I’m a few weeks into my role as Hyde Park Angels’ new Director of Platform, and yet I didn’t plan to be here.
In fact, my start in tech was unintentional—avoided even. My master’s thesis chair convinced me to consider a contract tech writing role at a former student’s startup, Arbor Networks. Although I was tech-focused in my academic research, I was determined to finish my thesis and apply to PhD programs. After declining the interview and going so far as sending a colleague’s résumé in my place, I decided to maintain my social equity with the person standing between me and graduation. I went onsite for the interview, discovered that the startup managed and protected most of the world’s internet traffic, and learned how I could apply my skills to have a meaningful impact on the world. I was hooked.
Three years later, we were acquired. A year after that, I got the itch to do something new, something bigger. While I loved writing user documentation, no one wants to read the docs, and frankly, no one should have to. I didn’t want to be a band-aid for product issues; I wanted to help users proactively. So when a former colleague asked me to come start the tech support team at a mobile travel app company called Mobiata, I jumped. I said I’d love to provide awesome support but asked him to let me try a different approach. I wanted to analyze and extract data from support interactions to help make the product better—and as a short-term solution, I’d write help content to empower customers to instantly help themselves with those product issues.
He took a risk on me, one that I’m profoundly grateful for. Expedia acquired that company to become its mobile division, and our team of three was the only tech support team in the organization. By closing the product feedback loop, writing top-notch help articles, and providing white-glove service, that three-person team scaled from supporting 2M+ Mobiata users to 22M+ Expedia users in the same year while maintaining 93% user satisfaction. Other companies noticed our unique approach. I started presenting at conferences and hopping on calls with Fortune 500 companies who wanted to learn how we operated—anything to help more organizations increase success by putting customers first.
Working together to scale outstanding service that benefited both the business and customer was invigorating. We were onto something by building scalable, rewarding relationships, but I felt a gap. We continually found ourselves supporting customers who needed help with their travel bookings, because they knew they could get help from the tech support team. Providing good mobile app support was only one part of driving customer satisfaction. I kept thinking, “How can we set up our travel partners to drive customer satisfaction with bookings?” After a few years navigating how to support a marketplace, I took a big risk. I left the Midwest and moved to Boston to help manage Uber’s East Coast rider- and driver-side support.
Unfortunately, my time at Uber didn’t pan out how I expected. A few weeks into my role, they sent me to Providence with a burner phone and a male pseudonym. I decided to pivot quickly. I accepted an offer to build out the Customer Support team at HPA portfolio company, FarmLogs. I hopped on a plane within a few days of accepting the offer and came home to the Midwest to help invent the future of farming. Within months, we developed a top-notch support function, and a year after that, we developed a streamlined customer success function. We learned how to remotely build and scale meaningful relationships with farmers—people whose businesses are supremely relationship-focused. With more than 1 in 3 U.S. farms using FarmLogs, our Customer Experience department of six people achieved 97% YoY customer satisfaction. We were customers-first, and we advocated for them throughout the organization.
As startups go, my time at FarmLogs wasn’t without its challenges. One of our biggest company challenges was trying to recruit experienced talent to the Midwest. Some of the very things that make the Midwest attractive (e.g., family-friendliness) are the things that candidates seemed to get hung up on. We’d hear questions like, “What happens if I outgrow FarmLogs? What else is here?” To people not from the Midwest, a return to Silicon Valley seemed inevitable, and no one wanted to uproot a family in the process. It was for this reason that a year after I joined FarmLogs, I decided to spend my spare time helping to change that narrative. I co-founded a non-profit conference called Intermitten, which exists to highlight and nurture the Midwest as both a hub of and destination for tech talent and thought leadership. It is one of the most rewarding things I’ve done in my career, and I left our 2017 event asking myself “How do I make this my job?”
It was with that in mind that I decided to move on from FarmLogs, take a break from my 10+ year startup grind, and look for the next way to have a meaningful impact on the Midwest ecosystem. In the meantime, I spent time helping startups lay the foundation for delightful and scalable customer experiences that benefit both the business and customers. I wasn’t sure exactly what my next full-time role would look like, but I decided to wait and trust that the right opportunity would present itself, as it always has. I’m so glad I did. When I learned about the Director of Platform role at Hyde Park Angels, I knew that this was exactly what I’d been waiting for.
