Venture funding is a poor proxy for tech entrepreneurship anywhere but in a few VC hubs; we should just stipulate that the majority of those dollars are going to Palo Alto and Waltham no matter what Pat Quinn does. But no matter where you locate, most tech startups aren't going to get funded.
That said, Chicago does very little (if anything) to support tech startups.
There is a "Chicago style" of startup --- 37signals and Threadless being the most visible examples --- with bootstrap backgrounds and ethics. There are things that Chicago could be doing to foster those kinds of companies, which don't require financier gatekeepers, grow organically, and are less speculative and volatile than valley shoot-the-moon companies --- which work well for San Jose only because there's always another shoot-the-moon company to fall back to when your current one fails.
Illinois could:
* Provide tax and fee incentives to technology startups
* Adopt policies that encourage development of tech-friendly office space outside of the loop
* Make its own internal processes more accessible to tech entrepreneurs, in the same manner as Data.gov, to create opportunities for companies to add value. Chicago's own IT infrastructure is, for instance, a shambles.
* Look for opportunities to work with local companies to showcase products and create calling cards for selling into the huge prospective client base in the Chicago economy.
Thomas, I disagree with your proxy statement, but we can do that over IM. Also, why stipulate? We can look at the data to see if that's true (and I will).
Again, I do believe the per-capita data is the correct metric, as that accounts for differences in population. While no one would be surprised that California gets the most money, the per-capita figures might be of interest.
I'd love it if you wouldn't mind copy/pasting your comment to the post (even with the first graf). It is being passed around political circles in Springfield, and it'd be good for them to see it. The post is only looking at the data (which proves that the leadership has failed); it is deliberately silent on "why" and "how to fix". I want others to suggest those things before I take a swing.
If per-capita dollars was the right metric, the Greater Los Angeles combined statistical area would pull VC investments down to Southern California, which is more than twice as large as the valley.
Similarly, New York startup investments would dwarf Boston investments.
Money goes to San Francisco because of a feedback loop set in motion and sustained by a network effect. Fighting it is like fighting the tides. Illinois doesn't have the will or the wherewithal to compete with the valley on the valley's terms, and shouldn't bother trying.
I'm not an Obama basher but there's no way he (or Sen. Durbin for that matter) can talk about the new 'entrepreneurial spirit' in America that's leading us out of the current economic malaise and then point to his home state.
No politician in Illinois has ever met a tax s/he didn't like -- and passed into law. The state budget is a mess, underwater by 11.5B, the governor was recently impeached for attempting to sell a vacant Senate seat, the City of Chicago is selling off it's expressways and parking meters for immediate cash, in Cook County we have some of the highest sales taxes in the nation, that budget is underwater too and state pensions pay more money to retirees than was paid to them during employment.
Now look at 37Signals -- they're a great company, in the city, hard-working, focused, and making money. They're tough-minded business people and for me, an inspiration to keep working hard on my idea.
But I have no illusions -- the risk in Chicago is always entirely your own.
The Illinois state budget might be a mess, but heck, California has been issuing IOUs and is nearly bankrupt. I'm not sure if the state budget necessarily has anything to do with startup-friendliness.
As he points out, some of those 50 states simply get no startup activity; if you pre-qualify the states and exclude places like Wyoming, we're below the median.
On the other hand, Maryland is a bad example; Maryland has artificial incentives for VC dollars, because of fedgov contracts.
This is particularly embarrassing as the state has a very good flagship tech school at the U of I (the most visible internet product coming from there being paypal, which ended up being based in California).
I think that the problem is that Chicago is just a bit too far from Champaign. Champaign is too small of a town to attract many startups, because the people and startup infrastructure aren't there. The logical thing to do is to move to Chicago after college, but if you're going to move that far, you start looking at other places. Most everyone I knew that wanted to get involved in startups moved out to the Bay after graduation. For the Bay area, its great universities are within easy driving distance of the whole area, so staying in town to start up is an easy decision.
I think this is more because of the community in the Bay Area rather than how far Chicago is. Most of my non-techie friends from U of I did move to Chicago. Chicago seems to be a hub for all big ten grads to move to. My techie friends who did stay in Chicago tend to have crappier jobs than those who went to the Bay area.
That said, Chicago does very little (if anything) to support tech startups.
There is a "Chicago style" of startup --- 37signals and Threadless being the most visible examples --- with bootstrap backgrounds and ethics. There are things that Chicago could be doing to foster those kinds of companies, which don't require financier gatekeepers, grow organically, and are less speculative and volatile than valley shoot-the-moon companies --- which work well for San Jose only because there's always another shoot-the-moon company to fall back to when your current one fails.
Illinois could:
* Provide tax and fee incentives to technology startups
* Adopt policies that encourage development of tech-friendly office space outside of the loop
* Make its own internal processes more accessible to tech entrepreneurs, in the same manner as Data.gov, to create opportunities for companies to add value. Chicago's own IT infrastructure is, for instance, a shambles.
* Look for opportunities to work with local companies to showcase products and create calling cards for selling into the huge prospective client base in the Chicago economy.