The 2020 Midwest Tech & Venture Capital Scene with Chicago's Hyde Park Ventures
By Laura Cowan
Laura K. Cowan is a tech editor and journalist whose work has focused on promoting sustainability initiatives for automotive, green tech, and conscious living media outlets.
Hyde Park Ventures' Managing Director Guy Turner heads up the Chicago office of the VC investing firm.
With everything going on in the world, what is happening to business funding in the Midwest, which only recently climbed out of the hole caused by manufacturing decline and economic collapse? Guy Turner, Co-Founder and Managing Director of Chicago's Hyde Park Ventures has been in investing for years. "Myself and one partner created Hyde Park nine years ago," Turner said from his office several weeks ago in Chicago, where he was sheltering with the door closed to avoid exposing colleagues to COVID-19 while work life continued as best it could. "We ran Hyde Park Angels," he explains of the group's origins in angel investing. "We recognized there were very few early stage funds working with zero to $1.5 million in revenue before coastal funds would be interested. In 2011 we raised our first fund," he said.
Guy Turner co-founded Hyde Park Venture Partners in 2011 after time with the Boston Consulting Group. He has led investments in numerous software companies and manages HPVP’s investments in Upfront Healthcare, Zipnosis, Fixer, and Truss. He is a mechanical engineer by training and also holds an MBA from Chicago Booth.
Today, Hyde Park Ventures is focused on VC funding early rounds in startups with five to 25 employees, still working with zero to $1.5 million in revenue. "We'll write checks for a quarter million to $3 million, rounds 1-7," Turner explained of the Midwest VC firm's focus. "Our strategy is geographic, because there still isn't enough capital focused on this region."
The Hyde Park Venture Capital team. Center left is Managing Director Guy Turner.
The Chicago region of the Midwest is known for Silicon Valley sales and marketing teams, shipping logistics companies, and advanced manufacturing or other business networks connected with Detroit and Toronto. Turner said it's a different flavor than some other tech centers, but is the heart of some of the Midwest's best entrepreneurial ventures that can succeed in the Midwest and beyond. Turner told Cronicle that if you're looking to get involved in the startup or VC scene in Chicago or connect with tech networks there, look for startup gatherings hosted by VCs and companies. He said groups in the Chicago tech and startup scene are layered by function. "HR leaders from startups, finance," he gave as examples.
We quickly got the impression that Turner and his team back up their faith in this hard-working region with the support companies need to succeed here. He spoke proudly of one startup Hyde Park Ventures backed who went through an unusual amount of early turmoil.
Turner said he enjoyed working with one company that partnered with the Kellogg factory in Michigan to track trucks on the road. "We invested at the seed stage with an entrepreneur who was an industry expert," Turner said of the company that is typical of Chicago's special brand of tech company. "They were sued for patent infringement by a competitor, which is unusual in the software space. These claims are often reaching because they're hard to prove: it's not hard tech. We got behind the company, supported them with resources while they fought through appeals court and won." Turner said the company came out the other side of the ordeal even stronger and raised new rounds of capital from respected firms including August Capital. "When there's an early-stage company with a great idea and the world tries to take it down," Turner said, "we're proud of a great company like that and a CEO who is tough as nails. We're extremely admiring of him."
Photo courtesy Salesforce Chicago. Pictured, the new Salesforce Tower on the Chicago River.
What's going on in the Chicago startup and tech scene right now? Uber is renovating and moving into the Old Main Post Office. Google has been expanding its office in the Windy City, and Salesforce has been in process of building a new tower on the river. "Chicago has good DNA for sales and marketplace businesses," Turner told us of the Valley's expansion of sales and marketing teams in the Midwest. The expansions in Chicago are also due to the great airport system in the region that connects international business hubs. Chicago is a great central location for sales offices, it's relatively affordable for a major U.S. city, and that's why companies like Groupon and Grubhub are headquartered there.
What about smaller tech companies? "Historically, Chicago has been a location of marketplaces emerging," Turner told us, "of business and marketing rather than tech, but it's also a logistics technology hub." In the midst of this particular flavor of big tech and Midwest shipping companies, Hyde Park Ventures has carved out a niche and a reputation for spotting new tech talent and new businesses that can succeed locally. "We raised a new fund at the end of 2019," Turner told us, though he acknowledged that what happens after the coronavirus outbreak is anyone's guess at this point. The firm was involved in Ann Arbor-based AI startup Clinc's latest funding round.
The firm is taking a long view of every company they support through the coming hard times. "We will continue to partner with the best entrepreneurs in the Midwest," Turner said. "Right now we're making sure our companies have the support they need to figure out what the next few months will look like--which will be different for all of them."
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