I couldn’t be more thrilled to be in this role. The opportunity to support and evangelize Midwest startups at the epicenter — the most active investor group in the Midwest — is a dream for me. I look forward to applying my experience driving organization success through mutually-beneficial relationships, evangelizing the Midwest as a top region in the country for startups and investors, and supporting the people who source and support the innovation of our future.
Alida has laid a fantastic foundation for HPA, which I’m so grateful for. I look forward to carrying on her legacy while also adding my own expertise. This is the beauty of collaboration and diversity. We get to combine multiple sets of talent to create something greater than either of us could have done on our own. And this is why I look forward to collaborating with the Hyde Park Angels community of extraordinary people and leveraging our collective expertise and success to help shape the future of the Midwest and the future of investing.
While 2017 was a strong year for Midwestern startup exits in general, a deeper analysis demonstrates that Chicago in particular is among the nation’s leading cities for top exits and IPOs over the past five years. This indicates the city has evolved and is now presenting a recurring pattern of startup successes that drive attractive venture returns.
Using data from Pitchbook, SEC filings, and my firm’s own proprietary analysis, we at Hyde Park Angels looked at the 10 most valuable exits in major cities outside Silicon Valley from 2013 to 2017. Looking specifically at exits and acquisitions, our research shows Chicago’s 10 most valuable exits generated more money than those in the New York City, Seattle, and Boston metro areas, and its total is only surpassed by Los Angeles.
Chicago’s top 10 exits generated $14.9 billion thanks to eight companies that exited for more than $1 billion apiece, including GrubHub, Coyote Logistics, and Naurex. New York was close behind with $14.2 billion, with successful exits from Jet, Blue Apron, and Etsy. Seattle and Boston followed New York, each generating a little more than $10 billion. Outperforming all cities was Los Angeles, which saw $30.5 billion in its top 10 exits over the past 5 years — a total that was significantly boosted by Snap’s $20 billion IPO last year.
As was the case with Snap in Los Angeles, extreme outliers can skew the perception of how much startups in a particular city are typically exiting for. For example, Groupon’s $20 billion IPO in 2011 buoyed Chicago’s exit numbers for several years. These anomalous exits can make it a challenge when we try to analyze trends at both the national and regional levels.
If we remove L.A.’s Snap IPO, the city’s top 10 exits over the past 5 years total $11.4 billion. This puts all of the top five cities within a closer range of one another. When we examine the exits themselves, we see that each city performs well across major sectors like consumer, enterprise technology, marketplaces, and health care.
Interestingly, when we look at these cities without the Snap outlier, Chicago leads the group. The value of Chicago’s top 10 exits is slightly higher than those in New York and 1.3 to 1.5 times higher than those in L.A., Boston, and Seattle. Perhaps more interesting in this scenario is that Chicago’s 10th most valuable exit (Trustwave’s $850 million acquisition by SingTel) was $261 million higher than the average 10th most valuable exit across all cities ($589 million). These trends reveal Chicago’s strength and consistency as a leader among its peer group.
This analysis further indicates how Chicago’s startup ecosystem nurtures Midwest economic growth and entrepreneurship. My firm defines the Midwest as Minnesota, Wisconsin, Illinois, Indiana, Ohio, and Michigan — a region that contributed $2.9 trillion to the GDP in 2016. Midwest patterns of strength and consistency in our ecosystem are not only good news for the Midwest and Chicago’s ongoing ability to attract more capital, they are integral to the economic strength of the nation.
A trend is emerging in venture capital that is good news for the Midwest startup ecosystem: Companies led by seasoned entrepreneurs who strategically opened major offices in both the Midwest and Silicon Valley attract funding from top-tier VC firms. While it is too early to determine whether this will be the next big wave in Midwest VC funding, recent evidence of this trend has clearly surfaced in Chicago.
It is not surprising that these dually-located companies are increasingly earning the confidence — and capital — of top-tier VC firms. These startups’ founders are proven Chicago entrepreneurs whose past successes fuel new ventures.
Specifically, Livongo CEO Glen Tullman scaled Allscripts and oversaw its 1999 IPO. G2 Crowd co-founder Godard Abel’s previous startup successes were BigMachines, which Oracle acquired in 2013, and Steelbrick, which Salesforce bought in 2015. Similarly, Kenna Security founder Ed Bellis was the Chief Information Security Officer at Orbitz, which went public during his tenure in 2007.
