{"id":8011,"date":"2019-01-02T17:54:00","date_gmt":"2019-01-02T22:54:00","guid":{"rendered":"https:\/\/blog.brainstation.io\/?p=8011"},"modified":"2019-10-28T15:10:23","modified_gmt":"2019-10-28T19:10:23","slug":"2018-was-another-big-year-for-chicago-tech","status":"publish","type":"post","link":"https:\/\/brainstation.io\/blog\/2018-was-another-big-year-for-chicago-tech","title":{"rendered":"2018 Was Another Big Year for Chicago Tech"},"content":{"rendered":"

As 2019 gets underway, we thought it might be fun to take a moment to look back at 2018. As you\u2019ll see, it was a big year for Chicago tech. <\/span><\/p>\n

Here are some of the Windy City\u2019s most important tech industry stories and developments from the year that was. <\/span><\/p>\n

The Chicago Tech Sector Gets Noticed<\/b><\/h2>\n

In 2018, companies like Rio Tinto, Showpad, and Iam bank expanded their Chicago-based operations, and for good reason: the city is gaining a reputation for its abundance of talent.\u00a0<\/span>Illinois <\/span>ranks<\/span> fifth across the United States for STEM graduates, with nearly 25,000 degrees awarded in 2017. It is also the fifth-largest STEM workforce in the country, with more than 320,000 professionals. <\/span><\/p>\n

The city also has some of the lowest-tech wages and the <\/span>slowest tech wage growth <\/span>among top metro areas in the country. While this isn\u2019t great news for tech professionals, it is offset by the region\u2019s reasonable cost of living and the fact that operational savings are attracting new investment.<\/span><\/p>\n

\"Matt

Matt Kamen, Foursquare | Source: Foursquare<\/p><\/div>\n

Foursquare, for example, plans to hire a half-dozen engineers in the city this year, with a focus on data science, analytics, and machine learning. Yes, six new employees are not exactly earth-shattering, but the news is notable when you consider that the company also looked at Toronto, Austin, and Montreal as possible destinations for expansion.\u00a0<\/span><\/p>\n

\u201cWe want to tap into the Chicago market. We\u2019re excited about the tech talent there\u2014the new grads, people returning home because it\u2019s such a livable city,\u201d Foursquare Senior Vice President of Engineering Matt Kamen <\/span>told<\/span><\/a> Crain\u2019s Chicago Business.<\/span><\/p>\n

These are some of the reasons why Chicago has been called the best<\/span> startup city<\/span> in the Midwest, with 357 startups founded in the last three years. This kind of entrepreneurial spirit is attracting younger workers:\u00a0<\/span>Individuals aged 25 to 34 with a bachelor\u2019s degree are relocating to Chicago <\/span>faster than any other city<\/span>.\u00a0<\/span>At the end of 2017, the city <\/span>had<\/span> more than 14,000 tech businesses and 341,600 tech workers, which had <\/span>increased by 15 percent<\/span> from the year before. This looks to have continued in 2018, as in November, Mayor Rahm Emanuel announced that 16 local technology companies had added or will be adding a combined 2,000 jobs in Chicago within 2019.<\/span><\/p>\n

All of this hasn’t gone unnoticed. In March, KPMG released the \u201cChanging Landscape of Disruption Technologies” <\/span>study<\/span>, which had Chicago and Boston in joint second place as the most innovative city nationwide. \u201cChicago and Boston are positioned to be leading tech hubs for years to come given the continued rise in VC investment and the incremental presence of ikey tech giants,\u201d the study wrote. <\/span><\/p>\n

That same month, the city <\/span>won <\/span>a Smart 50 Award from Smart Cities Connect<\/span>, which honors the 50 most innovative and influential projects each year from around the globe. Chicago was included for its Array of Things program, which will act as a \u201cfitness tracker\u201d for the city, measuring liveability factors like climate, air quality, and noise to detect traffic, improve pedestrian safety, identify standing water, and more. <\/span><\/p>\n

\u201cThe Array of Things program is another example of the City\u2019s commitment to developing and implementing new technology that will help fuel opportunity and engagement to help Chicago become a more transparent, innovative, effective and efficient city,\u201d Mayor<\/span>\u00a0<\/span>Emanuel said.<\/span><\/p>\n

\"Chicago's

Chicago’s Array of Things Program | Source The Computation Institute<\/p><\/div>\n

The City Raises the Bar <\/b><\/h2>\n

Building on that momentum, Chicago launched numerous initiatives in the past year to bring the city\u2019s tech scene to the next level.<\/span><\/p>\n

