Venture Ecosystem FactBook: 2017 Credits & Contact PitchBook Data, Inc. JOHN GABBERT Founder, CEO ADLEY BOWDEN Vice President, Market Development & Analysis

Content GARRETT JAMES BLACK Manager, Custom Research & Publishing REILLY HAMMOND Data Analyst JENNIFER SAM Senior Graphic Designer

Contact PitchBook pitchbook.com Contents RESEARCH [email protected]

Introduction 3 EDITORIAL [email protected]

Chicago in the US Venture Ecosystem 4 SALES [email protected] Economy 5

Investment Activity 6-10 COPYRIGHT © 2017 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any Exits & Fundraising 11-12 means—graphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systems— League Tables 13 without the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment. The PitchBook Platform The data in this report comes from the PitchBook Platform–our data software for VC, PE and M&A. Contact [email protected] to request a free trial.

2 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO Well-positioned, yet underserved at the late stage Introduction Look up a company. Third in our series of reports focused on exploring US venture ecosystems at a more granular level, the Chicago FactBook offers multiple contextual datasets And its cap table. woven together with analysis of the current domestic venture environment. And its investors. When it comes to , analysis can be particularly challenging given the nature of the model, especially when it comes to quantifcation of And its EBITDA risk. Moreover, if the past 20 years of fnancial history have taught us anything, multiples. it’s that overreliance on quantitative methods and modeling can be uniquely dangerous. Hence our preference for frameworks of analysis that, while And its board benefting from quantitative grounding, remain primarily qualitative. One of our members. preferred frameworks for analyzing datasets at a certain level of geographic granularity is that of the ecosystem, wherein the overlapping cycles of In seconds. fundraising and investment reinforce each other via key nodes of informational fow.

Consequently, in the following pages, we trace the evolution of the Chicago venture scene over the past decade through an ecosystem lens. Especially as The PitchBook Platform the Chicago venture ecosystem has been growing steadily, it appears to be has the data you need approaching a level where, as one venture capitalist put it, local entrepreneurs may no longer do a “tour of duty” in Silicon Valley before returning. Furthermore, to close your next deal. Chicago’s corporate landscape is intriguing given the role of human capital in a venture ecosystem. Multiple Fortune 500 companies call the city home, and Learn more at yet, likely due to their particular sector, many don’t acquire local startups at an pitchbook.com anticipated clip as of yet. Regardless, the fact senior or high-level employees and talented individuals in general are readily available has and will continue to be key. The company you keep matters, after all. With that and recent healthy fundraising levels, plus continued outside investor interest, Chicago’s VC ecosystem looks poised for continued growth—barring tail risk—without one seminal, transformative turning point as of yet.

We welcome your feedback and questions—reach out to us at [email protected]. I’d like to thank Hyde Park Angels, Origin Ventures, Adams Street Partners, ARCH Venture Partners, Alex Meyer of HBS Angels of Chicago, Illinois Venture Capital Association, the Polsky Center for Entrepreneurship & Innovation, Chicago Ventures, KDWC Ventures, John Pletz, Hyde Park Venture Partners and the National Venture Capital Association, among others, all of whom assisted in the production of this report.

GARRETT JAMES BLACK

Manager, Custom Research & Publishing

3 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO Chicago in the US Venture Ecosystem Snapshot of Chicago MSA’s size within the US venture ecosystem as a whole

In early August 2016 we released the of the 12 venture ecosystems below, to could be prone to raising hackles, it frst US Venture Ecosystem: FactBook, provide some context for how Chicago is critical to note that size does not the largest PitchBook report ever and stacks up. The most striking thing at correlate with health. Moreover, the a compendium of venture and relevant the outset is that Chicago, despite Bay Area and Valley predominate economic datasets for the top 12 (by its overall size, is in the middle of the to such a degree that it is clear the overall venture activity) metro areas rankings. There are many reasons for VC industry currently remains highly within the US. As a recap, we have that result, ranging from historical to concentrated. reproduced the table ranking the size geographic. As with any ranking that

Note: As of 6/30/2016, this ranking was generated by weighting capital raised, VC invested, VC activity and venture-backed exit value equally, tallying up their ranking in each area, then summing and sorting from lowest to highest, with a lower score indicating a larger ecosystem.