In addition to having proven their ability to help usher a company toward a good exit, these repeat entrepreneurs have powerful talent networks that are now bridged between the Valley and Chicago. Just as noteworthy, this dual location model creates an opportunity for the companies to have a home in the Midwest, which boasts the headquarters of 111 Fortune 500 companies and serves more than 52 million consumers, thereby powering a $2.9T GDP in 2016 — greater than California, New York, and Texas.
In all of these cases, the entrepreneurs made the strategic decision to not create satellite offices but to establish a major presence in both locations. It allows them to leverage their social capital in Chicago and combine it with the talent base and financial capital that the Valley affords. This — along with the entrepreneurs’ track records of success — positions their companies to become safer bets to VC firms.
We expect this trend of dually-located offices to continue as more repeat Chicago entrepreneurs take advantage of their credibility and experience to build new local companies, all while immersing themselves among Silicon Valley’s resources. The result will be a virtuous cycle that bolsters Chicago’s ecosystem, one that will breed value for years to come.
There are some bright spots in representation at the university level — over one-third of undergrad engineers and 29.5 percent of doctoral students at Northwestern University’s School of Engineering and Applied Science are women — but overall, the trend is not pervasive.
There are many reasons for this stunning lack of representation, and most of them start long before college.
While there isn’t a perfect correlation between underrepresented groups and income levels in Illinois, students of color have been shown to suffer disproportionately from the funding imbalance. Reports of low-income schools struggling with chronic understaffing versus high-income schools not only providing iPads to each student but even cafeteria sushi are well documented.
“The hardest thing for many urban schools to do to make further gains in [STEM education] is to find highly qualified technology teachers. But there’s a reality that if I’m trained in computer programming, I can make a lot more money at a tech company than teaching programming. We have to get more people involved in teaching tech.”
Another core challenge Russell finds is that “You can’t be what you can’t see. For young people of color growing up in Little Village or Englewood, they don’t know what a UX designer is. But once they see it, their perspective completely changes.”
With 240 students, 97 percent of whom are African American or Latinx, Chicago Tech Academy focuses on providing students with project-based learning, real-world opportunities in tech companies, and a host of mentoring programs so that students can get the connections they need to succeed in technology — and help them see what a job in the field looks like.
So far, this curriculum is working, with 60 to 65 percent of Chicago Tech Academy high school students eventually enrolling in college, and 30 percent pursuing STEM paths.
Like Russell, Scott Issen, president and CEO of Future Founders, emphasizes the importance of giving underserved communities exposure to paths in entrepreneurship and technology. Future Founders runs programs and mentorship opportunities for both K-12 and millennial groups. Its mission is to get more youth involved in entrepreneurship, which often means STEM. These students typically come from under-resourced areas of Chicago.
Issen said of the student participants he meets in Future Founders’ K-12 programs, about half have never met an entrepreneur, and the ones who have don’t know growth-stage tech entrepreneurs.
Of the students who go through Future Founders’ entrepreneurial-focused programming, over 90 percent believe they can become entrepreneurs and express interest in coding classes, app development, and business formation.
“Our focus is to show students that they can create their own opportunity. They don’t have to go to school and wait for someone to give them a job,” Issen said.
Future Founders runs programs like Future Founders Discover, a six-week bootcamp run within Chicago schools and led by entrepreneur-instructors who teach students the ins and outs of entrepreneurship and facilitate an app-based final project and pitch day.
The organization’s STEM Challenge paired 27 high schools across Illinois with one of 15 industry partners, including Microsoft, Motorola Solutions, Caterpillar, Baxter, and Uptake to solve tech-based business challenges as part of their educational curriculum. Half of student participants are of color and over 40 percent are female.
Echoing Russell and Issen, ISTC president and CEO Mark Harris emphasized, “There’s a disconnect between students and their perceptions of what a STEM job is and what the people who do STEM jobs look like.” Namely, students believe that STEM means working at NASA, but don’t think of companies like Google or Facebook
That’s why ITSC worked with Microsoft to create partnerships with three high schools. As part of the STEM Challenge, students were asked to solve artificial intelligence-related problems for Microsoft, which deepened their understanding of tech while also opening possibilities for careers in the future.
As Harris put it, “[Students] are used to having a teacher at the front of the classroom and an answer in the back of the book, but I think through problem-based learning, students have a whole new shift in what it means to learn. In this case, when they are presented with a complex, very interdisciplinary, real-world problem, there’s a light that goes on.”
The companies that participate in the program get the unique advantage of accessing the next generation of talent and planting the seeds of interest in what they do. ITSC works not just in urban communities, but also in rural areas of Illinois that may not even have broadband access.
