Chicago’s startup ecosystem has ranked among the 20 best cities worldwide with thriving cultures for entrepreneurship in technology.
According to a new report by Compass, a benchmarking software company based in San Francisco, Chicago came in strong at number seven—up three spots from the last report in 2012.
The study said that Chicago employs more than 40,000 workers in its tech startup sector, with 15,000 of those created in the last four years alone. It noted that over 10 unicorns call the Second City home.
Startup strongholds like Silicon Valley, New York City, and Los Angeles lead the pack, with Boston and Seattle also landing in the report's top 10. Tel Aviv, London, Berlin, and Singapore rounded out the top half of the list.
Compass collected insights from 11,000 startup surveys and over 200 interviews with entrepreneurs in 25 countries. The rankings were based on a city's overall performance, funding, talent, market reach, and startup experience.
This year’s newcomers include Austin, Texas; Amsterdam; and Montreal.
Although Chicago has a leading startup ecosystem, it faces increasingly stiff competition. Here are some of the report’s key findings:
- Chicago saw the highest growth index of all US ecosystems, but fell short to three other ecosystems outside the US. That growth index is thanks in part to a 2.4x growth in VC investments.
- Out of the top 20, Chicago had the third fastest growth for number of startups.
- Of that same list, it also had the highest amount of women-led startups.
- Although Chicago startups benefit from the 5th largest local market, its global market reach is noticeably lower. Part of that is due to the fact that Chicago startups have fewer foreign customers and operate in fewer languages than the regional average.
- In all of North American, Chicago has the highest rate (85%) of funding secured from exclusively local sources.
- Chicago came in at 11th in terms of talent, with the average time to hire a software engineer coming in 11 percent shorter than North America’s average score.
- The study found that Chicago startups provided the lowest equity share for employees—on average, a meager five percent— out of all the other ecosystems in North America.
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