Size of VC ecosystem, Total VC funds raised Total VC invested since Total # of VC rounds MSA* Total exit value since 2010 ranked since 2006 2010 since 2010

San Francisco #1 #1 $117.6 billion #1 $101.4 billion #1 9,710 #1 $90.8 billion

San Jose #2 #4 $35.5 billion #2 $43.3 billion #3 4,152 #2 $63.5 billion

New York #3* #2 $43.6 billion #3 $33.9 billion #2 6,174 #4 $17.6 billion

Boston #4 #3 $41.2 billion #4 $30.7 billion #4 3,664 #3 $28.7 billion

Los Angeles #5 #9 $2.7 billion #5 $21.3 billion #5 3,403 #5 $11.2 billion

Seattle #6 #5 $7.6 billion #7 $8.4 billion #6 1,717 #10 $6.7 billion

Chicago #7 #7 $3.4 billion #8 $8.3 billion #9 1,348 #6 $9.95 billion

Washington, DC #8 #6 $4.8 billion #9 $8.2 billion #7 1,416 #9 $7.4 billion

San Diego #9 #11 $1.5 billion #6 $9.4 billion #10 1,317 #7 $8.7 billion

Austin #10 #10 $1.9 billion #10 $6.6 billion #8 1,376 #12 $3.7 billion

Philadelphia #11 #8 $3.0 billion #12 $4.8 billion #11 1,003 #11 $5.4 billion

Atlanta #12 #12 $1.15 billion #11 $5.0 billion #12 837 #8 $7.8 billion

Source: PitchBook. *New York and San Jose technically tied but given San Jose’s exit value and VC invested we gave it second place. Note that PitchBook uses the US Census Bureau defnition and delineation of metropolitan statistical areas.

4 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO Relatively healthy Chicago’s current economic condition & recent trends