\"Penny

Penny Pritzker, P33 | Source: Penny Pritzker<\/p><\/div>\n

In October, Chris Gladwin and former U.S. Secretary of Commerce Penny Pritzer launched <\/span>P33<\/span>, which aims to make Chicago a top global innovation hub by 2033. Made up of close to 200 business and computer leaders, educators, entrepreneurs, tech experts, and policymakers, its goal is to reclaim the city as the \u201cWorld\u2019s Brightest Spot\u201d for technological discovery and development.<\/span><\/p>\n

“Together, we will harness the collective power of what’s already happening in\u00a0Chicago\u00a0today to build momentum for tomorrow,” <\/span>said<\/span><\/a> Pritzker. “We plan to make\u00a0Chicago\u00a0a magnet for technology’s next era of creators and generate opportunity across all industries for everyone living in our city.”<\/span><\/p>\n

That same month, the city\u00a0<\/span>announced that it would be the first in the world to pilot the Smart City Digital Inclusion Maturity Model<\/span>, an assessment tool created by G3ict and World Enabled with support from Microsoft.\u00a0<\/span>Designed to help city leaders and urban planners better understand the needs of people with disabilities, the Maturity Model helps measure digital inclusion and track progress. <\/span><\/p>\n

In June, the city also <\/span>began a collaboration<\/span> with <\/span>The Boring Company<\/span>, founded by Elon Musk. The goal of the collaboration is to build the Chicago Express Loop, a system of autonomous vehicles that will transport passengers to O\u2019Hare International Airport at speeds over 100 mph.<\/span><\/p>\n

\u201cIf you look at the history of Chicago\u2026every time we\u2019ve been an innovator in transportation, we have seized the future,\u201d Mayor Rahm Emanuel <\/span>told<\/span><\/a> the Chicago Tribune. \u201cI think figuring out \u2014 when time is money \u2014 how to shrink the distance between the economic and job engines of O\u2019Hare and downtown positions Chicago as the global leader and global city in the United States.\u201d<\/span><\/p>\n

\"Chicago

Chicago Express Loop | Source: The Boring Company<\/p><\/div>\n

In August, ChicagoNEXT (an initiative of World Business Chicago, the Mayor\u2019s Office, the University of Illinois, and C3) hosted the three-day <\/span>ThinkChicago: Lollapalooza 2018<\/span> program. ThinkChicago invited 200 of the nation\u2019s top tech and business students to experience one of the country\u2019s most popular music festivals, meet Chicago tech icons, and pitch ideas. <\/span><\/p>\n

\u201cThinkChicago inspires students to unleash their career potential by exploring opportunities with Chicago startups and innovative companies,\u201d Mark Tebbe, chairman of ChicagoNEXT <\/span>said<\/span><\/a>. \u201cBy connecting this top talent to Chicago and its leading businesses, it\u2019s a win-win-win for our city, companies, and students who are ready to start their careers.\u201d<\/span><\/p>\n

The city also <\/span>created<\/span> a new design office under its Department of Innovation and Technology earlier this year. The office aims to designs digital products and services, with its mission \u201cto listen, amplify, and design with the community to build better technology experiences for everyone.\u201d<\/span><\/p>\n

Another Big Year on the Funding Front <\/b><\/h2>\n

While falling short of the record-setting amount raised in 2017 ($1.7 billion total), this past year was still great for Chicago tech, with almost $1.4 billion in funding. The city also continues to provide a good return on investment. According to Pitchbook, Chicago startups give investors a median multiple on invested capital (MOIC \u2013 calculated by dividing startup exit value by the total amount of venture capital raised by the startup) of 5.6 times, which is better than the Bay Area, New York, and Boston.\u00a0<\/span><\/p>\n

\"Cresco

Cresco labs | Source: Crain’s Chicago Business<\/p><\/div>\n

The largest funding rounds of the year took place in October when local companies raised more than $405 million. This was led by cannabis company Cresco Labs, which announced $100 million in Series D funding round, making it the second-largest private funding round in U.S. cannabis history. \u00a0The funds will allow Cresco Labs to expand the production of their \u201cmedically-focused and adult-use\u201d cannabis products.<\/span><\/p>\n

Just a few weeks later, Verano Holdings, a new Chicago-based holding company that consolidated several cannabis operations, announced it had raised <\/span>$120 million in financing<\/span> to fund its expansion. Investors included Toronto-based Scythian Biosciences and Markham, Ontario-based Serruya Private Equity. <\/span><\/p>\n