“We’re blessed that in addition to collecting the data, our mission is to try to impact [the numbers] through advocacy and programmatic activities. We are going to continue to be intentional about serving urban underserved areas as well as rural areas … to grow the research and tech community in Illinois.”
The Hyde Park Angels Entrepreneurial Education Series takes you through the early stage investment process from start to finish – and the foundation of that process is pitching. Your pitch deck is the most important sales tool in your arsenal – and not just for investors, but also for finding customers and hiring top talent.
On February 16, 2018, we hosted a Build the Perfect Pitch webinar. The attendees really blew us away by their engagement during the Q&A session. After the 45-minute presentation, entrepreneurs asked more than 80 questions. We wanted to address some of those questions in this exclusive new blog built just for you. The full recording of the event is also available.
When is the right time to raise funding?
At a high level, once you’ve hit several business objectives that will provide protection for you in the negotiation process, you’re ready to raise. If you take capital too early, you’ll lose ownership, equity, and control. The more you build out your business before you seek funding, the more leverage you’ll have because you’ve de-risked the investment.
When considering a raise, ask yourself the following questions:
Do I clearly understand the value my business provides?
Is my business model built out?
Do I have some initial traction in the market?
Do I have clear reasons to raise funding? (i.e., raising funding to meet demand or to build the team in order to bring the product to scale)
Can I raise funding again in 12-24 months?
If the answer is “yes” to these questions, then you’re ready to raise. But if you’re considering a raise because you’ll need to shut down otherwise, think more closely about the best course of action moving forward.
What’s the most effective way to approach investors?
It’s never too early to start building relationships with investors. We recommend a strategic approach to make the best use of your and your investors’ time. Start by building a list of venture capitalists you’d like to get investment from, such as investors who specialize in your industry and whose investment criteria you meet. You might target these firms by seeing where companies like yours, or companies you aspire to be like, received funding. Remember, an investment is like a marriage – so be thoughtful and intentional as you make this list.
Next, scour your network for warm connections and ask for introductions. In the investment world, relationships are key, and you’re more likely to get 15-20 minutes with someone through a warm connection. Read up on their background and come prepared with strategic questions and insights.
If you don’t have any warm connections, use social media to your advantage. Start a conversation by following the content your target firms are producing – engage with, compliment, and share it.
Venture capitalists often talk about events they’ll attend. Be there, find a few minutes to chat with them, and be prepared.
What meetings occur after the pitch and before the term sheet is signed?
There’s no specific formula for the focus or number of meetings before a term sheet is signed, but you can expect a standard sequence. You’ll start by educating investors on your business, determining if there’s a match (i.e., both sides understand, trust, and want to work together), and conducting due diligence. These meetings could move quickly depending on the investment opportunity and your relationship with the investor. Depending on whether you already have investors interested and/or have preexisting relationships with investors, your timeline to close will differ.
I am a solo founder, first-time founder, and/or young founder. How can I present a strong Team slide?
Founders come in all shapes and sizes, with a variety of experiences and teams supporting them. The objective of your team slide is to highlight how the management team is absolutely the right group of people to execute on your idea.
Highlight how the team complements one another – and you – without disparaging yourself. Be forthcoming about gaps in the team and how you’re currently filling them with advisors or plan to use funding to actively address them. Read more in our How to Successfully Pitch Your Team to Investors blog.
Is it more appropriate to send a one-pager or your full pitch deck prior to pitching?
It depends on the situation. Is there something particular you’re hoping to achieve by sending a one-pager? Is the investor requiring you to send the full deck? The most important question to ask yourself in this scenario is: why?
What is your one-pager going to accomplish that your pitch deck won’t? What are you trying to achieve by sending a pre-read? And how is delivering it ahead of time going to help you realize your objective? If you can answer these questions with specific, strong reasoning, then go ahead and send your content of choice ahead of time.
If an investor is requiring that you send content, then it’s likely part of their standard vetting process. If you’re concerned about providing the required documentation, reconsider whether this investor is a good fit. If you’re confident it’s a good fit, then provide what they require but consider removing any slides you passionately feel must be brought to life in-person.
The Best of the Rest
To read more about the content covered in the live event, check out our Building the Perfect Pitch blog. We also provided webinar attendees with additional resources after the event, and we encourage you to see how they might help you prepare to raise funding for your business:
As an investment leader in Chicago, I get asked about startup trends on a regular basis. Most often the question I’m asked is, “What is the strongest startup sector in Chicago?”