Chicago contrasts with Illinois as a whole when it comes to economic According to analysis by Hyde Park Angels, growth. Cook and Collar counties accounted for close to 87% of it costs tech frms approximately 42% more private-sector jobs added in the state to operate in San Francisco than it does in since the depths of the recession. Especially as they pertain to the Chicago. entrepreneurial/startup ecosystem, most statistics point to relative health in Chicago, with sentiment waxing Select Chicago metropolitan statistical area (MSA) positive among employers and income statistics growing slightly faster than prices. Civilian labor force, March 2017 3.7 million One negative statistic in the table to College students per 1,000 residents, 2015 74.2 the right testifes to one of the likely reasons recent CBRE research ranked Population growth, Cook County, July ‘16-July ‘17 -0.41% Chicago 13th in terms of tech-talent market health in North America: The Employment growth, March ‘16-March ‘17 0.8% population of millennials declined by Change in unemployment rates, not seasonally adjusted -1.8% 5% between 2009 and 2015. (That March ‘16-March ‘17 Compensation cost change, 12-month, not seasonally adjusted, March migration resembles Illinois’s, with 2.5% ‘16-March ‘17 114,000 lost to domestic migration Wages & salaries change, 12-month, not seasonally adjusted, March 2.7% against a total population of 12.9 ‘16-March ‘17 million, the highest rate in the region.) Approximate range of change in annual fair market rents, 1-4 bedrooms, FY 4.8%-5.5% 2016-FY 2017 13th out of 50 is still more than healthy, and, moreover, Chicago is still Consumer price index (urban) annual percentage change, March 2017 2.0% relatively much cheaper to operate in 2017 ranking for startup activity, 2017 ranking for entrepreneurial growth 31, 30 than many other large markets, and as a consequence of its size remains S&P/Case-Shiller IL-Chicago Home Price Index, February 2017 140.87 remarkably diverse. Moreover, multiple large businesses have been moving Job growth ranking among top 200 MSAs from 2010-2015, 2016 88 their headquarters to the city—ADM, Employer confdence increase, 2Q 2016-2Q 2017 7% Conagra Brands, Caterpillar—although Year-over-year percentage change in business barometer that signals more in terms of business 7.6% March ‘16-March ‘17 appeal than increased employee counts. All in all, the Chicago economic Current-dollar GDP, 2015 $641 billion scene is a welcoming environment One-year change in Zillow Home Value Index, one-year forecast 6.4%, 2.6% without being a blockbuster growth success. One potential area of concern noted during the course of background Sources: US Bureau of Labor Statistics, HUD FY 2017 Fair Market Rents, PayScale, Brookings Institution, US Bureau of Economic Analysis, The Kauffman Index, Illinois Science & Technology Coalition, The research was pending Illinois House Milken Institute Center for Jobs & Human Capital, Federal Reserve Bank of St. Louis, Society for Human Bill 3393, which would levy a 20% Resource Management, World Business Chicago, Zillow, CBRE (Hyde Park Angels’ analysis) tax on fees earned from investment Capital Association, HB3393 did not end up moving forward but a comparable bill management. Should a comparable SB1719 recently was passed by the Senate and is currently assigned to the Revenue & Finance Committee in the House. IVCA notes that SB1719 is not tied to any federal federal bill pass, the measure will cease measure, unlike HB3393. Further details are available here. to exist1. Note: Per the Illinois Venture 1 5 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO A gentle, temporary pullback An overview of Chicago’s venture investment activity

VC invested remains on pace relative to historical totals Amid a general decline in VC Chicago MSA venture activity transaction volume driven by a slide in early-stage deals nationwide, Deal Value ($M) Chicago could prove different 274 # of Deals Closed From a cyclical standpoint, the 240 nationwide backdrop of subsiding 239 230 venture fnancing volume suggests we 200 are merely in the investing cycle’s later 165 stages, particularly as VC invested, median deal sizes and post-valuations 124 remain substantial. On a yearly basis, therefore, Chicago’s relative health 85 stands out considerably, as both VC 65 64 invested and deal volume were steady 51 from 2015 to 2016. Although quarterly 53 fgures indicate a decided slackening $1,079 $2,055 $1,494 $1,327 $1,278 $457 $478 $921 $790 $708

$335 of momentum as of late, it is especially $254 critical to note that it takes a long time 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* to build a venture ecosystem, so the Source: PitchBook. *As of 4/30/2017 robust increase in venture funding over the past decade is the more important point to highlight. Given the level of dataset granularity, temporality plays a more signifcant role as well. Quarterly momentum has been subsiding Chicago MSA venture activity

$1,400.0 90 Deal Value ($M) # of Deals Closed 80 $1,200.0 70 $1,000.0 60 $800.0 Source: PitchBook. *As of 4/30/2017 50

$600.0 40 30 $400.0 13 20 $200.0 10 $0.0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2010 2011 2012 2013 2014 2015 2016 2017*

6 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO Lower costs of doing business still the coasts—although outliers at the some of the larger early-stage rounds. help mute deal metrics’ infation, with late stage still exist, as is evident from On an anecdotal basis, however, the a few notable outliers the charts below, and steady increases collaborative nature of Chicago VC is It’s simply cheaper for venture-backed over the past few years were certainly still largely intact. A note regarding startups to operate in Chicago, in a recorded. Important consequences the follow-on case study below: The manifestation of the region’s generally can ensue: Capital effciency can be extent to which that seeded cohort lower costs dubbed “the Midwest greater at times; vastly accelerated of 2010 garnered follow-on rounds is discount”. Accordingly, median fgures ramp-ups can be somewhat hampered, testament to a healthy progression for deal size and valuations can remain particularly when it comes to obtaining up the capital stack, though skewed less infated than those observed on specialized talent in some segments; by the few, most successful repeat and syndication is often necessary for fundraisers.

