I2A Fund Goes Private, Becomes Chicago Ventures
6/24/2013 – Armed with $40 million in fresh capital and a new name, one of Chicago’s rising venture funds is adding to the local pool of money for homegrown technology startups.
The I2A Fund, which was created in 2007 with contributions from the state of Illinois, announced Monday that it has closed its second fund with $40 million and renamed itself Chicago Ventures. The new fund is composed entirely of private capital, and the primary investors are local venture capitalist J.B. Pritzker, The Duchossois Group and Pat Ryan Jr. Pritzker and The Duchossois Group, along with the state, had been the main contributors to the first I2A Fund, which totaled $10 million.
“The really exciting thing for us as we close the fund is the number of local investors and entrepreneurs,” said Chicago Ventures partner Stuart Larkins, a managing director of I2A, which stands for Illinois Innovation Accelerator. “We purposely didn’t focus on raising any money from the state.”
Larkins said the investors in Chicago Ventures are “all eager and active” to contribute mentorship and advice to the fund’s portfolio companies. The group includes John Canning, co-founder and chairman of Madison Dearborn Partners; Gordon Segal, the co-founder of Crate & Barrel; and James Gray, founder of OptionsXpress. (John Madigan, a former chairman and chief executive of Tribune Co., which publishes the Chicago Tribune, is also an investor.) The majority of the investors are from the Chicago area.
Some of the participants in the $40 million fund have experience as angel investors, meaning they’ve made personal investments in startups at their earliest stages. But others are new to venture capital and are eager to tap into the area’s growing startup scene, said Kevin Willer, the former CEO of the Chicagoland Entrepreneurial Center who is joining Chicago Ventures as a partner on Monday.
“There’s a real interest from folks who haven’t really been into this asset class to make some investments in this early stage,” Willer said.
Larkins said the new fund is about 20 percent committed, leaving “a lot of dry powder” for new investments in young technology startups. Chicago Ventures’ portfolio consists of 15 companies so far, with 14 of those based locally. These companies include Retrofit, a provider of customized health and weight-loss advice; Shiftgig, an online network that helps service workers find jobs; and Power2Switch, an online resource that lets consumers shop for cheaper electricity rates.
In May, I2A logged its first exit. Cartavi, a Naperville-based maker of real estate software was acquired for undisclosed terms by DocuSign, an electronic signature technology company in San Francisco. Cartavi and its 11 employees are continuing to run the business from Naperville.
Larkins said that while I2A had been more of a “follow-on fund,” meaning it would participate in rounds led by other investors, Chicago Ventures wants to be on the front lines of finding opportunities and leading rounds.
“We’re the seed folks,” he said. “In some cases, we’ll be the very first money into the deal.”
The launch of Chicago Ventures comes less than a week after Hyde Park Venture Partners, a firm created in 2011 from Hyde Park Angels, said it closed its first fund at $25 million. Hyde Park Venture Partners also focuses on early-stage technology companies in Chicago and the Midwest. Both Hyde Park Venture Partners and Chicago Ventures are investors in SimpleRelevance, a digital marketing startup, and Food Genius, which collects and analyzes restaurant menu data.
Chicago Ventures has its offices at 1871, the collaborative workspace for startups at the Merchandise Mart that is run by the Chicagoland Entrepreneurial Center. Willer is leaving the CEC for his new role at the venture fund. His permanent replacement has not been named.
Jim O’Connor Jr., co-chairman of the CEC, will fill in for Willer on an interim basis.
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