It’s a hard question because one of Chicago’s core advantages nationally is that we are consistently strong everywhere (except when it comes to finding a franchise quarterback for the Chicago Bears).
At my investment firm Hyde Park Angels, we’ve collected, segmented, and analyzed the data, and we’ve found that across health care technology, fintech, consumer products, and more, we’re seeing impressive growth and performance.
However, what truly stands apart is our performance in marketplace platforms — services that facilitate transactions between buyers and sellers. A combination of factors, including experienced leaders and an influx of capital from previous successes, are driving a virtuous cycle. This is especially relevant given the gig economy that marketplaces employees 34 percent of the nation’s workers and retail marketplaces like Amazon and Alibaba have grown over 50percent annually.
The foundations for today’s marketplace platforms
The wave of marketplace platforms we’re seeing now owes a real credit to Groupon and OpenTable.
The company’s legacy still pays dividends for Chicago today. Brad Keywell and Eric Lefkofsky, serial entrepreneurs and investors who proved instrumental in Groupon’s rise, have founded a host of companies that have bolstered the city’s tech sector, including Echo Global Logistics, Mediaocean, Uptake, and Tempus. They are also the investors powering Lightbank, one of Chicago’s flagship venture capital firms
Like Groupon, OpenTable set an industry standard in marketplaces, creating the first widely adopted solutions for restaurant reservations and consumers in 1998. After going public in 2009 and being acquired by The Priceline Group in 2014 for $2.6 billion, OpenTable remains a major force in the industry today.
Now, GrubHub founder Mike Evans is leading the new on-demand handyman marketplace Fixer, leadership from Avant is starting a new stealth mode startup, and Raise is paving the way for Chicago companies disrupting the way the world views currency.
Now the marketplace sector in Chicago has become established enough that both experienced tech executives in other sectors and the founders of successful marketplace startups are eager to lead emerging companies.
In 2016, ShopRunner recruited Sam Yagan, a former executive at the MatchGroup, to become CEO. Matt Moog, who founded one of the first Chicago marketplaces, Cool Savings, returned to the marketplace model with cofounder Maria Katris through Built In, which matches talent with tech company job opportunities. As Katris focuses on leading Built In’s growth, Moog serves as CEO of product ratings platform PowerReviews.
There’s also Chad Cooper, the former CTO at GrubHub, who founded LandscapeHub with Lisa Fiore. Andy Bokor cofounded Trustwave, a Chicago company that exited for $800 million, and has now cofounded Truss, a marketplace in commercial real estate.
Despite all this success, marketplaces are undoubtedly tough to get started. In a two-sided model, which side must come first: the suppliers or the customers? Once these marketplaces are established, however, they are disruptive, add value on both sides, and allow for rapid expansion across markets, including international ones.
Part of this ease of expansion comes from the strong economic models that often come with marketplaces. These have easy-to-understand unit economics once the marketplaces come together and allows for a clear cut-and-paste replication in most cases across geographies. The other advantage of this model is the opportunity for vitality once traction is established because the customers become top referrers.
Overall, marketplaces are not easy businesses to build, but in Chicago, the path has been paved. I expect to see success continue to breed more success.
The answer is one of the most innovation-driven higher education systems across the U.S.
In 2016, Illinois produced a record 40,400 STEM degrees, outpacing the nation by growing its number of STEM graduates by 10.6% versus the average 6.5%. This growth represents a concerted effort by Illinois universities to create more STEM programs for students, and then keep them engaged after they graduate,
Illinois is also the fourth largest producer of MBAs in the country. Across these MBA programs, entrepreneurship is an in-demand specialization and area of study with more students opting to pursue startup opportunities after they graduate than before.
Universities aren’t just focusing on educating the next generation of entrepreneurs and technologists; they’re powering that growth through strategic partnerships, accelerator programs, investment arms, and live and online resources.
In addition to providing business consulting resources, education around rapid prototyping and enterprise creation, and university-wide commercialization resources, IIT is also home to a technology park and business incubator.
As a result of its wide-ranging resources and access to top-level tech talent, IIT has incubated some of Chicago’s biggest startup success stories, including Cleversafe (which sold to IBM for $1.3B) and bioagriculture startup Chromotin (which raised over $70M in venture capital funding).
What’s more, IIT has attracted major donors from the entrepreneurship ecosystem, some of whom directly benefited from the university’s resources.
