“Chicago’s major strength is its demonstrated ability to catalyze change. The Chicago Women’s Leadership Accelerator is just one example of the various DEI initiatives focused on increasing opportunities for historically excluded Chicagoans.”
Chicago has deep roots as an industrial hub and is home to the headquarters of 12 Fortune 500 companies. Reflecting a general slowdown in investment, Chicago startups raised nearly 34% less capital from VCs in 2022 than they did in 2021, but the Midwestern city remains a solid tech startup hub. Founders can access a strong network of 70 startup accelerators and incubators, including 1871 — one of the largest incubators in the country — Techstars Chicago, and the Chicago Innovation Exchange.
One of the driving forces behind Chicago's startup growth is its abundance of top-tier universities and research institutions. The University of Chicago, Northwestern University, and the Illinois Institute of Technology are just a few of the institutions that foster an environment of collaboration and innovation. At City Colleges, students can enroll in the Digital Scholars summer pipeline program, which connects students to startups.
The city is also looking to lure foreign workers laid off by technology giants to the city to fill thousands of open roles. More than 35 local firms looking to hire workers on H-1B visas have teamed up with the City and non-profit P33 to create a job-listing website. HR startup Atlas raised a $200 million Series B in September 2022; and Puttshack, which offers tech-infused mini golf experiences, raised $150 million the next month. Also in October, direct-to-consumer home insurance company Kin closed a $145 million credit facility.
Ecosystem by the Numbers
Fintech investment in Chicago was up by 44% in 2022 versus 2021 to reach $2 billion. In March 2022, World Business Chicago announced Fintech as a priority industry of focus. In May 2022, Amount, which creates software for financial institutions, raised a $99 million Series D at a valuation of just over $1 billion.
AI, Big Data & Analytics
In January 2023 the University of Chicago’s Polsky Center for Entrepreneurship and Innovation and Data Science Institute launched Transform, an accelerator for startups focused on data science and AI. The Big Data and Analytics Roundtable helps members of the Chicago Booth community better understand big data and analytics. In October 2022, AI-enabled precision medicine company Tempus raised approximately $275 million in equity and debt financing. It has raised over $1.3 billion in total.
The Chicago area is home to 185 Life Sciences companies and related businesses and seven medical schools. Research parks including Chicago Technology Park, University Technology Park at IIT, and Illinois Science + Technology Park bring together research and industry. A stream of Life Sciences startups are emerging from the University of Chicago and Northwestern University. In November 2022, Emalex Biosciences closed a $250 million Series D round.
Reasons to Move Your Startup to Chicago
Large, Diverse Workforce
Chicago boasts the third largest labor pool in the United States, as well as an extremely diverse workforce. Approximately 30% of Chicago-based startups have either a woman or person of color as a founder or CEO. Chicago also has a very balanced economy, with no single industry employing more than 14% of the workforce.
Chicago offers several programs for entrepreneurs, including Neighborhood Business Development Centers, SCORE Chicago, and Illinois Small Business Development Center. The city has passed reforms to reduce red tape and has also eliminated the employee head tax. The ecosystem is home to numerous incubators and accelerators, including mHUB, Kiwi Tech, Evergreen Climate Innovations, and Higher Ground Labs.
Chicago's central location makes it an attractive option for startups looking to expand throughout the U.S. With its easy access to two world-class airports and 10 interstate highways, startups can set up shop in Chicago and easily reach customers and partners across the country. There are approximately 16,000 transportation, distribution, and logistics companies in the Chicago area, and the city leads the U.S. in freight handling.
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