J.B. Pritzker and Paul Lee on NEA's Move into Chicago

October 23, 2012

New Enterprise Associates [NEA] is one of the world’s largest venture capital firms, whose offices cover all corners of the earth, from Shanghai to Bangalore to D.C. and, now, Chicago. The company announced late last week its plans to open an office here to move closer to its goal of partnering with “ exceptional entrepreneurs to build transformational businesses in technology and healthcare.” With $13 billion in committed capital, the 35-year-old firm plans to work more closely with early stage Chicago companies in the IT, healthcare and life sciences fields.

To some, NEA’s entry here is a sign of greater things to come for the local tech industry.

“It’s a terrific development--I think the first of many developments in the community of capital from outside of Chicago coming to invest in the great new opportunities that are presenting by our burgeoning community,” said J.B. Pritzker, who heads New World Ventures and the Pritzker group and who recently signed on as chair of Mayor Rahm Emanuel’s ChicagoNEXT council. Regarding the Mayor’s initiative to turn Chicago into a startup hub, Pritzker sees the NEA move as a component of that plan in that it will help enable more business in the city.

“Having another major investment firm in Chicago means that we'll be able to attract increasing amounts of innovative, talented people and companies from outside of the Midwest to our city,” said Paul Lee, a partner at Lightbank. “This is exactly what we need to happen in order for Chicago to grow into a tech innovation hub that matches up to what we're seeing on the coasts.”

We caught up with Managing General Partner Peter Barris, a man with plenty of Chicago connections of his own. In addition to being a Chicago native, Barris serves on the Board of Trustees at Northwestern University, where he earned his bachelor’s in electrical engineering. He also serves on the boards of other area companies such as Groupon, Benchprep and Sprout Social. I also learned that Barris has a residence in Chicago where he spends considerable time. No wonder he’s excited about the new offices here.

What sparked your interest in opening an office in Chicago and how did you decide to move forward with it?
Barris: NEA made its first investment in Chicago about 25 years ago. We made one investment in the ‘80s, four or five in the ‘90s, and then things started to pick up. We’ve invested more than $300 million in 20 companies in Chicago, and three-quarters of our portfolio has really been built in the last five or six years.

NEA has been active in Chicago for a long time now, and the idea of establishing an office is not a new one for us. The difference is that when we had the discussion this time, we decided to move ahead. Initiatives like ChicagoNEXT are really fueling the momentum here, and I think a lot of credit goes to Mayor Emanuel and the City for recognizing the opportunity and doing all they can to support and encourage it.

How will this new office affect the way you do business in Chicago?
Barris: Being ‘on the ground’ allows us to better support our current portfolio and reduces the friction in seeing and investing in new companies. In the past as we have entered new geographies like New York, India, and China, our approach has always been ‘crawl-walk-run’—we start slowly, put down some roots and really figure out the right way to do things, and then establish a more permanent presence. Chicago’s a little different given our long history of investing here—there are four or five of us at NEA who are already here very regularly —but I would look to see our activity accelerate.

How many employees will your new office house? Where will it be located?
Barris: Currently we have 4-5 partners who will spend significant time in Chicago but will not be based there full-time. Our thinking right now is, on any given day we’ll have somebody on the ground. We have a small office in 600 W. Chicago, and we’ll be looking to establish something more permanent in the coming months.  

Are you hiring in Chicago?
Barris: Not at this time.

How would you characterize Chicago's startup community?
Barris: There’s tremendous entrepreneurial energy in Chicago right now, and it’s more diverse than people think. You’ve got people reinventing legacy industries (like advertising, logistics, printing) and forging new ones—certainly in the social/mobile space, but also in computing and storage and energy and education. Our firm also invests in healthcare, and I’m hopeful we’ll start to see more opportunities in that sector as well.

There’s a huge and growing entrepreneur culture here, and this region is home to some of the world’s most renowned universities. NEA and other top-tier venture capital firms have added fuel to the fire with an influx of capital in the last few years. I like to think NEA got here early and we are most certainly here to stay.

Who in Chicago are you most interested in working with in the near term?
Barris: We’ll continue to work closely with the local venture community—we have longstanding relationships with folks at Lightbank and World Ventures, and we’ll seek to become more involved with local angel and incubator groups like 1871 and Hyde Park Angels. We’ll also be focused on collaborating more closely with universities, and getting even more deeply engaged in Chicago’s entrepreneurial community.

To learn more about NEA, visit their website. You can also follow them on Twitter at @NEAVC.