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Union league club presentation Friday March 7, 2014

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Union league club presentation Friday March 7, 2014

  1. 1. Chicago Startup Scene The City That Works is A Work In Progress
  2. 2. About Jeff Carter • Partner, West Loop Ventures; Co-Founder Hyde Park Angels • Born and raised in Chicago • • Independent investor, CME Member for 25 years, former Board member • @pointsnfigures (Twitter) • Passionate about helping outstanding entrepreneurs turn promising concepts into market-leading companies.
  3. 3. Society is Rapidly Changing “Startups are transforming our society. Over the past 100 years, we’ve gone from an industrial era to a post information era where the network is rapidly disrupting the hierarchy and transforming the way we work and live.” -Brad Feld, Foundry Group
  4. 4. Unbundling of Industries “What’s different today is that we are seeing on a daily basis revolutionary new ideas, devices, and form factors, not evolutionary enhancements.”-Arvind Sodhani Intel Capital in the WSJ (Jan 1. 2014) The Megatrends Networks not Hierarchies Organizations operate from top down. Software and technology enables them to be flatter, fleeter, and first. Everything Will Be Unbundled Organizations that are generalists will be disintermediated by focused competitors that engage specialized business silos Everyone is a Node on the Network Mobile technology makes everyone a node on the network they operate in. This has deep ramifications for companies and society Software is Eating the World Technological changes are changing the way we produce, interact and transact enabling flatter, customized chains of distribution and peer to peer networks.
  5. 5. Trends In Venture Capital “Smaller funds with smaller check sizes were 2-3x more likely to produce “venture returns”-greater than a 3x TVM-than deals in larger funds. In our view, small specialist VC funds are better positioned to exploit the current opportunity than larger VC funds, which often avoid smaller venture deals.”-StepStone VC Research Report, June 2013
  6. 6. Small Fund Advantage Smaller funds (less than $250M) outperform larger funds year after year.
  7. 7. Other Leading Funds Emphasis on Seed and Series A creates a “portfolio of options”.
  8. 8. Series A Funding Gap Series A funding gap is especially acute in the Midwest. There are opportunities to invest in sustainable, disruptive businesses in the Midwest. Current headline VC funds cannot meet the need, nor do they have the networks to source deal flow.
  9. 9. Chicago is the Hub Chicago is the hub for Midwestern startup culture. In 2012, a new startup company was formed every 48 hours. Strong in B2B, the Midwest is poised to ride megatrends and next waves in innovation. The Midwest is home to 129 of the Fortune 500, some of the largest PE funds and Family Offices. All represent a deep pool of potential buyout partners In the last five years, there were $23 Billion worth of exits out of Chicago and this region- source “Fast Company”
  10. 10. Chicago Ecosystem • Seminal Moments were around 2005-2009 1. New Venture Challenge-University of Chicago 2. Hyde Park Angels 3. Excelerate Labs which became 4. 5. UI Labs, Matter, Chi. Innovation Mentors It takes a minimum of 20 years to build a sustaining ecosystem—be patient; Chicago has a ways to go.
  11. 11. Midwest Embracing Entrepreneurial Movement • Top research universities in the “Big Ten” states are under pressure to monetize resources via startup companies. Some examples: – Champaign/Urbana (Top tier Engineering and Business, UI Labs, Illinois Launch) – Chicago Booth, Kellogg , DePaul, Notre Dame(New Venture Challenge, Polsky Center, Levy Center, Coleman Center) – Madison (UWisconsin, Gener8tor) • Major Midwestern cities are actively encouraging entrepreneurial movements • Indianapolis/West Lafayette/Bloomington (INpac, SproutBox) • Emerging start up ecosystems in Minneapolis, Kansas City (Google Fiber), St. Louis, Ann Arbor, Detroit, Columbus, Cleveland, and Cincinnati • Virtually every major university in Big Ten country are emphasizing entrepreneurship programs on campus. Even small schools are embracing the entrepreneurial movement.
  12. 12. Chicago Potential Where Can Chicago Be Successful as a Startup Power Player? 1. 2. 3. 4. 5. 6. 7. 8. Financial Services ( B2B-Manufacturing, Services (, Real Estate (, Travel, Logistics, Supply Chain ( Healthcare ( Agriculture ( Personnel ( Retail ( If we try to be just like Silicon Valley, we will fail.
  13. 13. Immediate Challenges 1. 2. 3. 4. Money-not enough seed stage capital in Chicago Money-not enough Series A capital in Chicago Midwestern Sensibility (these are crazy, no money ideas) Density and Relationships-need more engineers and entrepreneurial minded people locating here to build network 5. More Successful Exits-successful companies exiting for big numbers (Groupon, Braintree, Grubhub) 6. Corporate participation-as customers, investors and as acquirers 7. Government participation-as customer
  14. 14. What Makes A Good Investment?
  15. 15. It’s All About Perspective
  16. 16. When Startups Start Out
  17. 17. Quick Low Cap Investment Growth, Stealthy Attacks
  18. 18. Would You Have Invested? • Company turns 140 typewritten characters into a microblog (Twitter initial description in 2006) • Delivery service that brings fast food to you (founded 2006 as Grubhub, IPO in 2014) • Company that helps online and mobile businesses accept credit card payments by providing merchant storage, payment gateway (Braintree, 2007, acquired by PayPal for $800M) • Company that creates memorable experiences for customers and employees (founded 2012, • Company that allows strangers to rent a room in your house or apartment (Airbnb) • Social network for math and science geeks (founded 2012, • A company that provides free stock market charts (2008, • Company that allows hourly workers to change their shift or find extra work (2010,
  19. 19. What Can You Do? 1. Become A Customer of A Startup 2. Make an Introduction to a Potential Customer 3. Mentor Entrepreneurs for FREE utilizing 4. Give Startups FREE Feedback 5. Talk about the local Startup Community with your friends, neighbors and work associates 6. Invest via an angel group, or local early stage VC fund
  20. 20. If You Love Chicago, Get on Board


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