Second City, Now Start Up City

Posted by Jeff Carter
on July 1st, 2012

Mayor Rahm Emanuel was at 1871 Friday. He said, “Chicago has always been the Second City, now we need to become the start up city.”. He is right, and much of Chicago is starting to do just that.

In the past couple of years, we have had a lot of cheer leading in Chicago. We have held awards. Made speeches. Techweek has been here. We have a great website, Built In Chicago where a lot of the techies gather. Technori started here, and holds pitch contests that sell out. You can’t get a ticket. We have excitement.

We have angel groups, and VC’s. Finding outlet for capital isn’t hard anymore. Getting capital can be tough-but it’s tough no matter where you try and raise money. Initially when we began Hyde Park Angels, we hoped to do 4-5 deals per year. If you count second rounds of funding the group has participated in, we do way more than that now. There are over 100 angels in our group now. In addition, there are other groups in the city. Cornerstone Angels is active. Northwestern’s Wildcat Angels is starting. Notre Dame is starting to make some noise. Entrepreneurs can get a lot of at bats to try and raise seed capital in Chicago.

But, we are lacking some things in Chicago. It needs to change if a start up community is really going to exist here. The first thing that needs to happen is the big companies need to become customers. They benefit from a start up community around them. The big guys can help start ups validate their business model, and can help them generate vital cash flow that is needed to secure next rounds of investments.

For example, why aren’t all the local publications and media using Ycharts for their business sections and programs? When a company needs to plan a small corporate event, why aren’t they calling Kapow Events? The big hospitals ought to be using SonarMed for surgery requiring breathing tubes.

If not the big companies, how about the unions? The government organizations? Hey, try a new company for paycheck planning, Smarteys. Start to use the companies that are trying to grow around you. Successful start ups create jobs for your members. Guess what? Some start ups just want you to have fun like Dabble. Successful start ups add to the tax base, and also create lifestyle jobs for people that don’t have the skills to work in a start up.

Even on a national level. I see Start Up America and Steve Case tweeting all the time, but how many government organizations and agencies in Washington are buying stuff from start ups? I bet few if any at all.

We have some capital, but we need a lot more. If you are a person or family with some means, find a small fund manager you trust and give them some money to invest. Make sure they primarily invest in midwest start ups. There is a lot going on all over the midwest these days. Bad economies will do that.

The point I am getting at is all the cheer leading and posturing is great. It generates buzz. But, in order to really create a start up society there needs to be successful exits. By becoming a customer of a start up, you help create successful start ups. By investing your hard earned dollars in someone that can find and create start ups, you help create the next generation economy.

Chicago lost 200,000 people over the last decade. For general business, it’s a rough place. There are rules, regulations and meddling politicians. Mayor Emanuel has pledged to end that. He is fighting 200 years of local history. We have tremendous resources at entrepreneurs disposal. All the ingredients are here right now for success. Let’s hope Rahm follows through and does something to change the climate here. But it doesn’t begin and end with the mayor. Everyone in the metro area needs to figure out where they fit in. The best way to fit in is become a customer. Otherwise, we can put the pom pons away.

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