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Lynne Marek

I2A and Firestarter venture capital funds raise money for new investments

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(Crain's) — Two Chicago venture capital funds led by prominent entrepreneurs and investors, including J. B. Pritzker and ShopLocal LLC founder Brian Hand, have closed new rounds of fundraising, promising more money for startups in the city and beyond.

 

The I2A Fund LLC — backed by Mr. Pritzker, who invests on behalf of his wealthy family; Craig Duchossois, owner of the Duchossois Group; and Merrick Ventures LLC CEO Michael Ferro, among others — has closed on the first stage of fundraising for a second fund that is ultimately targeting about $35 million to $40 million in capital, according to sources familiar with the fundraising. It has raised less than half that amount in the first stage, they said.

 

I2A Chairman Robert Fealy, who is also president of the privately held conglomerate Duchossois Group, confirmed that the fund has finished the first stage of funding, but he declined to comment on details, citing federal laws that restrict soliciting investors for such funds. Investors in the second fund are likely to include many of those who were in the first. I2A Managing Director Kapil Chaudhary also declined to comment on the details.

 

“There's a lot of good entrepreneurial activity going on in Chicago and the state of Illinois in general,” Mr. Chaudhary said.

 

Another group of venture capitalists has come together to form Chicago Founders Capital LLC and raised $5.7 million from 42 investors for FireStarter Fund LLC, according to a filing made with the Securities and Exchange Commission.

 

The Chicago Founders angel investor fund is backed by prominent Chicago entrepreneurs, including Mr. Hand, Viewpoints Network LLC CEO Matt Moog, OkCupid CEO Sam Yagan and SurePayroll Inc. co-founder Troy Henikoff, according to the filing.

 

Mr. Hand declined to comment and the others couldn't be reached.

 

The two new funds are likely to see presentations from some of the same Illinois entrepreneurs seeking investments, but they won't necessarily be in competition for placing money because companies often accept investments from more than one fund.

 

I2A invests mainly in Illinois companies that are in the early stage of their development, providing seed capital for getting them off the ground. It focuses on technology, clean-energy, education, new media, consumer and retail.

 

Stuart Larkins, formerly a top executive at Chicago-based Performics Inc. (later absorbed into Google Inc. and Publicis Groupe SA), was hired to be managing director and lead fundraising for I2A's second fund. He declined to comment.

 

I2A is closing on the first leg of the capital for the second fund now, partly because it was eager to make investments, according to the people familiar with its activity. I2A earlier this month made an investment in Chicago-based Power2Switch Inc., which helps commercial and residential consumers compare and choose energy providers.

 

I2A closed its first $10-million fund in 2008 and invested that money in 13 companies, 11 of which are in Chicago, including Viewpoints, SitterCity Inc., SoCore Energy LLC and YCharts Inc. That fund is no longer making new investments.

 

When reached last month to talk about the Firestarter fund, after an initial Crain's report, Mr. Yagan said that the fund will distinguish itself from other angel investing groups by making it easier for entrepreneurs to seek money from it and by providing those applicants with faster responses. It wasn't clear whether that fund will have a geographic or industry focus.

 

Based on the $5.7 million raised from 42 people as of the Dec. 14 date of the filing, individuals in that group are contributing about $135,700 each, on average, with this initial investment.

 

That fund also is unique in that its financial backers are mainly entrepreneurs themselves who know the ropes of starting a business and funding startup operations.


Read more: http://www.chicagobusiness.com/article/20111228/NEWS01/111229854/chicago-funds-i2a-and-firestarter-gear-up-to-bankroll-startups#ixzz1hrV17vsk
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