Lightbank Aims To Change VC Game, Will Invest Beyond Chicago

http://techcrunch.com/2012/12/23/lightbank-looks-beyond-chicago-as-it-aims-to-disrupt-the-venture-capital-industry/

by iProject • 14 years ago

13 7 14 years ago

eldavido2• 14 years ago

All cynicism aside, it's hard not to see this as a quintessentially Chicago firm forced to expand because they couldn't source enough hometown dealflow.

Maybe they have some uniqueness about the way they operate their firm, but that book of a TechCrunch article doesn't make it easy to pick out.

eldavido2• 14 years ago

Normally wouldn't self-reply, but I felt I could do a lot better than what I'd just written.

I grew up in Chicago and attended Urbana-Champaign (UIUC) engineering for college. I headed out to SF to see what all the hype was about. I also have a long-term girlfriend in Chicago. I've flown back and forth between the two cities 12x in the past year, so I feel I have some room to comment on the differences.

Chicago and SF are both great cities. Both have huge populations and deep business networks spanning back generations. Also, both have plenty of capital. Chicago's capital tends to be old-money, industrialist capital, whereas SF is more pro-risk and institutional, but both have money. And I actually think Chicago has a stronger overall "business" culture with numerous family-owned small businesses dating back to the 1800s. Whereas the SF tech crowd always chases what's new and shiny, I think there's a much greater willingness to invest for the long term and build patient, long-term empires in Chicago than in SF.

Also, while SF/Bay Area is often praised for its deep engineering talent base, Chicago has quite a lot of engineers. People often forget it's been a rail and telecom hub for 150 years, three major financial exchanges (CBOE, CME, and CBOT) call it home, tons of broadcasting and media (Ogilvy) types work there, and lest we not forget, patio11, tptacek, and 37signals all grew up there.

What Chicago lacks is entrepreneurs. Eric Ries hits the nail on the head calling entrepreneurship a "management science". The process of systematically identifying opportunities, measuring and de-risking them, and then putting a team together and raising capital isn't as common in Chicago as it is in SF. I think the Bay Area has achieved a critical mass at this point, where nothing intrinsic about it leads to entrepreneurial success (and in fact, much about California is downright hostile to business) -- but everyone's here these days. From my office in Soma, I can walk 3-4 blocks and be at Crittercism, Twitter, Square, Stumbleupon, Lyft, Zendesk, Smule, Coinbase, and dozens more. The sheer proliferation of people, and of entrepreneurial expertise, means the density of opportunities coming from here is unrivaled, anywhere.

I may yet move back to Chicago but it will come at a cost. I'm encouraged to see Lightbank get more SV press/mindshare but let's not kid ourselves; it's hard to be a one-city fund when your city isn't a global destination for software entrepreneurs the way it is here.

stox• 14 years ago

Chicago has a huge number of startups, mostly in the HFT sector. Many are just under the radar. You also forgot to mention the National Laboratories, Fermi and Argonne. Over the course of time, how many companies has spun out from under Bell Labs, Motorola, etc?

1871 is off to a good start, as are some others including Lightbank.

It is a different scene here in Chicago, but I am not so sure it is less than that in the Bay area when all is said and done. Time will tell.

capred• 14 years ago

I'm skeptical of Lightbank. Taking an investment is a pretty serious relationship and not much in the Lefkofsky or Keywell's history implies these are the type of people you want to get married to.

http://tech.fortune.cnn.com/2011/06/10/groupon-eric-lefkofsk...

zaidf• 14 years ago

My last job was at a struggling Lightbank-funded company. I didn't have much interaction with the VCs but did get to meet with Brad and Paul Lee briefly. Like any VC worth much, these guys have their niche: sales. They have that part figured out.

The challenge for them would be adding value in non-Chicago companies. As I understand that their companies in Chicago are able to tap in vast resources. A company based in NYC, like the one I worked for, overall seemed to have more of a struggle.

Ultimately they company I worked for decided to close their NYC office and move to Chicago which I think was a good idea.

clobber• 14 years ago

Now here's a VC group to steer clear of.

frozenport• 14 years ago

I am convinced that lightbank is either a scam or ripoff. They offered my partner and I 100,000 for one year and asked for 35%. The reality is that they are a idea company and not a vc firm. They would pay me 50,000 to work for them, which is not competitive.

Lightbank Aims To Change VC Game, Will Invest Beyond Chicago

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