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Chicago Tech is on Pace For One of Its Best Years in VC Funding Ever

News & Media — August 16, 2017

This article originally appeared in ChicagoInno here.

What a difference one mega funding deal can make.

Thanks to Outcome Health’s recent $500 million+ round, Chicago tech companies have now raised more than $1 billion in venture capital funding in 2017. And with six months to go, the city could reach VC levels it hasn’t seen in over a decade. 

Chicago tech companies have raised $1.04 billion in 2017 as of June 12, according to Pitchbook data provided to Chicago Inno. Compare that to the $930 million and $910 million Chicago companies raised in 2016 and 2015 respectively, and 2017 has the potential to be milestone year for the city’s tech startups. 

Chicago’s best year for funding in the last decade came in 2011, when the city’s tech companies raised $1.4 billion. The second highest in that span came in 2014 with $1.1 billion. Pitchbook provided historical data for only the last 10 years as it’s more reliable, a spokesperson said. (Venture statistics can vary based on who’s doing the measuring. PwC and CB Insights had Chicago over a billion dollars in venture capital raised in the last two years.)

Another way to measure the strength of a city’s tech ecosystem is number of deals. Chicago saw 196 companies receive VC funding in 2014, the highest in the last 10 years. In 2011, Chicago had just 106 deals. 

Through June 12 Chicago has recorded 60 venture deals, which would put it on pace for falling short of the deal volume in 2015 and 2016, despite outpacing both years in money raised.

Large rounds for single companies have always driven the peaks in Chicago’s largest funding rounds. Groupon’s $950 million round was largely the reason for Chicago’s big 2011, and Avant’s $225 million helped spark the city’s strong 2014. When looking at top VC deals in Chicago over the last 10 years, Groupon tops the list with its nearly $1 billion round, followed by Outcome’s half-billion round last month, according to Pitchbook. 

Large rounds help boost a city’s venture funding numbers–and can help a city’s narrative as a growing tech community–but when measuring the health of a city’s technology sector, it’s about more than just one company’s successful year. As Fred Hoch, executive chairman of the Illinois Technology Association, told us last month, Chicago needs 50 more Outcome Healths. “We need to see more of these $200, $300, $500 million rounds to showcase Chicago,” he said.

Outside of Outcome, large rounds from Chicago tech companies this year include $90 million in two rounds for Uptake, $30 million for Networked Insights, and $30 million for G2 Crowd. 

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