It's not Silicon Valley but...Upswing for Venture Capital in the Midwest
The August issue of Eye on Innovation discussed venture capital—its importance, opportunities and the march toward globalization. But, are there changes in VC in the United States? While much venture capital activity occurs on the U.S. west and east coasts, the Chicago Midwest is finally on an upswing. Previously, finding capital had been particularly problematic for the Chicago area. There was so little of it that a lot of companies left.

According to articles compiled from Dialog news and trade journals, during just the first half of 2010, venture capital investments in Illinois startup companies gathered momentum and increased in dollar value with nearly $432 million invested in Illinois-based enterprises, compared with $184.2 million invested for all of 2009 and $467.4 million in 2008. Previously, investments in Illinois-based companies ranged from 0.8 percent to 1.5 percent of total investments. This year, Illinois represents 3.5 percent.

Why is Chicago venture capital riding high?
Several factors affect the increase in VC in the Chicago and surrounding areas of the Midwest.

• Entrepreneurs. Young talent in Chicago's start-up community is incredibly energetic with a lot of ambition says the Center for Research in Technology and Innovation, Northwestern University Kellogg School of Management.
• Educational opportunities. Major universities with leading schools of business are initiating new graduate programs. Entrepreneur magazine and the Princeton Review survey results show:
  • The University of Chicago, Booth School of Business, Polsky Center for Entrepreneurship ranks second in Graduate Entrepreneurship Programs.
  • The University of Chicago ranks in the top ten graduate category of the survey
  • The University of Michigan Ross School of Business ranks third in entrepreneurship education due to the innovative programs and courses offered by the school's Samuel Zell and Robert H. Lurie Institute for Entrepreneurial Studies (ZLI).
• Strong corporations. The focus at the Booth School is driving innovation in the areas where Chicago's industries are most prevalent, including manufacturing, commodity trading, transportation and pharmaceuticals.
• Incentives. In its ninth year the Chicago Innovation Awards has already received a record number of applications this year. Last year, nominations numbered 325, compared with 60 its first year.
• Social networking. MidVentures Launch, the largest technology conference in the Midwest, started last year and has received overwhelming response.

Why is entrepreneurship important?
Why does it even matter if Chicago cultivates entrepreneurs? Unlike established companies that are more affected by economic changes, start-up businesses, according to a study based on U.S. Census data, drive job growth in the American economy. Entrepreneurs have also historically been key drivers of economic recovery in past recessionary periods.

Investors must take the next step. Their leadership is needed to break out of the conservative Midwestern mentality and continue looking for innovative start-up companies to back.

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