Similarly, legendary entrepreneur Ed Kaplan who founded Zebra Technologies, a longstanding leader in bar code technology, donated $10M to IIT’s innovation and tech entrepreneurship institute after getting his undergraduate education in mechanical engineering at the university.
Interestingly, Ed Kaplan also supported the University of Chicago’s New Venture Challenge.
Among the companies that have incubated at Northwestern are 4C Insights(which raised $26M in venture capital funding) and Aptinyx (which raised $65M in venture capital funding).
Northwestern has also been home to entrepreneurs disrupting the logistics industry like Mathew Elenjickal of FourKites and the wireless power space like Jacob Babcock of NuCurrent (both of which my firm Hyde Park Angels invested in).
Northwestern enlists major tech and VC players to provide leadership and support to its programs.
The University of Chicago’s efforts to grow the startup community are widespread across disciplines, degrees, and communities.
The New Venture Challenge (NVC), which is run out of Booth, is recognized as the number one university accelerator program in the country. Among successful participants are GrubHub (which went public in 2014) and BrainTree (which sold to PayPal for $800M).
Since the program began in 1996, it has launched 180 companies still in business that have raised over $585M in funding and generated $5.8B in exits. Rising stars in the clean eating space like Tovala and Simple Mills(which my firm Hyde Park Angels invested in) also incubated there.
The center, known as the Polsky Center for Entrepreneurship and Innovation, operates a co-working space and innovation center called Polsky Exchange North, supports the university’s Innovation Fund, and hosts the NVC, among other core responsibilities.
Already, the Innovation Fund, which invests in startups from an ecosystem that includes the University of Chicago, Argonne National Laboratory, Fermilab, and the Marine Biological Laboratory, has seen success funding ClostraBio, a food allergy solution that raised $3.5M from venture investors.
As Illinois universities lean into the local startup and entrepreneurship ecosystems, we expect to see continued growth and success.
How bad is the diversity in tech problem? Seriously bad. And seriously long-standing.
For almost 30 years, women have made up less than 10 percent of the entrepreneurial and venture capital market labor forces, while Hispanics hovered at 2 percent and African Americans below 1 percent, according to a recent Harvard Business School paper.
After talking with over a dozen women-focused organizations, along with individuals who benefited from their programs, we found a few common themes around why the problem is systemic and how to fix it, including creating communities, providing flexibility and education, and facilitating network-building.
“When we look at women and diversity, we want to make sure that everyone has a voice and everyone feels welcomed,” said Alicia Driskill, founder and CEO of EvolveHer.
According to Driskill, women face significant challenges in technology related to the wage gap, dwindling careers prospects after maternity leave, and lack of leadership opportunities. But to confront these problems, as well as grow their businesses, they need a safe space to talk about them.
She built the Chicago-based EvolveHer as a creative workspace for women with the goal of supporting “a diverse group of women by allowing them to have conversations that will help them on a personal and professional level.”
This need for a community that strengthens women’s positions by giving them the connections and resources they need to get a leg up is a theme across Midwest women-in-tech organizations.
In Indiana, WomenIN empowers aspiring women in technology and seeks to support the growth of female entrepreneurs. The initiative is run through Purdue Foundry, but expands its offerings outside of the university ecosystem.
“Women approach entrepreneurship differently. We’ve found that women entrepreneurs crave increased amounts of validation and support — a confidence boost, if you will,” said Brittany Collins, codirector of WomenIn.
This holds true whether female entrepreneurs are in the same space together. In an environment that traditionally has not accepted women, WomenIN focuses on bringing education and support to founders on-demand and in real time through online platforms.
“An important need for women entrepreneurs is flexibility. … The WomenIN program provides women entrepreneurs with an online community of resources, recordings and fellow women entrepreneurs who are available to help in a variety of ways,” Collins said.
In Michigan, Inforum focuses on accelerating women’s careers by giving them a place to learn, network, and find speaking opportunities themselves. As part of their program, Inforum provides structured education to help grow a greater pool of angel investors and entrepreneurs.
Inforum president and CEO Terry Barclay said that since the program launched in 2012, 100 female entrepreneurs have participated, incorporating 41 new companies, creating 384 new jobs, and receiving 35 new patents. These women have raised more than $41.8 million in new capital and over $9.1 million in government contracts.
“At the current pace of addressing the gender wage gap of 20 cents on the dollar, that gap will close nationally in the year 2059. And in Michigan, where we have an older economy, it will take even longer — till 2084. We can’t let that unfold naturally. We need Inforum because even though women enter the workforce at roughly the same rate as men, we represent just 21 percent of the senior leadership roles,” said Barclay.
