Over the past several years, data points to evidence that Chicago’s tech scene is growing, with 2021 shaping up to be a defining year for local startups. PitchBook and National Venture Capital Association figures show that local companies have been raising record amounts of venture capital this year, which allows startup staffs and valuations to grow.
In the first half of 2021, local tech companies raised $3.8 billion; that already eclipses last year’s total, which was the highest since 2014. Data from WBC also shows that 11 Chicago startup companies have reached “unicorn” status in 2021, an industry term for companies valued at over $1 billion.
Kathryn Finney, an entrepreneur and investor known for launching Digitalundivided and #ProjectDiane, and her husband, Tobias Wright, a software engineer at Microsoft, moved to Chicago this year from Atlanta, though not because of P33 ads. Besides having family in the area, they each saw opportunity in Chicago as the local tech industry has grown.
“One of the hesitations for Chicago for us for a long time was there wasn’t a lot of tech here,” Finney said. “Having a husband who is an engineer and me being in the startup world, there wasn’t a lot going on and that limited our ability to move here.”
Historically, about half of the computer science and engineering students at the University of Illinois at Urbana-Champaign, a top-ranked computer engineering school, have left the state after graduating, according to school data.
“It’s never been a problem to recruit (students). The problem is to keep them here after they graduate,” said Rashid Bashir, the dean of the Grainger College of Engineering at UIUC. “That clearly has to do with the jobs that are available.”
As a smaller tech economy, Chicago has fewer software and engineering positions, especially at high-profile firms like Facebook, LinkedIn or Google. WBC has worked to get nearly 90 companies to move their headquarters to or open offices in Chicago in 2021 by touting the region’s talent coming from Big 10 universities and the lower cost of living compared with the coasts, says WBC CEO Michael Fassnacht.
Tegus, a business intelligence company that moved to Chicago from San Francisco three years ago, just signed a lease for a new office in the Loop and said it is hiring 100 people this year.
“There’s so much opportunity in Chicago to start your company, to join a startup or to join an established company,” he said.
Regardless of how many advertising campaigns or tech-forward initiatives Chicago tech leaders launch, the city and its tech ecosystem still have issues that could deter would-be migrants. While there’s evidence that the local tech sector is growing, it still lags behind other tech and startup meccas, like Silicon Valley, New York and Boston.
On a 2020 global ranking of startup hubs by Startup Genome, Chicago comes in No. 14, behind Silicon Valley (No. 1), New York (No. 2), Boston (No. 5), Los Angeles (No. 6), Seattle (No. 9) and Washington, D.C. (No. 11).
Additionally, Chicago also can’t shake its reputation for violence. Kinga said he was initially worried about crime when he moved to the city in June.
“When I was figuring out what neighborhood I wanted to live in, one of the top things on my mind was: What’s the crime rate here?” Kinga said.
During a recent trip P33 took to San Francisco to recruit tech talent, Chicago representatives were asked about how pervasive violence is in the city. But leaders try to ease anxieties by pointing out that nearly every big city in the U.S. is dealing with crime.
“In general, all cities are facing an issue right now of increased crime,” Pritzker said. “People are aware of that as a city challenge, but they’re seeing it in San Francisco and New York and other major cities. It’s really not about us particularly.”
Besides a smaller tech industry and crime concerns, Chicago’s cold, long winters and complicated politics hold it back, too.
Even still, P33 said it is making progress with its efforts to bring more tech workers to Chicago. Success to them looks like recruiting and retaining 10,000 diverse tech professionals over the next two years, especially those with Chicago roots.
“This is our ‘Project Sea Turtle,’ ” Fassnacht said. “Sea turtles, ultimately, always come home. And that’s what we’re trying to do with this campaign.”
