Chicago has one of the country’s biggest business communities. Will tech follow?

As presented by attendees of our Tomorrow Tour stop in the Windy City, here's a five-point plan for making sure it happens.

Broad shoulders, great skyline.

(Chicago skyline at dusk by Pigprox via Shutterstock)

As the ranking of emerging entrepreneurship communities goes, Chicago makes a good case that the game is rigged.

Consider those places that are often cited as U.S. leaders. There’s Silicon Valley, the truest and clearest global innovation power, presently occupying a swath of South Bay suburbs — as well as an ever-growing chunk of the covetous hearts and minds of thoughtleaders the world over. Then there’s New York City, the financial capital with false starts, tech-wise, that have presaged the booming Silicon Alley of today. Even if you include brainy Boston, crunchy Seattle and weird Austin’s outsized reputation, we allow for very few national metros to serve as shorthand for destination-level innovation hubs.

This has led to a common refrain among those who speak about their hometown tech and startup sectors. Things are going well, they say, but we’re not caught up yet.

“We all want to know, ‘When do we get good?'” joked James Janega, the thoughtful and charismatic longtime Chicago Tribune reporter who cofounded its tech vertical and now leads the Innovation & Insights group at Slalom Consulting’s Chicago office. Earlier this month, he led a discussion at the Chicago stop of the Tomorrow Tour, a multi-city event series we at are producing with Comcast NBCUniversal.

His point was taken. What measure is Chicago’s startup community being ranked by?

Very likely every city in the country with an economic development community looking toward the future is talking up its own next-generation entrepreneurs and competitive pool of tech talent. Unpacking those discussions is a major point of the Tomorrow Tour. But shouldn’t Chicago make it into that vaunted group by its sheer size, business roots and history? We’re talking more than 30 Fortune 500 companies, nine within city limits, a legendary “city that works” reputation and an outsized culture.


Well, no, not exactly. And if you bring together enough Chicago tech and startup leaders, they’ll tell you what needs to be done to change that.

Here’s their game plan:

1. Fight coastal bias

For one, there’s a known media bias “on the coasts,” said Wailin Wong, another former Tribune reporter who now produces a small business podcast for Chicago’s project-management powerhouse, Basecamp. So the stories of the Midwest and other places outside Silicon Valley/NYC/Boston just don’t land with the same heft, Wong said. For example, she never thought that Chicago-founded GrubHub got its due in its 2013 merger with New York-based food delivery competitor Seamless.

“We’re so humble and midwestern, it’s not really in our DNA to brag about it too much,” said Starter League cofounder Neal Sales-Griffin.

2. Play to our strengths

The Chicago Mercantile Exchange makes the city a commodities, food and agricultural powerhouse. It and other corporate giants have made Chicago the dominant Midwest financial center for generations.

And today, “every big company is developing an innovation strategy,” said Kristie Heins Fox of PR giant Edelman’s Chicago office. Look at elevator giant Kone’s smart-home work with IBM’s Watson, she said, noting the company with U.S. headquarters in Illinois.

“We need to do more and more to connect startups to those companies to help them both grow,” said Fred Hoch, the CEO of the Illinois Technology Association. “I want to see a new Sears Tower filled with a new generation of companies.”

To get there, local tech founders can learn the lessons from others who have built a brand outside the coasts, like the Second City comedy pipeline.

“Who is our big name in lights?” asked John Pletz, a local tech reporter with Crain’s.

3. Add more capital

Hoch, who is also a stakeholder of growth-stage incubator space TechNexus, which hosted the Tomorrow Tour, adds Chicago to the chorus of cities that says it needs more investment to quicken the pace of its tech business growth. One active 73-year-old banker can’t do it all.

If Chicago-area companies raised $1 billion in venture capital funding in 2015, Hoch says that total should be closer to $5 billion to be the kind of global center he expects.

Amid a fiscally challenged state budget, Illinois State Treasurer Michael Frerichs wants to contribute. He plans to put $220 million of state funds over three years into 15 or more investment firms that will capitalize Illinois companies. It’s a chance to diversify state investments (the money isn’t coming from a capital budget), while also supporting efforts to grow the early-stage capital markets in Chicago and elsewhere in the state, he said. A smaller 2012 version of the plan put money into Trunk Club and SpotHero, among other popular Chicago web startups, Frerichs said. It’s a goal of changing the narrative of entreprenuership as an option in Chicago.

“What do you call a founder with three failed companies in California? Experienced,” Frerichs said, to laughs in the audience. “In the Midwest, it’s a failure we won’t invest in.”

That has to change he said. And not just for today’s classic startup story. Chicago has lots of communities that should be part of making the city’s next generation of companies — something local leaders like social enterprise investor Jessica Droste Yagan of Impact Engine might suggest.

“It’s unfortunate that entrepreneurship and technology have been made one in the same,” said Jimmy Odom, the founder of recently acquired on-demand delivery service WeDeliver. In the fall, he took a role with the Illinois Department of Commerce and Economic Opportunity focused on minority representation. “More kinds of people in Chicago need to get access to the resources we already have,” he said.

4. Build on successes

Chicago has no shortage of big tech exits, enough that Hoch is now itching for a tech company that starts acquiring, rather than getting acquired. For all of the successes, many are still in recent memory — perhaps they haven’t brought about the wave. Some standout exits include the following:

The city’s best known consumer social web giant, Groupon, has become an uneasy citation for local tech leaders, as its long-sagging stock price and massive staff cuts outsize its daily deals engine. One founder said we have to “wear the weight of Groupon,” though it has created and attracted a new kind of knowledge worker to Chicago.

That talent and these big exits just might be the backfill that can build a foundation on which a long lasting culture of growth startups and tech strategy can be built.

“You need enough people who have seen that movie to help it happen again,” said Pletz, the Crain’s tech reporter. “Now we need that next unpredictable breakout success. It’s about attention, not just ego.”

5. Celebrate a great city

No one questions Chicago’s cultural strengths. But visiting in March after the Miami Tomorrow Tour stop can lead a reporter to wonder: When highly mobile tech talent could migrate anywhere in the world, how do you sell the Windy City’s frigid winters?

“We appreciate the good weather more when we have it,” said Justin Walker, the executive director and cofounder of Bunker Labs, an accelerator for veteran-founded businesses. He offered that with a smile, but he meant it.

Where the big Northeast cities are known for emptying out during their hot summers, people come into Chicago, said Walker. Where Miami founder Michael Hall referred to his “beach attachment syndrome,” which means he doesn’t often swim but wants to know he can, Chicagoans are hungry for new waves of public outdoor space. (Last decade, Millennium Park offered a glimpse of what could be accomplished.)

It speaks to the sense that entrepreneurship hubs are popping up where urban centers are thriving enough to retain their best talent. To have a world-class startup community, you need to be a world-class city — or at least be a place someone wants to live.

“We are in the golden age of cities. They are cleaner and safer than ever. We have challenges but we’ve always had challenges,” said Zack Cupkovic of real estate investment firm R2, which is building out an innovation hub on historic Goose Island. “The success of Chicago and its entrepreneurship community will happen together.”

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