For many of us, the idea of angel investing can be intimidating. The startup industry seems to be getting an immense amount of publicity thanks to TV shows like Shark Tank and Silicon Valley, companies like Facebook and Uber, and inspiring people like Elon Musk who’s successes have been widely celebrated and publicized. We often hear incredible stories about a new technology startup trying to disrupt a massive industry to become the next big homerun company. With every one of these stories, we also hear about the investors and venture capitalists that pride themselves in being smart and savvy enough to invest in these early stage companies and walk away with millions. The reality of this industry and the details of how these deals actually take place are far less publicized.

As a new investor, the idea of entering the arena alongside these experienced investors can be daunting and the process of gaining access to these types of deals, knowing which companies to invest in, or who and what you need to know to be a successful angel investor can be overwhelming. The good news is that the industry is far more communal than you would probably expect. Contrary to what we see on Shark Tank, investors do not need to fend for themselves and compete against one another in hopes that a founder will choose them over another investor. Of course, there is competition amongst venture capitalists but more often than not, they are referring each other investment opportunities, sharing expertise, and encouraging other investors to participate in their deals. Before we cover the details of analyzing and making an investment, let’s first start by understanding the landscape and culture of Chicago’s startup ecosystem and who the various players are.

Chicago’s Startup Scene

Chicago has not always been thought of as a top startup hub, and certainly has not compared favorably with thriving startup communities in the US like Silicon Valley who has clearly set the precedent for a successful startup ecosystem. However, over the past several years, Chicago has made purposeful strides to cultivate a startup ecosystem and has seen tremendous results in putting Chicago “on the map” in the industry. As a result, more and more founders are choosing to headquarter their companies here in Chicago and have great incentives to do so… according to Hyde Park Ventures, it costs tech firms 42% more to operate in San Francisco than it does in Chicago. And Chicago now regularly is noted as a top entrepreneurial ecosystem in the US, and even the world, and has even been put in the top position on some lists that focus on opportunity for growth and investor returns. But, as Chicago has picked up momentum in the startup space, it should come as no surprise that it has also seen an uptick in new venture capital and angel investing organizations as well. But how measurable is all of this recent momentum and growth? And where do we stand in relation to other cities?

Chicago: #7

The most recent Pitchbook annual report on the US Venture Ecosystem ranked the top 12 metro areas by overall venture activity and ranked Chicago as #7. Since 2010, Chicago has invested $8.3 billion of venture capital dollars. In our opinion, it is quite an accomplishment to be on the list of the top 12 metro areas especially considering who are our rivals are; San Francisco, San Jose and New York rank as the top three on the list, reporting $101 billion, $43 billion, and $33 billion venture capital dollars invested since 2010, respectively. The data does indicate however, that Chicago has a long way to go in order to compete with the geographic concentrations in this industry. While the number of investors, venture capital firms, angel investing groups, incubators, and accelerators have grown exponentially in Chicago, access to capital is still limited. In our conversations with local founders, we have heard a reoccurring theme that Chicago-based startups are having to seek investment dollars from venture capitalists outside of Chicago, clearly indicating that there still aren’t enough trusted investors (or not enough capital) available to meet the current demand. The solution is clear: we need more investors willing to invest in local startups.

Inside Chicago

In 2016, the most active investors in Chicago were Hyde Park Angels, Chicago Ventures, Hyde Venture Partners, Service Provider Capital, and M25. Below is a more detailed list of Venture Capital Groups and Angel Networks to be familiar with. It is important to highlight what other types of organizations are included in what we refer to as the startup “ecosystem.” Chicago has an evolving list of “incubators” and “accelerator” organizations, as well as nonprofits and other groups dedicated to supporting new startup companies in the early phases. Below is a list of some of these organizations:

Venture Capital & Angel Groups in Chicago
(not including corporate venture)

• Adams Street Partners
• Apex Venture Partners
• Baird Venture Partners
• Ceres Venture Fund
• Chicago Arch Angels
• Chicago Ventures
• CME Ventures
• Duchossois Tech Partners
• Energy Foundry
• Energy Foundry
• Firestarter Fund
• First Analysis
• Heartland Angels
• Hyde Park Angels
• Hyde Park Venture Partners
• Illinois Ventures
• InvestHer Ventures
• Irish Angels
• JK&B Capital
• Jump Capital
• Jumpstart Ventures
• KGC Ventures
• Laveer Capital
• Lightbank
• M25
• MATH Ventures
• MK Capital
• Nameless Ventures
• NextGen Venture Partners
• OCA Ventures
• Origin Ventures
• Pritzer Group Venture capital
• Sandbox Industries
• Service Provider Capital
• Sterling Partners
• Wasson Enterprise
• West Loop Ventures

Incubators:

• 1871
• 2112
• Blue1647
• Brad’s Deals
• BuiltWorlds
• Bunker Labs
• Catalyze Chicago
• Catapult
• Currency
• Food Business Incubator
• Hatchery
• Illinois Hispanic Chamber of Commerce & 1871 Joint Hispanic Tech Incubator
• INCISENT Labs
• Insight Accelerator Labs
• MATTER
• MHub
• Polsky Incubator
• Propel
• Roniin
• Technexus
• Ventureshot
• WiSTEM

Accelerators:

• Elmspring
• Good Food Business Accelerator
• Healthbox
• ImpactEngine
• Junto Institute
• Polsky Center
• Techstars Chicago

Non Profits/Groups/Events:

• BuiltIn
• Clean Energy Trust
• Coleman Entrepreneurship Center
• Future Founders
• Illinois Technology Association (ITA)
• Knapp Entrepreneurship Center
• LiftUpLift
• Ms Tech
• Co
• Technori
• The Garage
• TiE Midwest
• Women Tech Founders

The list can certainly go on…

The Female Funding Gap

With all these companies in Chicago, you might assume that there are enough investors to fulfill the demand for capital, but any female founder would certainly tell you otherwise. Despite the influx of new investors and venture organizations, female founders in Chicago are still getting less than 3% of all venture capital investments. Meaning, an increase in investors in Chicago thus far, has not necessarily been correlated to an increase in funding for female founders. So to be clearer, we don’t just need more investors, we need investors who are specifically eager to invest in our female founders!

That is where DyMynd Angels serves an important role in the Chicago ecosystem. While there are female leaders, as well as female-led and focused accelerators, incubators, and venture firms. There is not a female-led-female and focused angel groups. Given the funding gap for female-led founders this is where we need to focus and build a pipeline for start-up leaders in Chicago!

Join our conversation by following us on Facebook and subscribing to our email list. Together, women must rise to respond to this funding gap! Click here to share your thoughts below!