But are these programs and initiatives really increasing diversity in tech?
For Julie Novack, CEO and cofounder of PartySlate, the answer is mostly yes. She was part of the first cohort of WiSTEM, a Chicago-based program that connects female entrepreneurs to capital sources, tech resources, and a broader community. Since participating, PartySlate has raised $3 million in funding. (Disclosure: PartySlate is a Hyde Park Angels portfolio company.)
Novack identified the program as useful in the early days of her company because of the outside speakers the organizers brought to educate cohort participants, as well as having a community of female founders to lean on.
“I’m much closer with the female founders I’ve met. You have more in common. You go to these gatherings and it’s 80 percent men. You’re just drawn to each other. I’ve found some of these founders that have kids and families who understand the challenges of balancing everything,” Novack said.
Still, she sees one major gap when it comes to these diversity programs.
“There are not enough female venture capitalists. I am seeing more and more female entrepreneurs. We need to see more women who are investing. I would like to see more venture programs to get women into venture. Giving women the resources to start the business [is important], but they won’t get more funding without more equal representation in venture,” said Novack.
For her part, Novack has built an organization that she says is very diverse, and she’s helped another female founder get funding by making a connection to PartySlate’s existing investors.
Perhaps once we start empowering women in tech with the capital they need to build and invest in companies, inclusion programs will finally start taking hold.
Specifically, while Illinois ranks 15th in the country for retaining computer science graduates, 45 percent of its software engineers leave the state after graduation, many of them leaving for the Bay Area.
So why is the state’s top engineering talent leaving for the West Coast?
According to Jenny Farver, chief technology officer at brand and content creator marketplace Popular Pays, one of the major challenges for Illinois technology companies recruiting engineering talent is competition with firms like Google and Facebook. These companies invest heavily in their recruiting efforts — significantly more than startups can afford. (Disclosure: Popular Pays is a Hyde Park Angels portfolio company.)
“We need to ensure that the pool of the candidates is large enough that startups and large companies can hire out of it,” said Farver.
Creating a larger candidate pool is a problem the state, universities, and local technology companies are tackling.
For one, Illinois universities are doubling down on STEM and engineering-related programs, especially in computer science. Illinois is the fourth fastest growing state for awarding STEM degrees nationally, with universities like the University of Illinois Urbana-Champaign, Northwestern University, and the University of Chicago expanding their related programs. Despite a decline in student enrollment at the university level statewide, all three universities saw increases in those majors. What’s more, the University of Illinois Chicago broke ground on a new engineering building in November, its first new building in 13 years.
But candidates don’t just come from traditional universities anymore. The rise in dev bootcamps across the country, but also at the state level, contributes to a growing number of new engineering candidates.
Justin Stewart, a software engineer on Farver’s team at Popular Pays, was one of these dev bootcamp candidates. He felt motivated to stay in Chicago for family reasons, but after joining Popular Pays, his motivation shifted to staying at the company he loved.
“When you have a small company and it’s just a few people, you have to be a family and feel like you can work together for a long time. My motivation was to follow the company. The company went to San Francisco [for Y Combinator] and so did I. The company came back to Chicago, and so did I,” said Stewart.
Building ties to technology companies early is critical to retention. Illinois’ computer science graduates are five times more likely to work in Chicago than in any other city in the country — they just have to find a match to a local company first.
That’s why John Higginson, chief technology officer at publicly traded online lending company Enova, has built a robust internship program for STEM majors. (Disclosure: John Higginson is an investor at Hyde Park Angels.)
“We focus on juniors. We give them a really good experience, and we don’t just talk about the company, but also the Chicago tech community that they can be part of. We really sell living and working in the city, and we stay in touch with them after the internship is over,” said Higginson.
Consequently, Enova consistently lands recent grads who have developed a strong affinity for the company and the city while in school. According to Higginson, since 2014 Enova’s engineering team has grown from 80 engineers to 140.
But expanding the candidate pool and developing close ties to engineering talent early is not enough to attract top talent, especially in an extremely competitive hiring climate.
“There’s hundreds of companies that have free snacks and soda. [Engineers want] to do interesting things. They want to invent things and solve really hard problems,” said Higginson.
