As expected, Chicago's 2021 venture funding hit a record high, blowing the previous year's total of $2.8 billion out of the water.
Chicago tech firms raised $7 billion in 2021, according to venture data firm Pitchbook, which is by far the highest total since Pitchbook began tracking VC stats in 2006. Chicago saw 374 venture deals in 2021, according to Pitchbook, which was up from 321 deals in 2020.
Last year's deals were paced by several large rounds of $100 million or more, including Walgreens' $1 billion investment in VillageMD, alternative protein startup Nature Fynd's $350 million and ActiveCampaign's $240 million, among others.
Nationally, startups raised $330 billion across more than 17,000 deals last year, both U.S. records. Chicago's yearly VC funding outpaced markets like Austin ($4.9 billion), Denver ($6.1 billion), Washington, D.C. ($5.7 billion) and Miami ($4 billion). Chicago fell behind Seattle ($9.2 billion) and Philadelphia ($8.1 billion), as well as markets that traditionally out-raise all other U.S. cities: the Bay Area ($120 billion), New York ($53 billion), Boston ($34.9 billion) and Los Angeles ($34.3 billion).
Last year proved that venture dollars are starting to make their way to more corners of the U.S. Silicon Valley's share of total U.S. venture funding fell to 27% last year, the lowest level in more than a decade. In 2014, the Bay Area accounted for more than 40% of all U.S. venture funding.
Money flowing to Chicago venture funds also hit new heights in 2021. Local VC firms raised $5.6 billion in 2021, which was more than double what VC firms raised the year prior. Only the Bay Area, New York and Boston saw more funding raised by VC firms last year.
"It's a great time to be a founder in Chicago," said Jason Heltzer, the managing partner of Origin Ventures, a Chicago VC firm that raised a new $130 million fund last year. "Gone are the days where growth capital is scant and where a single large round skews VC investment totals. Chicago is home to a large and growing number of fast-growing, admired companies attracting some of the best investors in the world."
With venture capital shattering records last year, is Chicago poised for a 2022 slowdown? Early headlines would suggest otherwise. Three startups have already raised rounds of $100 million or more: Foxtrot's $100 million, project44's $420 million, and Zero Hash's $105 million. And this week LanzaJet, a sustainable aviation fuel startup, raised $50 million from Microsoft's climate-focused innovation fund.
"The city’s venture ecosystem saw tremendous growth and broad expansion in 2021, from historic VC fund-raising to a record number of new unicorns to a plethora of promising new start-ups in the most lucrative sectors," said Pete Wilkins, managing director of Hyde Park Angels. "All of these factors are solidifying Chicago’s position as the Midwest’s primary innovation hub."
