Chicago: entrepreneurs like big city thinking and cheaper rents

Population 2.7mStudent population (metro area) 625,000Start-ups 2,200-plus

Start-ups are drawn to the third most populous US city because Chicago is massive, cultured and thoroughly metropolitan, but rents are relatively cheap and the talent pool, supplied by some of the country's best universities, is deep.

The city's tech scene has grown hugely in recent years, expanding beyond its traditional ecommerce and financial technology roots into healthcare, advertising and marketing, led by incubators and accelerators such as 1871, Techstars Chicago and the medical industry-focused Matter.

The case for: If cheap rent, world-class public transportation, Northwestern University and the University of Chicago were not enough, the city is also home to more than 400 corporations - including 30 Fortune 500 companies - many of which are looking to invest in the next big thing. Mayor Rahm Emanuel has also made a point of fostering the start-up scene through tax credits and greater engagement, as well as encouraging leading tech companies such as Google and Twitter to set up offices. Chicago has diversified well beyond its manufacturing roots, and unlike other large US cities, which can be dominated by a single industry, no single sector now accounts for more than a seventh of the economy.

The case against: They do not call it "flyover country" for nothing. Although Chicago offers all the benefits of its coastal peers, not many of those on the coast consider it a peer. That means that although venture funds are increasingly looking to Windy City start-ups, Chicago can still be an afterthought for some. The long winters do not help.

Local heroes: Daily deals site Groupon is the granddaddy of the start-up scene, anchoring a tech corridor from the old Montgomery Ward building just north of downtown. Food-delivery app Grubhub's $1.9bn initial public offering last year brought it into the city's top ranks, along with Cars.com, which was acquired for $1.8bn last year and Fieldglass, a vendor management software company that was bought for $1bn last year. The Google and Twitter offices are likely to attract more newcomers.

Show me the money: Venture funds poured nearly $1.5bn into 155 companies last year, up from just over $1bn the previous year. Maria Katris, chief executive of Built in Chicago, an online tech hub, says the city has "tens of billions in late-stage growth equity and buyout money available" and "more than $100m in early stage financing from angel and early stage funds", such as Hyde Park Angels and Cornerstone Angels.

Getting there: The city's O'Hare International Airport is among the world's busiest, with direct flights to just about every major international city. Chicago's central location means that San Francisco and New York are each roughly a three-hour flight away. As an added bonus, the Blue Line train will take travellers to the heart of downtown in about 45 minutes, an easy way around the problem of Chicago's legendary traffic.

Neil Munshi

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