Chicago tech: Leading the pack
Chicago continues to be one of the top tech hubs in the world.
There seems to be confusion about Chicago’s standing in the tech world. Some headlines in the not-so-distant past have been glum, asking “what’s wrong with Chicago’s tech startups” or laying out plans to “fix” the city’s tech industry. But an analysis of the current facts — including the trends — paints a different picture. The data points instead toward industry leadership and a vibrant Chicago tech community with sustainable growth.
Solid footing as a tech hub
When Compass, the online benchmarking company, reported the 2015 Global Startup Ecosystem Rankings, they found Chicago ranked No. 7 in the world, and the city made one of the “biggest leaps” in the standings — up from No. 10 on the 2012 list. As the report authors said, these rankings offer important answers and insights to both tech start-ups, and tech investors:
For Entrepreneurs: “Where should I start my new company?” “When I’m ready, where should I open up my startup’s second office?”
For Global Investors: “How can I find new startup investment opportunities around the world instead of simply settling for solely investing in my local startup ecosystem due to familiarity?”
For other sectors, there are more questions and some answers:
For Tech Talent: “Where is the best job market?” In a survey of tech workers by Modis, an information technology staffing company, Chicago was ranked the number one “future tech hotspot” by young people with professional tech degrees.
For the Housing Industry: RISmedia, an online real estate news outlet, interprets the Modis survey as a key indicator that Chicago is the number one housing market “set to be transformed by technology.” They add: “The hottest housing markets have one determining factor in common: employment opportunities. Cities with jobs in growing fields draw incoming residents in droves — and none is more in-demand currently than technology.”
Chicago’s reputation received further endorsement with the Inc. 5000 list of Top Cities for Fast-Growing Companies. With the No. 4 ranking in the nation, the report says ”there is no shortage of ingenuity in the Windy City.”
There are many tech jobs in Chicago. In recent months, 16 tech companies have added more than 700 jobs. That brings the total to more than 3,200 digital companies employing more than 54,000. And those numbers keep rising. One reason behind those healthy numbers may be that Chicago is also home to 90 business incubators and accelerators: From Chicago’s first-of-its-kind 1871 that recently expanded its space in the Merchandise Mart; to Catapult, the unique non-profit co-working space and accelerator whose members are peer-selected; to Insight Accelerator Labs, where a member took first place in the 2016 M2D2 competition for most innovative new technologies in med-tech.
Feeding the start-up growth spurt
According to World Business Chicago, $879.9 million in venture capital was invested in Chicago last year, with the total number of investment rounds increasing to 91 in 2016, up from 73 in 2015.
Investment momentum has been fueled by the Chicago Venture Summits that bring venture capital companies together with start-ups. Last April the second Summit attracted more than 200 venture capitalists from 150 firms who met with 200 local entrepreneurs at Google’s new West Loop office. The goal: to build on the success of the 2014 Venture Summit where 90 fast-growing companies connected with 147 venture capitalists. The first Summit was the catalyst for $220 million raised.
The tech talent shortage
According to recruiting firm Accolo, “One place where the demand for tech professionals with practical experience is exceptionally high is Chicago.” The firm recently showed 10,000 tech job openings in the city. But Chicago is not alone when it comes to unfilled tech jobs. Global IT leaders have sounded the warning signal: there is a talent shortage that is holding back growth. A survey of nearly 4,000 IT executives from more than 50 countries reported their chief concern is chronic shortages in key tech skills.
Jobs that go unfilled for lack of skilled workers represent a significant cost to business. A CareerBuilderTM a study on the U.S. skills gap reported that companies lose more than $14,000 for every job that stays vacant for three months or longer. The study also reported the job category that includes computer and mathematical occupations is the most challenging: 71 percent of employers report trouble filling those jobs.
Filling the gap
The Wall Street Journal reports there is a long-lived myth that the technology industry is full of meritocracies and college drop-outs, “where all that matters is the caliber of your code.” In reality, national data show 95 percent of tech sector job ads call for a bachelor’s degree or higher. There are plenty of answers to that need in Chicago. The city’s education landscape is dotted with standout programs that are producing graduates with the tech skills needed across the city and across the country.
- CIO Magazine says, “Undergraduate programs have been slow to catch on to big data education. Until now. (There) are eight universities paving the way for the next generation of data scientists with undergraduate degrees in big data.” The DePaul University undergraduate program for working adults in Decision Analytics was named to that list
- Building on Northwestern University’s history of success in research, innovation and discovery is The Garage. Here the university provides space and programs that allow students to experiment and take their ideas to the next level. That next level is the NUseeds Fund that provides venture capital for Northwestern students. The Garage currently houses 60 student-founded startups per quarter
- 1871 has been named the Top University-Affiliated Business Incubator in the U.S. by performance analyst UBI Global. Affiliates include Northwestern, University of Chicago, University of Illinois, Loyola University Chicago, DeVry University and Illinois Institute of Technology
To provide the next crop of freshmen for these top tier university programs, Chicago Public Schools launched Computer Science for All. As the most comprehensive K-12 computer science education program of any major school district in the country, CS4All moves computer science from an elective to a core subject. To support the program — and their future workforce — Google, Code.org, Microsoft and other technology leaders provide free curricula, assistance with professional development and teacher stipends.
The overlooked solution: Women
Despite Chicago’s leadership rankings in other measures of the tech industry, the city comes in at only No. 17 on the list of Best Cities for Women in Tech, a report based on U.S. Census Bureau statistics for computer and mathematical occupations throughout the country.
Here again, Chicago is not alone. “Gender bias (both conscious and unconscious) remains a critical problem in today’s workforce, especially in tech,” Forbes magazine said. The result: women are an underutilized resource, holding less than 26 percent of tech jobs.
Resources for Chicago women in tech
Combating the under representation problem is the top priority for Chicago organizations from tech incubators to professional groups:
- WisSTEM at 1871 “believe(s) Chicago is the best place in the country for women entrepreneurs to start a business.” The 12-week, curriculum-based program connects women to capital, community and technology esources. Since its inception in September 2015, the WiSTEM program has helped more than 37 women-founded companies and 45 entrepreneurs.
- The Chicago Executive Women’s Networking Group and its ARA program focus on strategies and tactics to Attract, Retain and Advance women in technology.
Staying on the growth curve
Chicago is well positioned as a national leader in the tech sector. But that also means addressing challenges shared across the country: skills gaps, gender gaps and labor shortages. Employers—– from traditional companies to startups — can look to the area’s robust education community as a source for the next generation of tech talent. Then, by adding recruiting strategies aimed at women with critical tech skills, the city could continue to lead on all fronts.