The “Midwest discount” still helps soften any potential Case study: Tracking Chicago MSA-headquartered infation given the scaling venture scene companies seeded in 2010 and follow-on fnancing Median venture fnancing size ($M) in Chicago MSA rates by company count & fnancing type

$14.0 Angel/Seed Early-stage VC Late-stage VC 5 % of ini�al cohort receiving Late Stage A 30% follow-on funding Early Stage B

$12.0 Angel C 25% $11.0 4 Seed $10.0 20% 3 $8.0 15% $7.2 $6.0 2 $4.7 $4.7 10% $4.0 1 5% $2.0 $1.4 $0.8 $0.0 0 0% 2010 2011 2012 2013 2014 2015 2016 2017* 2011 2012 2013 2014 2015 2016 Source: PitchBook. *As of 4/30/2017 Source: PitchBook. *As of 4/30/2017. In cases where the precise series of the fnancing is unknown, the stage is labeled instead.

Late-stage outliers can still propel numbers high, Median venture fnancing size ($M) in Chicago MSA by though as sample sizes grow fgures should correct early-stage series Median venture post-valuation ($M), Chicago MSA

$16 $160.0 Angel/Seed Series A Series B Angel/Seed Early-stage VC $143.8 $14 $8.6 $140.0 Late-stage VC $12 $120.0 $5.1**

$10 $100.0

$8 $80.0

$4.7** $6 $60.0 $54.5 $4.1

$4 $40.0 $37.5

$19.6 $2 $1.1** $20.0 $0.8 $6.0 $8.0 $0 $0.0 2010 2011 2012 2013 2014 2015 2016 2017* 2010 2011 2012 2013 2014 2015 2016 2017* Source: PitchBook. *As of 4/30/2017 Source: PitchBook. *As of 4/30/2017 **Indicates small sample size so not statistically signifcant as of yet.

7 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO With no sign of slowing, considerable Startups with founders affliated with University of Chicago by academic efforts support the startup year of founding environment 2015-2016 6 91 Incubators and accelerators such as 1871 Chicago, the Polsky Center 2014-2015 4 Source: Polsky Center for 42 Entrepreneurship & Innovation and Lightbank remain active in encouraging local entrepreneurs. 2013-2014 26 61 Different data providers on overall startup activity paint somewhat 2012-2013 22 36 # of inac�ve/acquired/non-ac�ve different pictures, with Kauffman ranking the Chicago MSA as 31st out of 2011-2012 14 # of startups the 40 largest US metro areas. 24

0102030405060708090100

Chicago MSA VC activity (#) by round size Chicago MSA VC activity ($M) by round size

250 Under $500K $500K-$1M $10M-$25M $2,500 Under $500K $500K-$1M $1M-$5M $25M+ $1M-$5M $5M-$10M 200 $5M-$10M $2,000

$10M-$25M $25M+

150 $1,500

100 $1,000

50 $500

0 $0 2010 2011 2012 2013 2014 2015 2016 2017* 2010 2011 2012 2013 2014 2015 2016 2017* Source: PitchBook. *As of 4/30/2017 Source: PitchBook. *As of 4/30/2017

Seed corrected between in 2015 from a peak, now is A surge last year in Series A VC invested portends steady subsequent raises Chicago MSA VC activity (#) by series Chicago MSA VC activity ($) by series

180 100% Seed Series A Series B Series C Series D+ 160 90% 80% 140 70% 120 60% 100 50%

