In the current climate for startups and entrepreneurs, with fundraising down, being part of an established ecosystem can be more important than ever. A recently released report suggests that type of environment is taking hold in Chicago.
Research center StartupBlink in its most-recent annual list of the top startup ecosystems across the globe ranked Chicago as a top 15 market globally and No. 6 among U.S. markets. StartupBlink's Global Startup Ecosystem Index has been updated annually since 2017, assessing 1,000 cities across 100 countries.
Within the United States, StartupBlink slotted Chicago behind only San Francisco, New York, Los Angeles, Boston and Seattle.
The best startup ecosystems were seen as the ones that offered new companies access to funding through local VC networks and accelerator programs and provide access to top-tier universities for both talent and new scientific research.
Chicago's global ranking was unchanged from last year's report. The city has been has been as high as 13 in previous iterations.
The report noted that Chicago had 1,671 startups in its sample database, representing about 3% of U.S. startups.
San Francisco ranked above all other startup ecosystems worldwide, and New York remained the "undisputed runner-up" for another year, according to the report.
There were 35 U.S. cities in the global top 100.
Where Chicago can thrive
Startups worldwide continue to undergo a major recalibration from the highs of 2021 — and "the funding winter," as the report describes it, has no signs of ending. That means startup need to reassess how they pursue funding. We've seen this play out locally with startups like The Desire Co., which recently pulled in new funding.
According to Crunchbase data, the first quarter of 2024 was the second-lowest for global startup funding since the beginning of 2018. As capital availability continues to be tight, the startup world has become more characterized by distinct clusters and shaped regionally with capital becoming increasingly concentrated in specific geographic areas.
While the StartupBlink report noted that Chicago's entrepreneurial landscape "bears room for improvement," the ecosystem also was described as fostering innovation across diverse industries.
"A sentiment of financial scarcity echos among some entrepreneurs, while investors counter that they yearn for more compelling ideas to support," the report noted. "As the Windy City continues to embrace and champion the spirit of entrepreneurship, its trajectory toward becoming a leading hub for innovative businesses and forward-thinking entrepreneurs seems inevitable."
Marketing and sales was considered to be Chicago's top startup ecosystem, ranking sixth globally with a total of 84 startups in the space.
