Fundraising is down, and there were more than double the number of tech layoffs in 2023 than there were in 2022, but as is often the case, pressure makes diamonds.
For this year's Inno Startups to Watch list, we found 24 early-stage startups poised to grow in the coming years.
U.S. investors directed only $170.6 billion to startups in 2023, down 30% from 2022, according to recent PitchBook data. Crunchbase data shows an even steeper decline in 2023 — at 38% year-over-year — with early-stage funding down more than 40%.
Yet some startups found a way to break through with big plans ahead in the coming months.
Now in our 10th year compiling the list, Inno Startups to Watch highlights up-and-coming startups that have shown they are ready to make a big impact in Chicago's tech scene. Included this year are life-sciences startups, companies spun out from Chicago stalwarts and businesses using artificial intelligence to disrupt their industries.
Here are our 24 startups to watch in 2024:
Alnair Therapeutics
Launched in 2022, Alnair Therapeutics uses technology built at the University of Chicago Ben May Department for Cancer Research and aims to improve delivery of drugs for difficult-to-treat cancers. The UChicago spin-out closed an oversubscribed $1 million-plus pre-seed round in June with participation from Chicago venture capital firms including Portal Innovations, OCA Ventures and CJM Ventures.
Alphathena
Chicago has historically been a center for financial service innovation, and co-founder Tushad Driver wanted to keep that tradition going with AI fintech startup Alphathena. A direct indexing platform for registered investment advisors (RIAs), Alphathena landed a $4 million funding round to kick off the new year led by London-based global venture capital firm ETFS Capital, with participation from local early-stage investor Hyde Park Angels. The Warrenville-based startup launched to make investing a more level playing field and won the "Best in Show" award at the 2023 Morningstar Fintech Showcase Conference.
Arvist
Located in the 1871 accelerator and part of the Techstars Industries of the Future Accelerator, Arvist raised an oversubscribed $1.1 million pre-seed round at the end of 2023 to fuel its mission to make warehouses more efficient. The Chicago startup uses data that already exists in warehouses and other similar environments — such as security camera footage — to provide companies with insights about their operations in real time. After going through the TechStars program in 2022, Arvist founder Nilay Parikh had a chance to begin a raise but elected to get his technology more "validation" first, securing three customers before pursing funding. Given the recent funding dip in the VC market overall, Parikh told Chicago Inno he felt he made the right choice to wait.
BiomeSense
An oversubscribed $3 million funding round closed in 2023 will help Chicago biotech startup BiomeSense with its upcoming commercial launch. The new funding, described more as a "Covid or seed-2 round" by CEO Kevin Honaker, will help the startup get to the finish line after being slowed by supply line challenges. Founded in 2018, BiomeSense is developing tools to collect, store and analyze microbes that can affect health and how we respond to certain environmental substances.
Bonfire
A talent development accelerator founded in 2019 by Rachel Bellow and Suzanne Muchin, Bonfire provides women in the workplace with coaching and new skills to help build their careers. The Chicago startup has helped more than 150 companies and more than 4,000 women and has developed a curriculum tested through Northwestern University's Kellogg School of Management.
Celadyne Technologies Inc.
Celadyne wants to be at the center of the hydrogen revolution and raised $4.5 million this month to help accelerate its mission of industrial decarbonization. In the next year, the startup expects to double its customer base and to continue to advance its fuel cell technology, which it says can be used as a more environmentally friendly alternative to diesel engines.
ClearCOGS
Founded as a project to reduce food waste by restaurant owner Matt Wampler and Osa Osarenkhoe, co-founder of nonprofit venture capital firm Fifth Star Funds, ClearCOGS says it is the restaurant industry's first AI operations manager. The restaurant tech startup uses an AI-driven approach to help restaurants optimize their stock levels, streamline restaurant management and improve operational efficiency. ClearCOGS utilizes AI to not only predict but prescribe actions for restaurants in regard to customer demand, staffing and inventory management.
Continuum.ai
Recently launched Continnuum was founded to make returns easier. The first B2B automated returns software for wholesale, distribution and manufacturing organizations already has customers paying five-figure contracts and is expected to take on new capital this year.
Echo Labs
After going through TechStars Chicago, Echo Labs announced the highest pre-seed funding round in Chicago startup history at $7.4 million. With the goal of creating a new technology solution for those who are deaf and hard of hearing, Echo Labs is a completely new take on transcription services. Built as the first AI capable of human-level transcription, Echo Labs' technology understands what the user is saying even in adverse conditions, said co-founder Edward Aguilar.
Eventnoire
A 2022 Google Black Founders Fund recipient and previous winner of Mountain Dew's Real Change Opportunity Fund Pitch Competition, Eventnoire has grown this past year thanks to recent event partnerships with Grammy-winning artists, cultural institutions such as Art Basel and major brands including Pronghorn and McDonald's. An event management platform geared toward Black culture, Eventnoire has now raised more than $1 million and is looking to expand.