80 40%

60 30%

40 20% 10% 20 0% 0 2010 2011 2012 2013 2014 2015 2016 2017* 2010 2011 2012 2013 2014 2015 2016 2017* Seed Series A Series B Series C Series D+ Source: PitchBook. *As of 4/30/2017 Source: PitchBook. *As of 4/30/2017

8 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO The Illinois Science & Technology have contributed to the decline. As Does sector diversity help or hinder? Coalition notes that according to their risk heightened in tandem with even Chicago’s sector diversity and sheer survey in the Illinois Innovation Index, gently elevating median fnancing size are oft-noted in contrast to the state universities produced more than sizes, those frst-time checks were fact its venture ecosystem is smaller 800 startups from 2012 to 2016, nearly written less frequently. As confrmed than that of, say, Seattle. The diversity 100% more than recorded from 2009 during background research, some can prove useful in terms of recruiting to 2013. Contrasting that statistic of the fedgling VC funds that initially talent in certain areas such as sales, with diminishing frst-time fnancing targeted smaller, local businesses yet what Chicago’s diversity does not fow in the Chicago MSA, it’s clear a have experienced subsequent success lend itself to is a prevailing narrative mild decline in the volume of rounds and consequently raised larger funds, centered on the strength of its tech of the smallest size categories may targeting Series A more explicitly. sector. Chicago is not necessarily

A steady if slow decline since 2012 The city itself attracts most activity First-time fnancings in Chicago MSA City of Chicago-only venture activity

109 # of Deals Closed Deal Value ($M) # of Deals Closed 101 Deal Value ($M) 96 210 191 86 187 78 156 178 68

56 125

89

44 8 $103 $198 $173 $108 $213 $138 $120 $34 $266 $451 $1,505 $377 $609 $1,092 $1,045 $1,035 2010 2011 2012 2013 2014 2015 2016 2017* Source: PitchBook. *As of 4/30/2017 2010 2011 2012 2013 2014 2015 2016 2017* Source: PitchBook. *As of 4/30/2017

Due in part to fxed costs, software predominates A plurality of VC is invested in software Chicago MSA VC activity (#) by sector Chicago MSA VC activity ($) by sector

100% Soware 100% Soware 90% 90% Pharma & Biotech Pharma & Biotech 80% 80% Other Other 70% 70% Media Media 60% 60% IT Hardware 50% IT Hardware 50%

40% HC Services & Systems 40% HC Services & Systems 30% 30% HC Devices & Supplies HC Devices & Supplies 20% 20% Energy Energy 10% 10% Consumer Goods & Consumer Goods & 0% 0% Recrea�on Recrea�on Commercial Services Commercial Services Source: PitchBook. *As of 4/30/2017 Source: PitchBook. *As of 4/30/2017

9 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO thought of as a tech city, and such other, similar jobs to be slim. That of Chicago’s economy. Meanwhile, narratives do matter when it comes to said, the growth of Chicago’s venture the talent pipeline is certainly still retention rates of local talent, among ecosystem and promising state of its fowing strongly, simply due to the other issues. The probability that a early-stage scene in particular hint concentration of local universities. senior software engineer will up and strongly it is more a matter of time Outside investors still critical to move to Chicago to take a job at a before this perception changes, as the underserved late-stage market startup is potentially lower should robustness of entrepreneurial efforts they perceive the chances of obtaining continue amid the relative health Select funds such as Pritzker Group Venture Capital and Adams Street Partners remain some of the few Investment in Chicago MSA-based companies by investors HQ’d outside Illinois only players in the late-stage venture scene. More coastal funds have been increasing their presence, helping Deal Value ($M) 182 plug the gap, as it were, at what # of Deals Closed some called the locally underserved 161 158 late-stage market. (On an anecdotal 144 Source: PitchBook. basis, some related they believed the *As of 4/30/2017 general startup market in Chicago 119 to be underserved, which could well 103 be the case in some pockets of the entrepreneurial scene given overall 87 startup volume, but in our opinion remains yet to be clearly established given the advent of multiple early- stage funds in the past few years.) Hence the preponderance of VC 33 invested in larger rounds, although since 2014 outside frms have also been driving rounds in the middle of $763 $732 $487 $339 $998 $602 $757 $214 the capital stack. 2010 2011 2012 2013 2014 2015 2016 2017*

