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Chicago - Rebel One - Startup Ecosystem Snapshot

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Chicago - Rebel One - Startup Ecosystem Snapshot

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Rebel One is an investor network and fund focused on backing rebel founders. Rebel founders are located everywhere, not just the coasts of the U.S. where a bulk of the capital in venture is allocated. We are sharing ecosystem research for our investor network to help them find the best rebel founders.

This is a high level analysis of the Chicago startup ecosystem for those investors.

Rebel One is an investor network and fund focused on backing rebel founders. Rebel founders are located everywhere, not just the coasts of the U.S. where a bulk of the capital in venture is allocated. We are sharing ecosystem research for our investor network to help them find the best rebel founders.

This is a high level analysis of the Chicago startup ecosystem for those investors.

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Chicago - Rebel One - Startup Ecosystem Snapshot

  1. 1. Rebel One Ventures Startup Ecosystem Analysis Chicago, IL By Sergio Marrero (GP), Vrat Joshi (Analyst) 1
  2. 2. A Bird’s Eye View City Snapshot 2 Population | 2.5M (9.7M Metro) Unemployment | 17.6% (2020) (historically 3.5%) (2019) GDP | $670.5B, 3rd largest in US Education System 46 Colleges, 206K+ Students Top Programs: Chicago Booth | UC University of Illinois Northwestern University University of Chicago North Dame (feeds into Chicago) Loyola University Chicago, IL
  3. 3. Ecosystem Observations:  » Diversified venture economy: real estate, insurance, aerospace (value-wise), and back-office efficiencies » Residents have deep roots to Chicago; it has built a sticky culture (people want to stay for long) » 3rd largest metropolitan U.S. economy: similar venture capital investment total as Miami, San Diego, and Seattle The Macroeconomics of the VC System Venture Capital Ecosystem 3 Funding Statistics VC Investment: $2.19B, 278 rounds U.S. Deal Share: ~2.42% VC Investment per Capita: $876 Top Investment Sectors: FinTech, Education, Healthcare, Logistics, and AI & Big Data Chicago, IL Sources: Pitchbook, Bloomberg CityLab
  4. 4. Looking into the Investment Space Funding Options 4 Angels / Angel Groups:  Hyde Park Angels, Angeles Investors, Ron Levin, Eric Lefkofsky, Brad Keywell, Mark Tebbe, Stuart Larkins, Ira Weiss, Jeff Weiner, Bill Miller, Brett Hurt, Chris Galvin, David Galvin, Dean Drako, Tony Wilkins, Karen Kerr Venture Capital:  Pritzker Group, Hyde Park Venture Partners, Lightbank, Jump Capital, ARCH Venture Partners, OCA Ventures, Origin Ventures, Chicago Ventures, Illinois Ventures, MATH Venture Partners, Method Capital, Serra Ventures, Impact Engine, Cleveland Avenue, Chingona Ventures Accelerators / Incubators:  Healthbox, Techstars Chicago, Polsky Center for Entrepreneurship and Innovation, Elmspring Accelerator, UofC New Venture Challenge  Chicago, IL
  5. 5. Founder Resources to Gain Knowledge Other Resources 5 Meetups:  FinTank, Startup Grind Chicago, Chicago Lean Startup Circle, FUND Conference Chicago Co-Working Spaces:  1871, Assemble, Blue1647, Catapult Chicago, Colab Evanston, The Coop, Industrious, MATTER, TechNexus, WeWork Chicago, Lacuna Artist Lofts Startup Media Channels:  Built In Chicago, ChicagoInno, Chicago Tribune Blue Sky Innovation, Startup Digest Chicago, 1871 Newsletter, Chicago Tech Events, Tech.CO  Chicago, IL
  6. 6. Who Dominates the Chicago Economy? Current Leaders & Rising Players 6 Largest Companies (Market Cap)*: Walgreens, McDonald's, Kraft Heinz, Tyson, Mondelēz International, Archer Daniels Midland, Boeing, United Airlines Holding, State Farm, Allstate, Exelon, Sears Holdings *Major corporate HQ or regional offices Notable High-Tech Ventures Started:   GrubHub (Food Delivery), Gogo (Airline Service), Orbitz (Travel Agency), Groupon (E-Commerce), Narrative Science (Productivity), Coyote Logistics (Logistics), Echo Logistics (Logistics), Outcome Health (formally ContextMedia – Healthcare), Belly (Productivity) Raise (Consumer), Uptake (AI), SpotHero (Logistics), Braintree (FinTech) Chicago, IL
