Midwest Entrepreneurial Ecosystems: A Look at Illinois and Minnesota


In a previous article, we reviewed the venture capital ecosystems in Ohio and Michigan. Now, let’s take a look at Illinois and Minnesota.

Last year, Illinois businesses raised more than $2.2 billion (No. 8 nationally) through 299 deals, while Minnesota saw $1.2 billion (No. 14 nationally) through 132 deals.

In its report titled “America’s Mighty Middle,” Crunchbase highlights the growth of investment dollars ($5.8 billion in 2010 to $20.2 billion in 2019) and the frequent occurrence of large exits (60 percent at $500 million or more from 2015 to 2019). Examples include Chicago’s Grubhub ($2.7 billion valuation at its IPO in 2014) and Minneapolis-St. Paul’s JAMF (which started in Wisconsin and confidentially filed for an IPO at a $3 billion valuation in Q1 2020).

Here are a few ways Illinois and Minnesota have gotten to where they are. You should note that it’s not about the size of the states; rather, it’s about these states having internal collaboration, creating momentum and putting the pieces together.

Corporate Engagement

With headquarters in Chicago, Adams Street Partners manages $41 billion of assets. In 2016, its fund of funds team raised $2.6 billion in capital. Adams Street Partners, which incorporates ESG into its investment decision-making process, also gives back to its local communities, donating to Chicago organizations such as 1871 and Bunker Labs.

The Syndicate Fund in Minnesota has a secondary mission of providing ongoing education to both investors and entrepreneurs. Last year, it closed a $5.75 million funding round from 50 investors, a “testament to the success of the first fund.”

Strength of University Assets

The University of Illinois is 18th and Northwestern University 23rd in the Milken Institute’s ranking of tech transfer programs. To encourage economic development, the University of Illinois is waiving license fees to patented technologies for those who will be developing or producing products in the state. Meanwhile, Northwestern’s Innovations and New Ventures Office’s goal is to ensure that Northwestern innovations are developed to maximize society’s use and benefit and promote economic growth. The Milken Institute ranks the University of Minnesota 14th in country in tech transfer. Its Minnesota Innovation Partnerships program streamlines the process of sponsoring research and licensing the resulting technology, and it can make technologies available for a low cost “test-run.”

State Assistance

Illinois Senate Bill 3205, signed in August 2019, calls for the state treasurer to allocate up to 5 percent of the state’s investment portfolio into the Illinois Growth Innovation Fund, which is designed to attract and retain Illinois startups and deter them from heading to the coasts.

The Minnesota Department of Employment and Economic Development has a program called Launch Minnesota that has awarded more than $1.2 million to Minnesota startups, with an additional $1.2 million being matched by private sources.

Established Trade Associations

The Illinois Venture Capital Association has been making its professional advisors available to help small businesses during the pandemic. It also is highlighting how portfolio companies have been “helping us through these times.”

The Minnesota Technology Association focuses on advocacy, tech talent development and community building as the defacto VC trade association for the state. To help build up its tech ecosystem, the association has curated resources (e.g. inclusive workforce development) throughout the state.