Investment (#) by size in Chicago MSA-based Investment ($) by size in Chicago MSA-based companies by investors HQ’d outside Illinois only companies by investors HQ’d outside Illinois only

100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 2010 2011 2012 2013 2014 2015 2016 2017* 2010 2011 2012 2013 2014 2015 2016 2017* Under $500K $500K-$1M $1M-$5M Under $500K $500K-$1M $1M-$5M $5M-$10M $10M-$25M $25M+ $5M-$10M $10M-$25M $25M+ Source: PitchBook. *As of 4/30/2017 Source: PitchBook. *As of 4/30/2017

10 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO Strong foundations Datasets of venture-backed exits and local venture fundraising in Chicago

Recent exit volume lays groundwork Sustained decade highs in exits helped lead to recent fundraising success for future recycling of talent & capital Venture-backed exits of Chicago MSA-based companies

A key point for the Chicago VC ecosystem has been the recycling Aggregate Exit Postvalua�on ($M) of both human and fnancial capital, 26 after a handful of hefty exits. $13,480.7 24 cofounders Eric Lefkofsky and Brad 21 Keywell—whom also began VC frm 19 # of Exits Closed Lightbank—are perhaps the best- 16 known examples. Yet given high- 18 profle, sizable sales such as those of CleverSafe or Fieldglass, the pipeline of employees that cashed out or may 12 cash out sooner rather than later could $4,166.5 $3,214.2 nurture a greater incidence of repeat 4 entrepreneurs, much like Chris Gladwin $1,263.6 $1,071.2 $889.2 of Cleversafe, who recently headed $873.7 $43.0 up a new enterprise called Ocient. The timeline for such a trend is elongated, 2010 2011 2012 2013 2014 2015 2016 2017* hence the impact of earlier successes Source: PitchBook. *As of 4/30/2017. Note: Aggregate exit post-valuations are included to better has been crucial. Local boosters always represent the total value created by IPOs in particular. They include IPO post-valuations, which are long for a truly massive success story, calculated as total shares outstanding multiplied by offering share price. yet the role played by what some would consider more modest exits can’t be discounted.

Unsurprisingly, corporate buyers dominate the listings Interestingly, PE buyers have provided signifcant Venture-backed exits (#) by type of Chicago MSA- liquidity in the past based companies Venture-backed exits ($) by type of Chicago MSA- based companies 100%

90% 100%

80% 90%

70% 80%

60% 70% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017* 0% Acquisi�on IPO 2010 2011 2012 2013 2014 2015 2016 2017* Source: PitchBook. *As of 4/30/2017 Acquisi�on Buyout IPO Source: PitchBook. *As of 4/30/2017 11 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO A hefty portion of Chicago exits commanded signifcant MOICs A bevy of recently closed early-stage- Percentage of Chicago exits separated by multiple on invested focused funds bodes well for the capital (MOIC), 2007-2017* future, even if the late-stage market remains underserved purely on a Under 1-2x 2-3x 3-5x 5-10x 10-15x 15-20x 20-25x 25-30x 1x domestic basis 19% 12% 9% 9% 19% 14% 7% 9% 2% With no fewer than 10 venture funds

