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.