Flora & Noor
A skin care brand that targets those with melanin-rich skin and with chronic skin conditions like eczema and hyperpigmentation, Flora & Noor is the only halal-certified skin care brand made and based in the U.S. Nominated for the Fifteen Percent Pledge Achievement Award, Flora & Noor was a recipient of the Glossier Grant Program, which invests in Black beauty entrepreneurs. The startup is currently selling through Ulta and Amazon.
Flow Medical
Founded by University of Chicago researchers Jonathan Paul and Osman Ahmed, Flow Medical is developing a catheter to diagnose and treat blood clots. After announcing a $1 million investment in June, the Chicago-based medical technology company completed a $2 million friends-and-family funding round at the end of 2023 to accelerate the development of its catheter. Early-stage health care investor and successful startup founder Jennifer Fried was also brought on in 2023 to help build out the company.
Four Star Mushrooms
Founded in 2019, Four Star Mushrooms provides select Chicago chefs and most of Chicago's Michelin Star restaurants with specialty mushrooms. The controlled-environment agriculture company built out an 11,000 square-foot production facility to meet the growing demand for gourmet mushrooms and now serves more than 200 clients.
Hanahana Beauty
Making all its products with natural ingredients, skin care and wellness brand Hanahana received a Fifteen Percent Pledge grant earlier this month to help grow the brand. The $200,000 achievement grant is designed to help Black entrepreneurs access funding and create new economic opportunities and greater equity for Black businesses. Abena Boamah-Acheampong, founder and CEO, said the company expanded in Ulta Beauty stores nationwide in 2023 and that funding will help catalyze the strategic growth of the business.
Liv Labs
Hyde Park resident Melody Roberts co-founded Liv Labs to address a problem one in four American women face: urinary incontinence when exercising, squeezing or laughing. The pelvic-floor fitness device won the South Side Pitch in 2018, incubated at the Polsky Center, and is raising funds and testing its device prototype. Founded in 2017, the company previously landed an SBIR grant and spot in Silicon Valley's Y Combinator. The company was also chosen for Springboard Enterprises' 2023 Digital Health Innovation cohort.
Loper
A free phone app designed to help students discover their next step in education, Loper helps students realize their interests and finds the colleges that match them. Loper was selected for the 2023 OnRamp Education & Workforce Innovation Accelerator.
Mattiq
A Northwestern spin-out from professors Chad Mirkin and Andrey Ivankin, Mattiq wants to decarboinze the chemicals industry. The clean chemistry company signed on to join Chicago's Fulton Labs earlier this year after announcing a $15 million seed financing round in 2022. The startup will use the new space to bring its electrochemical solutions to market.
Nutrad
Chicago supply chain startup Nutrad will look to close a funding round in early 2024 targeted at $1 million. Named the most innovative startup at the Transform data science and AI accelerator at the University of Chicago’s Polsky Center, as well as a participant in 1871's Supply Chain Innovation Lab, Nutrad is also focused on building out its tech and bringing in $2 million to $3 million in revenue this year.
OrdrSmart
A Chicago-based platform that enables consumer-packaged-goods brands and ingredient suppliers to create and maintain a strong ingredients supply chain, OrdrSmart recently completed the Farm to Fork Accelerator and is currently working with mid-market manufacturers. The Techstars accelerator supported by Ecolab Inc. provides funding, access and programming for early-stage entrepreneurs in the food-tech industry.
Pimly
Launched by two former Salesforce employees, Chicago-based B2B software-as-a-service provider Pimly will use a recent $5 million seed round to continue to grow its go-to-market and product teams. The software startup launched its Product Cloud — the first Salesforce-native product information management platform — in early 2023.
Pulse Charter Connect
Selected to the newest cohort of the Techstars Physical Health Accelerator that looks for startups improving the physical and mental health of patients, Pulse Charter Connect wants to streamline the organ transport process by digitizing an antiquated logistics system currently used by transplant centers. The company uses advanced technology and real-time data to make organ transplant and transportation faster, safer and more cost-effective. Pulse Charter Connect was among 127 startups named to MassChallenge's 2023 flagship four-month accelerator after more than 1,100 companies applied.
Quicklly
Founded by Keval Raj and Hanish Pahwa, Quicklly gives South Asian and Indian food lovers a place to shop. The grocery marketplace raised $4 million in seed funding in 2022 after raising $1.27 million in pre-seed funding in 2021. The Chicago startup brought on Whole Foods Market veteran Rashne Desai last year as consulting vice president of culinary operations to play a key role in developing restaurant-quality Indian and South Asian meals to Quicklly's offerings.
Responsiv
Legal tech startup Responsiv raised $3 million in November to give in-house attorneys an AI assistant to help cut down research time. Founders Nikita Solilov and Jordan Domas launched Responsiv after spending nearly a decade at legal-tech startup Relativity, and will use the new funding to further build out their team.
Showdrop
Founded in 2021, Showdrop aims to give companies a chance to expand their customer bases through sampling, as 90% of consumers more likely to purchase a product if they have tried it first. The Chicago startup has raised $1.1 million in funding to date and recently partnered with Dom's Kitchen & Market to feature its sampling kiosk at the store's Old Town location.