  7. 7. Top Ranked Startups:  » Lightstream | Multimedia & Design Software » FanFood | Food Products » Livly | Real Estate Services » HealthJoy | Healthcare Technology » Upshow | Media & Information Services » Capital Markets Gateway | Financial Software » SpotHero | Automotive » Cresco Labs | Cannabis » Cameo | Entertainment / Social Media » Fooda | Food Products » CashDrop | FinTech + Food Healthtech Leads the Way Economic Activity 7 Recent M&A & IPO’s: » GrubHub, Just Eat Takeaway* | $7.3B » Give & Go, Mondelez International | $1.3B » Tapingo, GrubHub | $150M » KLX, Boeing | $3.2B » Braintree, Paypal | $800M » Venmo, Braintree | $26.2M » Agribel, Nutrine | $63M » GrubHub IPO | $26 (market), $2.03B Valuation » Sprout Social | $17 (market), $814M Valuation (Acquired, Acquiree | Deal Value ) *deal has yet to complete, (current date: Q1 2021) Chicago, IL
  8. 8. Analyzing the Geographic and Economic Reach Area Insight 8 Insights: » Major startup spaces and players high concentrated in “River North” and Loop, specifically in Merchandise Mart building (houses 1871 and MATTR). Other budding communities include Wicker Park, West Loop, and Pilsen. » While educational institutions are entrepreneurially focused, they mostly exist in different parts of the city (e.g. Northwestern University in Evanston, IL)   » Most Chicago startups are being acquired by larger corporate firms in the city  » About ⅓ of startups are founded / run by women » 45% of Chicago's investments have a 10X ROI compared to 25% for the Bay. Also, highest MOIC of all cities 5.5X from 2006 – 2018. » Raised $351 million Q1 2020, down -3.8% YoY Co-Working Venture Capital Accelerator / Incubator Chicago, IL
  9. 9. Insight from Local Subject Matter Experts Analysis 9 Feedback from locals immersed in the ecosystem on varying obstacles limiting Chicago’s startup ecosystem: 1. Many Midwest investors are considered “old money” that perpetuate a culture of more conservative investment risk tolerance 2. Local community has a lack of institutional support for experimentation (e.g. free cohorting spaces such as AWS Loft) 3. Local entrepreneurs while interested in entrepreneurship are less focused on high growth tech ventures 4. More capital exists than skilled talent with the experience and management training 5. Limited funding opportunities leading Seed and Series A investments and beyond between the pre-seed and growth phase Chicago, IL
  10. 10. Sources Interviews: Julie Martin, Dan Eidell, Samara Hernandez, 1871 https://fi.co/insight/the-chicago-startup-ecosystem-canvas-a-giant-list-of-startup-resources-in-chicago http://www.worldbusinesschicago.com/data/chicago-business-overview https://www.bloomberg.com/news/articles/2018-03-27/the-extreme-geographic-inequality-of-high-tech-venture-capital https://files.pitchbook.com/website/files/pdf/2018_Chicago_Venture_Ecosystem_AHH.pdf https://www.americaninno.com/chicago/inno-insights-chicago/chicago-sees-strong-year-in-vc-funding-with-2-2b-raised-in-2019/#:~:text=Chicago%20companies%20raised%20% 242.186%20billion,and%20%241.3%20billion%20in%202016. https://www.flaticon.com/ https://www.bizjournals.com/chicago/news/2020/05/31/chicago-startups-raise-68m-in-may.html#:~:text=Chicago%20startups%20raised%20%24351%20million,economy%20due %20to%20Covid%2D19. State of the Market Analysis 10 The startup ecosystem in Chicago has been a source of innovation across industries with an increasingly strong presence in the Food and AdTech space among many others. Reviewing the profile of the metropolitan area compared to other major cities, while the economy is diverse and large (3rd largest metropolitan market in the U.S.), it is ranked lower than other entrepreneurial ecosystems in terms of total startups and venture capital dollars deployed annually. Moreover, it seems many exits are within large corporations within the city, rather than IPO’s or other regional acquisitions. It is also speculated with major tech companies such as Google, Salesforce, Amazon, and Facebook establishing operations in the city over the past 5-10 years will result in more trained executives with capital leaving those institutions to start companies in the coming years. Chicago, IL

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