Chicago’s innovation community and where value grows from
This week the Illinois Science and Technology Coalition (ISTC) produced what, in my judgement, should be viewed as an annual report card on Chicago’s innovation community. As they have every year since 2013, ISTC examined the success of startups founded at Illinois universities by students and faculty.
The results, much like my report cards in college, were decidedly mixed.
According to ISTC, 942 startups were founded between 2013 and 2017, a number that marked a significant increase from previous years. What jumps out is the one differentiator that determined what startups were more likely to raise outside funding, and the level of funding they received. That differentiator was patented technology.
According to data gathered by the Illinois Science and Technology Coalition (with additional data from Pitchbook and Crunchbase), 146 tech-transfer startups emerged from Illinois universities between 2013 to 2017; 78 of those companies raised $483 million of outside funding. 53 percent of companies commercializing an invention received funding, and received an average of $6.2 million for each company.
These figures include money raised under the Small Business Innovation Research (SBIR) program, a federal grant provided to companies that are commercializing inventions. (Invent2026 has supported the Women’s Business Development Center’s “InventIllinois” program to increase that tally even more next year.)
There is also clear evidence that outside investors are accelerating investments toward tech-transfer companies. Four years ago, 121 Illinois tech-transfer companies examined by ISTC raised an estimated $114 million. That count has since quadrupled even as the number of tech-transfer companies emerging from Illinois has remained relatively static.
Contrast this with the success rate of startups in the sample that were not commercializing an invention. Of the non tech-transfer startups — 796 from Illinois universities, according to the study — 270 received outside funding, or 34 percent. These 270 startups raised a combined $394.5 million, or an average of $1.5 million for each company.
This year’s ISTC report card findings largely replicate those of previous years’ report cards.
Illinois universities are patenting 32 percent of invention disclosures — roughly in line with the federal lab system — but far too many Illinois-generated inventions have nowhere to go from there. “Despite reaching new highs in 2016, growth in many tech transfer metrics lags the national average,” the ISTC report notes.
ISTC’s report card reinforced what should be plainly obvious to any observer of Chicago’s innovation economy: We are not commercializing enough inventions, turning instead to well-intentioned coworking spaces and incubators to support software-based startups targeting a thin Midwest venture capital market.
The first ISTC report card counted 295 non tech-transfer startups emerging from Illinois universities; five years later, that figure has nearly tripled (!), speaking to investment made in catalyzing entrepreneurship in Illinois. I don’t bemoan those investments, but if we similarly invested in catalyzing technology transfer, the ISTC data clearly shows that we are more likely to see growth in outside funding, and by extension, new venture growth and job growth.
This over-the-top focus on catalyzing entrepreneurship without focusing on licensing IP is leaving a tremendous amount of value unrealized.
Thomas Day is the co-founder of Invent2026.
