Wanted: Fast-growing, job-producing startups

September 12, 2005

BY MICHAEL KRAUSS

Chicago needs more gazelles. Not at the Lincoln Park Zoo. It's had enough trouble this year. We need more gazelle companies -- fast growing, job-producing, wealth-creating gazelles.

What's a gazelle company? Think of Google. Google was founded in 1998 by two Stanford University graduate students, Larry Page and Sergey Brin.

Since going public in August 2004, Google's market cap stands at a stunning $82.5 billion. Today you can't buy a house in Atherton, Calif., because the Google millionaires are spending money, boosting the local economy, bidding up prices. Chicago should be so lucky.

So who's going to create Chicago's Gazelles?

I say follow the money. My money is on Matt McCall, the 41-year-old managing director of Northfield-based Draper Fisher Jurvetson Portage.

McCall is a rarity in Chicago. He's a seed and early-stage venture capitalist who manages a $180 million fund. He walks the halls at the University of Illinois, Argonne National Labs and his alma mater, Northwestern University looking for the next Google.

An eye for success

McCall's doing well. He backed his Kellogg classmate Jamie Crouthamel with a couple hundred thousand dollars in 1998. The total investment grew to around $6 million.

In 2004, Crouthamel sold Perfomics, an online marketing services firm, to DoubleClick for a little under $70 million, according to McCall.

More recently, McCall is backing Feedburner, a local startup that builds RSS (Real Simple Syndication) technology tools. By all accounts, Feedburner looks like a winner, too.

McCall thinks Crouthamel and his colleagues are poised to build new startups in Interactive marketing, an area where Chicago could build critical mass.

"We're extremely positive about this region," says McCall, who focuses on seeding IT and life sciences ventures. "In the past two years, we pulled all of our investment activity from a national focus to a predominantly Midwest focus."

Why? There's an enormous technology base here, reports McCall. There's also a deep base of companies locally that buy technology.

But the real reason is the level of federal research dollars that goes to Midwest institutions. McCall estimates over $2 billion lands annually at venues including the University of Illinois, the University of Wisconsin, the University of Michigan, Northwestern, Purdue and the University of Chicago.

"That money attracts the best technical thought leaders in their fields," says McCall. "If you actually spend the time to walk the hallways, it is unbelievable the technology that is sitting here. Champaign-Urbana has $100 million institutes like some campuses have dorms."

He points to the Beckman Institute, two nanotech centers, the National Center for Supercomputing Applications, the Siebel Center and a Department of Energy facility.

"A dizzying array of resources down there," says McCall.

All McCall has to do is find the next Larry Page and Sergey Brin. They're out there, Matt. Find 'em soon. We need the gazelles.

Up on the roof

Summer is drawing to a close, but FastRoot Technologies founder and CEO Terry Howerton is making his rooftop at 117 N. Jefferson the place Chicago's tech community meets and greets on Friday afternoons. Tech entrepreneurs, investors and even a few tech customers show up on Howerton's roof.

Howerton is chairman of the Illinois Information Technology Association. His goal is to bring the tech community together for fun and profit. He wants local tech entrepreneurs to meet prospective customers and investors. Roof sightings include tech buyers from Boeing and the city of Chicago.

No word yet on where the party moves when cold weather arrives.

"This thing has taken on a life of its own," says Howerton. "We're definitely going to have to keep it going."

Wicks on tap

Motorola chief designer Jim Wicks speaks Monday at the MIT Enterprise Forum at Gardner Carton & Douglas.

Wicks supervises 200 Motorola sociologists, psychologists, musicologists, engineers, graphic designers and software and colors specialists.

He'll talk about consumer experience, and the development of RAZR, Rokr and other new Motorola products.

Michael Krauss is a Chicago area tech writer and consultant.

 

 

 ©2005 Marion Consulting Partners