Salil Gupta, a Northwestern computer science graduate who works as a software engineer at Chicago big data startup Civis Analytics, originally left Illinois after graduation for the Bay Area because of the sheer number and variety of tech startups headquartered there. But just two years later, he came back for both personal reasons and the experience Civis offered.
“Civis provided me with a unique opportunity to work in a mission-driven organization. I work at Civis [because] we work on technically challenging problems, the engineering talent here is phenomenal, there is solid technical mentorship, and it’s rewarding to know that my work has actual social impact,” said Gupta.
Ultimately, the best way to keep talent in Illinois is to support the growing technology ecosystem. That way, engineers like Gupta can see more opportunities to work in challenging, rewarding environments from the outset.
“Illinois still has some growing to do in terms of the density of technology companies [but], there is a much richer set of options there than there was five years ago. The reason that I am very bullish on engineering in Illinois is that it’s the opportunity to do engineering in the context of a large business market. We’ve only scratched the surface of technology-oriented entrepreneurship because it’s very easy to find new markets here,” said Farver.
Correction, January 30: This article previously misidentified the university that broke ground on a new engineering building. It is the University of Illinois Chicago.
This national trend holds true across the Midwest. Based on data from PitchBook, Crunchbase, and my firm, Hyde Park Angels, of the 20 highest-valued companies across Illinois, Indiana, Ohio, Michigan, Minnesota, and Wisconsin, just six feature female leadership in the C-suite.
Even more strikingly, only four venture and private equity-backed companies with publicly disclosed valuations above $85 million had female CEOs. This elite group comprised Illinois-based OneSpace and Levo Therapeutics, Michigan-based Millendo, and Ohio-based Eloquii Designs.
In Chicago, of the 145 funding rounds reported in 2017, a total of 14 — or roughly 10 percent — went to female-founded or female-led companies.
But despite their small numbers, the women who make up that 10 percent are doing their part to create opportunities for other female leaders.
Early last year, Amanda Lannert raised $20 million from growth capital firm Updata Partners for her company Jellyvision, which builds interactive human resources software. (Disclosure: Amanda Lannert is an investor in Hyde Park Angels.)
“I see a lot more women starting companies. But I don’t see more women running large tech companies that exit or are raising large rounds. Just like Groupon created a watershed of awareness and liquidity for the Chicago tech scene, we need more women-led businesses to create massive shareholder returns, and then the money [will] follow,” said Lannert.
Achieving this goal requires two elements. One is investing in female founders so they can grow companies mature enough to raise and exit. The other is keeping women in technology long enough for them to reach the leadership levels.
Lannert is doing both by serving as an angel investor, planting the seeds early, and promoting diversity in her own company. Jellyvision has reached gender parity, including at the leadership levels.
“I think there are plenty of qualified women. We need people to focus on getting them into boards, getting them into leadership, and having them advocate for themselves,” said Andee Harris, a veteran startup leader and current CEO of employee engagement platform HighGround.
The key is encouraging women in tech to advocate for themselves in an environment that might not always be supportive, according to Harris. “People like to promote people who look like them, act like them, [and who] they feel connected to. Being male is part of that,” she explained.
Harris said male advocates helped her reach higher levels, and the support from those around made her feel more confident in promoting herself. She believes one of the ways to close the gender gap is to encourage tenacity and self-assuredness before women ever get to tech jobs.
As an executive board leader of Lumity, a nonprofit organization dedicated to preparing teens and young adults for careers in STEM, Harris encourages girls to develop both technical and social skills. Teaching girls to be assertive and confident, she believes, she can foster the grit they need to build pathways into and ultimately sustain meaningful careers in tech.
For Dori Graff, cofounder and CMO of Minnesota-based Kidizen, a resale marketplace for children’s clothing, the Midwest is in a good position to back more female founders.
“I think that one of the advantages to being a female founder in the Midwest is that certain norms and formulas for what a tech startup should look like are less defined and entrenched. I also see investors looking beyond Silicon Valley for new ideas and perspectives. With this comes the realization that women in technology bring a whole new perspective,” said Graff.
Raising capital and advancing in tech fields are real challenges for female entrepreneurs in the Midwest, as they are for their Silicon Valley counterparts. But as more capital comes into the region and female leaders lean into championing one another, better opportunities should come into play.
Ultimately, Chicago and other Midwest cities are communities “where any win is everyone’s win. This community is incredibly open, networked, supportive, collaborative, and helpful. This is a huge plus for any entrepreneur,” said Lannert.
It remains to be seen whether this attitude will translate into more wins for women.