Is Chicago A Financing Desert?

Melissa Harris of the Chicago Tribune seems to think so.  Her recent column about Chicago financing struck that tone.  A quote from her column, “Chicago trails Austin, Salt Lake City, Denver and Minneapolis in the ratio of dealmakers per capita, according to Zoller, an associate professor at the University of North Carolina at Chapel Hill‘s Kenan-Flagler Business School.”

Hmm, per capita might be the wrong way to measure financing.  First, the only people qualified to finance deals are accredited investors as defined by the SEC.  Does Chicago lag behind the other cities when measuring on that criterion alone?  

The article goes on, “Given Chicago’s growing reputation for entrepreneurship, “many of the promising ventures must be funded through equity outside of the region,” Zoller concluded based on his research and without reviewing the Tribune’s information.”  Question:  Does it matter where the money comes from if the business operates in Chicago?  So much of the new business start up world is virtual based, it is inevitable that there will be a lot of overlap in financing and in job creation city to city, country to country.  This assumes that there is a fixed pie of growth tied to a geographic region. That simply is not the case.  

HPA agrees that we can do more with regard to building an entrepreneurial ecosystem in Chicago.  It needs to be flatter, and more horizontal for funding sources and mentorship.  Ms. Harris does illustrate that point in her article too, ““What you have is a small number of dealmakers doing more than their fair share to support early-stage technology companies,” said Zoller, who is on leave from UNC while leading the entrepreneurship program at the Kansas City, Mo.-based Kauffman Foundation. “That creates highly channeled, highly hierarchical dealmaking. A really vibrant entrepreneurial ecosystem would have broader participation.”  No doubt, Silicon Valley, Austin, TX and Boston have deeper and broader pools when it comes to start ups and access to start up capital.  However, you have to start somewhere, and right now there is an ecosystem building in Chicago.  

Chicago can do better.  We don’t need a lot of government help to do it.  The best way for government to help is to streamline regulation and to get rid of regulations that block start up businesses from originating.  Chicago already has a great support community via incubators, college programs, a talent pool, and good places to hang out and eat!  

You can get involved helping to build an entrepreneurial ecosystem in several ways.  The best way, as we have written about before on this blog, is become a customer of a start up.  The second best way is pick up the phone and introduce a local start up to a customer.   Doesn’t cost you anything.

Nurture it and it will grow.  Starve it, and it will grow somewhere else. 

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