Chicago Made explored several companies across different industries to answer the question: What is a startup and what type of person chooses to become an entrepreneur?
It turns out there’s not one exact definition for the words “startup” or “entrepreneur.” They take many forms in Chicago, from the experienced businessman to the fresh-faced college student. From the shiny new tech company to the old-school manufacturing warehouse, we looked beyond River North to see what Chicago is making.
Troy Henikoff is the managing director of Techstars Chicago and teaches entrepreneurship at Northwestern University. Each year Techstars, formerly Excelerate Labs, receives about 1,000 applicants vying for 10 spots. Techstars looks for entrepreneurs solving interesting problems for a big market. Once picked, the 10 applicants begin a 90-day boot camp, joining an extensive network that provides seed capital, office space, pro bono and mentorship. Mentors can include angel investors or VC investors and founders of companies like GrubHub, Groupon, and OpenTable.
Techstars is entering its fifth year, and so far, its 40 startup companies have raised more than $45 million, Henikoff said.
Why is Chicago the place to be for digital startups?
It depends what perspective you’re looking at. We’ve had a number of investors over the last two years say that they’re only investing in tech in the Midwest because of the ridiculously high valuations and prices that are being seen in New York, Boston, San Francisco and The Valley. That’s one reason Chicago is attractive to investors.
Chicago has a rich, fertile ground for tech startups. We have two of the best universities in the country. University of Illinois has one of the best engineering programs. There’s a high concentration of great, tech people here in Chicago. In terms of customers, think about all the Fortune 500s that are here that you can sell to.
Can you define startup?
When I think about startups I think about high growth businesses. There are many different kinds of entrepreneurs. There are what I call lifestyle entrepreneurs, job replacement entrepreneurs, and then there are entrepreneurs who are high growth entrepreneurs. That’s what we focus on at Techstars, and we actually focus on a subset of that which is only in digital technology – web and mobile.
There are some startups focusing on manufacturing physical products.
The reason we focus on digital technology is that you can do so much in such a short time with so little capital. In software, there are people who are releasing software every day. You can learn and grow so, so, so fast because it’s so quick and inexpensive to modify your product.
How does mentorship play a role in starting up a business?
I started my first company right out of college and I had no idea what I was doing. I didn’t have the support like 1871. The people who are successful realize it takes more than just passion and a lot of hard work. It takes those things, but if you can find mentors who can help you, if you can get guidance and learn as much as you can from other people’s mistakes as quickly as you can, that’s when you’re going to be able to accelerate your growth.
Three Northwestern University students developed a device that harnesses kinetic energy and generates up to 6 hours of battery life for smartphones. This month the team won $75,000 at the Clean Energy Challenge. The team of Ph.D. candidates said that myPower, born out of the NUvention: Energy course, is already attracting the attention of investors. The 3-D printed product is expected to cost between $60 and $80.
How is Chicago becoming the next hotspot for entrepreneurs?
Tejas: Clean Energy Trust has been instrumental in connecting chicago energy entrepreneurs. And also, the incubators like 1871 host co-working space and a lot of other events. So you start to see the community build a lot. I think the other two big players are Northwestern and University of Chicago.
How does the device work?
Mike: There are internal components that couple to your own movement. As they move they turn that motion into electrical energy, and then it becomes stored in the battery inside the device. It basically transfers your motion into electricity, and electricity is stored in the battery; the battery transfers the energy to your phone.
Is Chicago creating startups that are useful to people?
Tejas: Some of the startups we’re familiar with that have been successful is SwipeSense for doctors, BrightSeed, and Cynode. A lot of the startups are product based because they are coming out of research technologies at the school or creative people designing them.
Mike: A lot of them focus on finding the problem-statement. If there’s no problem for your product, there’s not going to be a lot of useful demand.
Is a degree in entrepreneurship from a university necessary?
Alexander: No, you don’t need the formal training, but it can really help to have it. I wouldn’t know where to start a startup company. Even the people who claim that you don’t need a formal education to do that, I bet they’ve all read the lean startup books.
Mike Geier, CTO | Tejas Shastry, CTO | Alexander Smith, CPO