Source: PitchBook. *As of 4/30/2017. This table recreated and updated the same closed since the start of 2016 through methodology as used in this article, excepting the inclusion of in this dataset. the end of April 2017, there is plenty https://pitchbook.com/news/articles/which-us-cities-generate-the-best-vc-returns of accumulated capital waiting to be deployed. Especially given the Signifcant push in 2016 helped lay foundation for next investing cycle range of fund sizes—Origin Ventures’ Chicago MSA venture fundraising fourth, $80 million vehicle or the $66 million Chicago Ventures Fund II, for Capital Raised ($B) # of Funds Closed 9 99 example—the early-stage market 8 in Chicago is set to be well-funded. 88 When it comes to higher-priced segments of the capital stack, there simply aren’t that many large, local 5 players. However, as long as outside 5 investor interest remains active—on 5 quantitative and anecdotal bases it 4 looks set to stay robust—there remains only to source for late-stage capital 3 2 further abroad. It took decades to build Silicon Valley, after all—perhaps local frms in the Chicago MSA will $202 $413 $830 $628 $230 $411 $326 $666 $88 $17 $75 $95 raise hundreds of millions for funds in 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* the future, but for now, the ecosystem Source: PitchBook. *As of 4/30/2017 is still growing steadily toward that level.

The majority of exits remain on the larger side Total AUM resurges to new high after a decline owing Venture-backed exits of Chicago MSA-based in part to exits ramping up companies (#) by size VC AUM in Chicago MSA

100% $4.4

90% Total AUM ($B) 80% $4.2

70%

60% $4.0

50% $3.8 40%

30% $3.6 20%

10% $3.4 0% 2010 2011 2012 2013 2014 2015 2016 2017* $3.2 Under $25M $25M-$50M $50M-$100M $100M-$500M 2010 2011 2012 2013 2014 2015 2016 Source: PitchBook. *As of 4/30/2017 Source: PitchBook. *As of 4/30/2017

12 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO Select League Tables Select rankings of most active investors and deals in Chicago

Ready for the next round: companies Select 1Q 2017 venture fnancings of companies headquartered in Chicago (#) by time since most recent round Deal size Company Series/stage Sector Most recent 9-12 12-18 18-24 ($M) round type months months months Automation/Workfow SpringCM $25.0 Series E Software Angel/seed 19 55 47 Business/Productivity CloudCraze $20.0 Late stage A 14 20 13 Software

B 4 12 7 Jellyvision $20.0 Late stage Human Capital Services

Source: PitchBook. *As of 4/30/2017 Media and Information Shiftgig $20.0 Series C Services (B2B)

Aquilon Energy Services $19.0 Series B Database Software Most active investors in Chicago MSA,

2016, across all stages Pangea $11.6 Series B Financial Software

Strategic Internet Hyde Park Angels 20 $5.0 Late stage Application Software Marketing Partners Chicago Ventures 12 Wireless Communications Jiobit $4.8 Seed Equipment Hyde Park Venture Partners 12

M25 Group 11 Maestro Health $4.0 Series A Life and Health

Service Provider Capital 9 Tovala $3.7 Early stage Social/Platform Software HBS Angels of Chicago 8 Pak'd $3.3 Angel Food Products Pritzker Group Venture 7 Capital OVAL Fire Products $3.2 Series B Commercial Products Bluestein & Associates 7 Source: PitchBook Wasson Enterprise 5

Bridge Investments 5

Matter 5

Source: PitchBook League tables are compiled using the number of completed VC rounds for Chicago MSA or Chicago-based companies in 2016. To ensure your frm is accurately represented in future PitchBook reports, please contact [email protected].

Venture capital Venture capital, for the purposes of this report, is defned as institutional investors that have raised a fund structured as a from a group of accredited investors, or a corporate entity making venture capital investments.

Valuations Pre-money valuation: the valuation of a company prior to the round of investment. Post-money valuation: the valuation of a company following an investment.

Exits This report includes both full and partial exits via , buyouts and IPOs.

Fundraising This report includes Chicago MSA-based venture capital funds that have held a fnal close. Funds-of-funds and secondary funds are not included.

13 PITCHBOOK 2017 VENTURE ECOSYSTEM FACTBOOK: CHICAGO We do pre-money valuations, cap tables, series terms, custom search, growth metrics.

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