There’s no shortage of cities vying to be the next Silicon Valley, and over the last few years Chicago has made it clear that it too is throwing its hat into the ring.
Investors like venture capital firm New Enterprise Associates have taken notice, pouring money into companies like social media management tool Sprout Social (the VC firm was also an early investor in the region’s most well-known startup, Groupon). Entrepreneurs Brad Keywell, recently profiled in Fortune, and his partner Eric Lefkofsky, who co-founded Groupon along with former CEO Andrew Mason, are also investing in Chicago-area companies—their local venture capital firm Lightbank has funded 91 startups, about a third of which are based in the Windy City.
Buoyed by private and public investments in incubators like 1871, Chicago’s entrepreneurs have more resources than ever before (Mayor Rahm Emanuel, up for a runoff election on April 7, has made the city’s technological prowess a priority). Of course, Chicago has a long way to go: When it comes to venture capital dollars, it still lags behind New York, Seattle, Boston, Cambridge, Los Angeles and, of course, San Francisco and Silicon Valley, according to data from research firm Preqin. But then, as Chicago’s homegrown tech frenzy grows, the Second City may one day earn that title on the entrepreneurial map.
Check out the eight hot startups below.
In January the gift card marketplace raised a $56 million round of funding, making it one of the largest tech deals in the Chicago area in the last year.
One of Chicago's fastest-growing companies, ContextMedia plans to add 600 jobs in the next two years. Its technology distributes health information and programming directly to doctors' waiting rooms. Co-founders Rishi Shah and Shradha Agarwal have also set up their own fund to invest in other startups.
Chicago's most famous startup has had plenty of ups and downs over the years. Current CEO (and co-founder) Eric Lefkofsky is trying to steer the daily-deal site back to stability and sustainable growth by tweaking its business model and investing in international expansion. So far, it appears to be working: Groupon's 2014 revenue was up 24% from the year before.
Another publicly traded tech company with a home base in Chicago, GrubHub made its debut on the public market nearly a year ago. The food delivery app is hoping to take a bite out of what it thinks could be a $100 billion opportunity—enabling delivery services for restaurants.
Brad Keywell's latest company has an industrial-sized goal—taking on none other than General Electric. The startup, in stealth mode until recently, has developed a platform for the industrial Internet (think connected cranes and medical imaging machines). While it's still in its infancy, it has some dedicated backing from Keywell and co-founder Lefkofsky—as well as early investor and customer Caterpillar, based in nearby Peoria.
Launched in 2011, the startup is backed by Andreessen Horowitz and Lightbank, Brad Keywell and Eric Lefkofsky's venture capital firm (yes, those two have their hand in lots of Chicago-area companies). Belly signed up 7-Eleven as an early customer and is now going after larger and larger partners.
The company's software, which takes data and turns it into a narrative, started as an academic project at Northwestern University. It recently landed $10 million in funding and insurer USAA as a customer.
The private health insurance marketplace says it has helped 30 million people shop for coverage. It recently partnered with Walgreens to offer insurance options for part-time employees, and benefitted from the surge of demand after the passing of the Affordable Care Act.