Other big funding rounds include Tempus, a startup focusing on advancing precision medicine through data analytics, which\u00a0<\/span>raised<\/span> a $110 million Series E round in August. Tempus uses advanced machine learning, next-generation sequencing, and AI-assisted image recognition to help thousands of physicians make real-time, data-driven decisions.<\/span><\/p>\n

G2 Crowd, a peer-to-peer platform that lets users review business software, <\/span>raised<\/span> a $55 million Series C round in October. Funding was led by Silicon Valley-based IVP, but also included Emergence Capital, Accel, and Pritzker Group Venture Capital. The round brought G2 Crowd\u2019s total amount raised to $100 million.<\/span><\/p>\n

\u201cThis funding is about more than reviews,\u201d G2 Crowd CMO Ryan Bonnici said. \u201cThis funding is about building the world\u2019s biggest business commerce platform.\u201d<\/span><\/p>\n

\"G2

G2 Crowd | Source: VentureBeat<\/p><\/div>\n

Meanwhile, social media management platform Sprout Social announced it had <\/span>raised $40.5 million<\/span> in new funding led by Future Fund, an investment fund spearheaded by the Australian Government. Sprout Social has now raised $103.5 million in all, with the latest funding intended for product improvements and international expansion. <\/span><\/p>\n

Not to be outdone, <\/span>ShipBob<\/span>, a tech-enabled fulfillment service, also raised $40 million in new funding, bringing its total raised to more than $62 million. The latest round was led by Menlo Ventures, but also included existing backers Bain Capital Ventures, Hyde Park Venture Partners, Hyde Park Angels, and Y Combinator.<\/span><\/p>\n

The local acquisitions front <\/span>was just as busy<\/span>. Leading the way was DocuSign, the San Francisco-based electronic signature company, which <\/span>acquired<\/span> cloud software startup SpringCM for $220 million. SpringCM\u2019s software helps companies manage sales contracts and other types of documents across desktop and mobile platforms.<\/span><\/p>\n

A few months earlier, national retail chain Kroger purchased Chicago-based meal kit startup <\/span>Home Chef<\/span> for $200 million, which may rise to $700 if the startup hits certain growth targets. <\/span><\/p>\n

Expansions in the Windy City<\/b><\/h2>\n

Although Chicago failed to land Amazon\u2019s HQ2, it did make the <\/span>top five<\/span> \u2013 out of a total of 238 cities. This underscored much of what the city had to offer, and other tech titans took notice.<\/span>
\n<\/span>
\n<\/span>Facebook <\/span>announced<\/span> in June that it was expanding in the Windy City, opening a 263,000 square feet office downtown. The social media giant is also expected to hire close to 500 new employees in the city, including tech, sales, and office support staff.<\/span><\/p>\n

Google <\/span>announced<\/span> in October that it leased an additional 132,000 square feet of office space in the Fulton Market district. <\/span>
\n<\/span>
\n<\/span>\u201cWhat started out as a small sales office has now grown to house some of Google\u2019s most critical teams with roughly over 1,000 employees working across product, engineering, technical infrastructure, advertising and more,\u201d Karen Sauder, Google’s Vice President\u00a0<\/span>told<\/span> the Chicago Tribune. \u201cChicago is considered an innovation hub for the greater Midwest and attracts incredible talent from across all industries.\u201d <\/span><\/p>\n

\"Salesforce

Salesforce Tower Chicago | Source: Curbed Chicago<\/p><\/div>\n

Possibly most impressive was the <\/span>announcement that Salesforce<\/span> will open a new, 57-story Salesforce Tower, paying <\/span>475 million<\/span> over 17 years for a 500,000-square-foot lease. <\/span><\/p>\n

\u201cChicago is the Midwest\u2019s largest city with a global and economic force that attracts a wealth of talent and international business,\u201d said Tyler Prince, EVP of Industries and Partners at Salesforce <\/span>told<\/span><\/a> Built in Chicago. \u201cSalesforce is committed to continued growth in the region and supporting our thousands of Chicago-based customers and partners as they transform their businesses and connect with their customers in new ways.\u201d<\/span><\/p>\n

By 2023, when the new Salesforce Tower Chicago opens, the company plans on moving its 1,400 existing workers there and hiring 1,000 more. By that time, it may be just one of several beacons for a soaring local tech industry that shows no signs of letting up.<\/span><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

A look back at some of the Windy City\u2019s most important tech industry stories and developments from the year that was.<\/p>\n","protected":false},"author":7,"featured_media":8013,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[84],"tags":[707,708,706],"yoast_head":"\n2018 Was Another Big Year for Chicago Tech<\/title>\n<meta name=\"description\" content=\"2018 Was Another Big Year for Chicago tech. 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