Knowledge economy should know no bounds
January 30, 2006
BY MICHAEL KRAUSS
Leaders of Chicago's
tech community convened recently to debate the direction of Chicago's
knowledge economy. The discussion was intense. No obvious solutions
resulted, but several key issues and themes emerged.
With the restructuring
of the nation's automotive industry and Ford's announcement of
14 plant closings and 30,000 job cuts (though none in Chicago),
the debate over Chicago's knowledge economy takes on greater meaning.
to estimates by McKinsey & Co., Chicago is the nation's sixth
largest knowledge economy with $38 billion in annual gross metropolitan
product. McKinsey estimates knowledge economy GMP across the top
50 metropolitan areas grew at 4.2 percent annually from 2000 to
2005. Chicago grew at about 2.4 percent. McKinsey anticipates
Chicago will grow at 3.5 percent from 2005 to 2020. If Chicago
can boost that growth to the expected U.S. average of 5.4 percent,
our region will score an incremental $21 billion in annual GMP
by 2020. That's the opportunity.
for a roadmap
How to get
there is the reason for the debate, which was convened by TiE
(The Indus Entrepreneurs) a leading tech entrepreneurship group.
is a critical driver of wealth in this country," says TiE
President Adarsh Arora, the debate organizer. "Our key advantage
is innovation, which needs continued nourishment."
no disagreement on that point from the panel, which included Ellen
Carnahan of Wm. Blair Capital Partners; Tom Churchwell, Arch Development
Partners; Jerry Mitchell, Midwest Entrepreneurs Forum; David Weinstein,
Chicagoland Entrepreneurial Center, and Jack Lavin, director of
the Illinois Department of Commerce and Economic Opportunity.
of early stage investment capital and too few experienced entrepreneurs
were recurring themes.
are not enough folks with early stage bets," Arch's Churchwell
said, suggesting more VC's put money into developing companies.
But Carnahan observed it's not just a Chicago phenomenon. The
percentage of dollars invested in early stage ventures totaled
43 percent of all private equity investments in 1995, and fell
to 22 percent in 2005. It's a national issue, which could harm
our global competitiveness.
a venture capital gap," DCEO's Lavin agreed. The Blagojevich
administration sought to close the gap with a $200 million Illinois
Opportunity Fund that has not passed the General Assembly. Lavin
said he came to "listen and learn," and suggested the
state's budget situation creates challenges.
the importance of the state's efforts backing BIO2006 and the
new technology park in Skokie.
a key factor in multiple ways. "I don't see enough serial
entrepreneurs," said the CEC's Weinstein, while the MEF's
Mitchell lamented, "I don't see enough business plans."
managing director of Northfield-based Draper Fisher Jurvetson
Portage, pointed out that Chicago-based FeedBurner, a local startup
"growing at 10 percent a week," is having difficulty
finding skilled technology talent.
pointed to Chicago's financial exchanges and the successful startups
emerging from them. He urged greater focus on the financial services
sector as an area of opportunity, and the educational efforts
that would transform wealthy exchange traders into angel investors.
agreed it's the responsibility of the private sector to help Chicago
organize and capture the growth opportunity. The panel didn't
name names or propose structures for organizing private sector
initiatives to catalyze the effort.
who is president of BronzevilleOnline (www.bronzevilleonline.com)
pointed to the need for African-American representation in the
"What are we going to do collaboratively about the lack of
African-American involvement in entrepreneurship in Chicago?"
One new proposal
gaining momentum is the idea of creating a large scale "Entrepreneur
Center of Excellence." While still just a concept, the center
would be regional and staffed by successful entrepreneurs providing
deeper expertise than the current ITECs. The ITEC model was seen
as too diffused and unable to deliver.
said, "The glass is half-full. It will take major rethinking
and commitment by our civic leaders to make a dent in the current
situation. A lack of action will result in serious losses for
Krauss is a Chicago area tech writer and consultant.