What We Learned About Emerging Innovation Trends in the Midwest from the Chicago Venture Summit
Since launching eighteen months ago, the Chicago Venture Summit has quickly become a mecca for venture capitalists across the country to learn more about and meet with Midwest tech startups on the rise. Last year’s participating startups alone have raised $220.87M since presenting, and this year’s lineup will likely be on pace to do the same. Hosted by World Business Chicago and ChicagoNext, currently chaired by Hyde Park Angels member Mark Tebbe, who also founded Lante Corporation and Answers.com, the summit worked to promote the Midwest and Chicago as a burgeoning entrepreneurial ecosystem.
Hyde Park Angels attended to support its four presenting portfolio companies– Motion AI, NuCurrent, Rithmio, and Xaptum, with Managing Director Pete Wilkins introducing Motion AI — and learn more about emerging trends and patterns in innovation. Here’s what we learned.
1) Unicorns Don’t Just Live on the Coasts
One of the major themes of the summit was legacy, namely the idea of building a legacy tied to creating an impact on the world through technological transformation. The leaders of Chicago’s existing tech unicorns and soon-to-be unicorns — Shradha Agarwal (Co-Founder and President, ContextMedia), George Bousis (Founder and CEO, Raise), Chris Gladwin (Founder, Cleversafe), Al Goldstein (Founder and CEO, Avant), and Andrew Sieja (President and CEO, kCura) — all agreed with the basic idea Shradha introduced, “We are always building for the future and something that scales for years to come.”
This fundamental belief in working towards developing a better future has driven companies like theirs to achieve enormous successes, like Cleversafe’s $1.3B acquisition by IBM or Avant’s nearly $2B valuation. Moreover, globalization has created opportunities for companies to grow rapidly regardless of their zip codes, acting as a double-edged sword. On the one hand, unicorn status can be achieved outside of Silicon Valley, New York City, and Boston, but on the other hand, startups are now faced with competing not just against local or national rivals, but global ones. This latter idea presents both a problem and an opportunity for Chicago; as Al Goldstein stressed, “one of the challenges of Chicago is that B2C companies are undercapitalized” and upstream capital is in short supply. Building a contingent of upstream investors and looking beyond B2B models may offer up the Midwest ecosystem the chance to breed more tech heavy-hitters at home.
2) There Are Platform Opportunities Beyond Mobile
Steve LaValle, Former Chief Scientist at Oculus, which was acquired by Facebook for close to $2B, spoke with Mark Tebbe to discuss how the Rift was ultimately developed and looked to the future of virtual reality, stressing one key idea: VR and its cousin AR are the new emerging platforms of this technological era. Just as mobile fundamentally changed the way the world interacts with technology and itself, VR is poised to do the same. The technologies are rapidly evolving beyond just gaming into new uses and opportunities.
As Steve put it, “there’s one fundamental principle that keeps applying; people adapt what they know” to new platforms. Virtual reality may have started with gaming, but now as more scientists, technologists, and developers grow to understand virtual reality as a platform, they are manipulating it to work with their specialties and interests. A future of business solutions, education, and communication applications is not far from view. Ultimately, Steve’s most impactful predication was: “there are so many devices for capturing the three-dimensional world, we’re going to see these things merge.”
3) Corporations Are the Next Big Venture Players
“Having a corporation rubber stamp your technology can be truly [invaluable],” emphasized Rithmio Founder and CEO Adam Tilton, whose gesture recognition for wearable technologies was in part funded by Intel Capital, a leader in its targeted space. This point came up again and again as corporate investors from Caterpillar Ventures, CME Ventures, and Motorola Ventures spoke about their respective investments, initiatives, and mandates. In particular, Rumi Morales, Executive Director of CME Ventures, stressed that their investment activity and process is unique, and that each corporate venturing arm is structured differently and has different goals, so startups need to do their homework when approaching investors. NuCurrent, not only addressed how corporations could be invaluable validators of their technologies, but had actively and aggressively invested in new startups and technologies.
4) Chicago Is Truly Becoming an Innovation Hub
Just last year, 143 Chicago companies raised over $1.7B, and 39 exited, generating $8.2B in capital. Historically, Chicago has not been a center for entrepreneurship and innovation, at least compared to its coastal counterparts. However, opportunities abound for a number of reasons, including its unique position as the most diverse economy in the country. Multiple types of industries exist and flourish, and with the first class of truly successful tech players maturing and exiting, its finally poised to reach greater heights.
As George Bousis, Founder & CEO of Raise, pointed out, Silicon Valley’s success stories are built on “a series of generational successes…that have bled into the next companies.” Its dominance in the startup space has much to do with how long the market there has existed. The fact that investment activity, startup growth, and mega exits are reaching record levels coupled with the vast amount of private capital, corporate venturing and partnerships, and university talent and resources being deployed to stimulate more market success indicates a bright future for Chicago’s position as a national and global innovation hub.
Octavian testing oculus rift // TEDxAmsterdamED Amsterdam via PhotoPin (license)