, but also a thriving technology economy. Increased investments in high-tech and medical companies has pushed Chicago into the forefront of cities creating technology jobs. Sam Yagan, CEO and founder of online dating site OkCupid, SparkNotes and eDonkey is the executive director of Excelerate , a new startup incubator taking root in Chicago. Early-stage companies can apply for the premier thirteen-week "bootcamp" experience this summer where they will receive as much as $20,000 in funding along with mentoring from a laundry list of over 40 participating entrepreneurs. Among these mentors is David Cohen of TechStars, Harper Reed of Threadless, Seth Stemberg of Meebo, and Kevin Willer, head of Google's Chicago offices. Excelerate's VP Kelli Rhee is also the VP at Sandbox Industries , an incubator and venture fund that has been active in Chicago since 2003. Sandbox's venture fund provides anywhere from $50,000 to $2 million in early-stage seed funding, and manages the BlueCross BlueShield Venture Fund which invests up to $10 million in health care tech startups. Matt McCall, managing director at DFJ Portage, was recently interviewed by Fast Company for their piece Why You Should Start a Company in... Chicago , and gave his reasons why the city is a good place for startups. Among his reasons were the massive population of customers the large city provides, the government money provided for research at the Universities, and the connectivity of the mid-west alumni that have become successful in other locations. Finally he says that the "family trees" created by the various generations of entrepreneurs are helping build the city's startup culture. "You've got entrepreneurs that are fourth generation entrepreneurs. As a result, they played at the big leagues," said McCall. "They've got a mafia of people that they can pull in to the companies... And as a result, when you start a company, you've got kind of these built-in talent pools that you can reach into that you didn't have say in 2000." With the help of incubators, organizations and events like Excelerate, Sandbox Industries, Chicago Tech Scene , TechBuzz Chicago , Startup Weekend Chicago , TechNexus and TECH cocktail , the Windy City is on the rise as the startup playing field levels out. No city will ever match the atmosphere found in Silicon Valley, but Chicago's unique ecosystem of their own has and will continue to produce noteworthy startups. Photos by Flickr users David Paul Ohmer , Christopher & Amy Cate , and Mike . Discuss
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Never Mind the Valley: Here's Chicago
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In our recent discussions of branding for startups and entrepreneurs, we've mentioned that marketing and branding is always harder to do when what you're trying to sell isn't a quality product. Successful startup products tend to fit into an equation involving the ideas and the people who are executing those ideas. Caterina Fake , co-founder of Hunch and previously Flickr , says that it wasn't just the idea that attracted her to Hunch; the people behind it were just as important. Sponsor "The idea is just the starting point, just the first step. You also have to find the right people to help you do it," writes Fake in BusinessWeek's Entrepreneur's Journal . "No successful company has have ever been the product of just one person." As Fake describes, a great idea is nothing without the right team to make it a reality. In the hands of the wrong team, an amazing idea for a startup can fail, whereas the right team with the right idea will ultimately have a higher chance of success. An example for this is the rush of online video startups in the last several years, a great idea that only the best teams, at YouTube and Vimeo among others, have succeeded with. "The entrepreneurs [at YouTube] were able to raise the capital they needed to build and scale it," says Fake. "Obviously, it was a good idea, but the combination decided who the winner was." Often the most successful startups aren't the first players in their field, they just had the right people who could execute the idea the right way. At Hunch, Fake says the dichotomy of the MIT grads' engineering prowess and her knowledge of communities from Flickr created a perfect ying and yang combination, and a successful product. "When they decided they were going into the user-generated content direction, they knew it was not their strong suit. That's what I do," says Fake. "I had a lot of experience with building, designing, social software, getting a product integrated in other pieces of software--that kind of thing. It was a great combination of our two skill sets." There is certainly more to a successful startup than the right people and a good idea, but Fake believes these are the two most important factors. What else is important for startups apart from the ideas and the people behind them? Let us know what you think in the comments. Discuss
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Hunch's Caterina Fake On Fusing Ideas With Teams
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A month ago in our list of the " Top 6 Colleges with Entrepreneurial Programs " we highlighted the opportunities for the forward thinkers at Babson College in Massachusetts. Babson also happens to be the professional home of Daniel Isenberg , a management practice professor, who recently contributed to the Harvard Business Review's " The Conversation " blog with a post titled, " Should You Be an Entrepreneur? Take This Test ." In his post Isenberg provides twenty questions that any aspiring entrepreneur should ask themselves before quitting their day job to make sure they have what it takes to succeed. Sponsor "I've learned in my own years as an entrepreneur -- and now an entrepreneurship professor -- that there is a gut level "fit" for people who are potential entrepreneurs," writes Isenberg. "There are strong internal drivers that compel people to create their own business." Isenberg's self-examination includes true/false statements like, "I don't like being told what to do by people who are less capable than I am," and "I would rather fail at my own thing than succeed at someone else's." After completing the 20-part checklist, Isenberg gives you the entrepreneurial green light if you answered "yes" to 17 or more of the questions. According to Isenberg's checklist, the ideal entrepreneur likes to win, likes to "question conventional wisdom", is "rarely satisfied" and gets so excited by their ideas that they "can't sit still". Of course, having some entrepreneurship in your blood can't hurt either; one of Isenberg's signs of an entrepreneur is having members of their family or close friends who run their own business. For his final question, he suggests that a worthy entrepreneur "could have written a better test" than his. Isenberg warns that while answering "yes" to most of these questions could mean you'd make a good entrepreneur, it doesn't necessarily mean you should quit your job right away. "Do you have debts to pay? Kids in college? Alimony? Want to take it easy? Maybe better to wait," he writes. Finally, he adds that risk-takers and money-seekers do not make for good entrepreneurs. "People don't choose to be entrepreneurs by opting for a riskier lifestyle," writes Isenberg. "Risk is ultimately a personal assessment: what is risky for me is not risky for you." Can a simple checklist weed-out the true entrepreneurs with potential from the wannabes looking to make quick cash? Or is there more to one's potential for success as an entrepreneur than these twenty attributes? Let us know what you think makes for great entrepreneurs in the comments. Discuss
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Aspiring Entrepreneurs: Check Yourself Before You Wreck Yourself
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