Fall 2014

ILLINOIS INVESTMENT & EXIT LANDSCAPE TRENDS

CB INSIGHTS AND WORLD

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Illinois Is Heating Up: Nearly $7.5B Invested

In More Than 1000 Deals Since 2009

The prairie state is set to have a record year in deals and dollars invested, but where has the money been going, and who are investors involved?

After Groupon's massive funding rounds starting in 2010 and subsequent IPO in 2011, the Illinois

startup scene has been getting bigger. The majority of investments are concentrated in Chicago,

where nearly $4.6B of investment has been made in 368 unique companies since 2009.

This analysis provides an in-depth look at the financing and exit landscape to tech companies in the

Illinois region as well as the investors and companies fueling the startup ecosystem.

Note: Data in this report includes financings by angel investors, angel groups, mutual funds, hedge

funds, venture capital, corporate and corporate venture investors. Please note that it is not just

venture capital investors.

Specifically, this Illinois private company financing and exit review will cover:

Chicago Spotlight

Deals and Dollars in Illinois

Financing Trends by Stage

Financing Trends by Sector

The Most Well-Funded Private Companies

Investor League Tables

Exit Activity

Chicago is the hub of VC funding in Illinois and has taken 59% of all deals and 61% of all dollars in

Illinois since 2009. The city has had a total of nearly $4.6B invested across 368 deals

Deals and Dollars in Illinois

Funding in Illinois has had its good years and bad years. 2012 dropped by nearly 50% in funding after

a high of $1.7B in 2011, but has since rebounded. While yearly funding has had ups and downs,

dealflow has been consistently increasing since 2009. A record high of 247 deals were made in 2013,

0 50 100 150 200 250 300 350 400

Highland Park

Skokie

Naperville

Schaumburg

Evanston

Northbrook

Champaign

Chicago

Dealflow by Cities in Illinois2009-Q3 2014

4%4%

5%

6%

7%

12%63%

Chicago Dealflow by Sector2009-Q3 2014

Financial

Business Products & Services

Software (non-

internet/mobile)

Healthcare

Consumer Products &

Services

Mobile &

Telecommunications

Internet

a 278% increase since 2009. 2014 is currently on track to having the most deals as well as the highest

amount of funding if this trend continues.

Looking at a quarterly trend, we see back-to-back strong funding quarters in Q4'10 and Q4'11 which

were propelled by two massive funding rounds in Groupon for $500m and $450M respectively. Deals

have experienced relatively consistent growth since Q4'11, with this past quarter reaching a record

high of 74 deals including Tiger Global Management's $75M Series C funding round in Chicago-

based AvantCredit.

Illinois financing trends by stage

Though mid-stage has consistently received the most funding, year to year changes have been drastic

typically being propelled by a handful of larger deals. 2010 and 2011 were dominated by Series D

funding due mostly to funding Groupon, while 2013 saw nearly a third of dollars go to Series B

financings led by a $45M funding round in SMS Assist. Series E+ funding, which was non-existent in

2013, took 1/5 of funding dollars in 2014 including a $36M round in Chromatin and a $30M round

in Ifbyphone. Seed/Angel dollar share has slowly grown from 2% in 2010 to 10% in 2014, which

included deals in I2R Holdings, GetSet Learning and G2 Crowd. Highlighting a nascent but growing

early stage investment community in the Chicago area.

In terms of deal share, early-stage deals have consistently taken nearly 3/4 of total deal share each

year. In 2014 so far, half of the deals have been Seed rounds, though Series E+ deal share has

reached a 6 year high of 4%. Every other stage of investment has remained relatively range bound

except for a spike in 2011 Series D deal share which included deals in Grubhub, PowerReviews,

and SpringCM.

Illinois funding trends by sector

Looking at a sector breakdown of dollar share demonstrates just how dominant funding is in Internet

companies. So far in 2014, more than 3 quarters of funding has gone into Internet companies, which

was have seen more than $500M. 2014 has seen some growth in Software as well, reaching a six-

year high of 10% dollar share which was led by a $30M investment in Ifbyphone that included Apex

Venture Partners, Origin Ventures, and NewSpring Capital.

Since 2009 more than 420 deals have been made in the Internet sector, with 74 being made in 2014

so far. While 2014 has been one of the slower years for Internet deals, they still comprised nearly 2/3

of all deals. The Mobile scene in Illinois has also remained relatively popular, with nearly a fifth of all

deals happening in this area. Healthcare software companies such as SA Ignite, Pharos Innovations,

and Maestro Healthcare Technology have also been getting some traction.

Most well-funded startups

Cumulatively, the top 20 most well-funded private companies have raised nearly $4B in investment.

Though Internet startups are 5 of the 20 companies, the list shows sector diversity including 3 Energy

and Healthcare companies. AvantCredit and Invenergy top the list, with more than $500M total

funding each.

Investor League Tables

Pritzker Group Venture Capital topped the list of active investors, with investments in more than 35

companies since 2009 focused on the tech sector. Some companies they've invested in

include Cleversafe, Gogo (which had it's IPO in 2013), and Sittercity. Lightbank and Chicago Ventures

followed after, both having invested in more than 20 companies each.

Most Active Early-Stage Investors

Lightbank had the most early stage investments, the largest of which was a $5.6M investment

in Tagkast, a social event amplifier. All but one investment from Lightbank since 2009 was in early

stage deals. Excelerate Labs, a popular accelerator in the Illinois area, invested in 23 companies as

did Chicago Ventures.

Most Active Mid-Stage Investors

With 7 investments, Pritzker was the most active mid-stage investor, making investments in SMS

Assist, Sittercity, and Eved. They are followed closely by IllinoisVENTURE, New Enterprise

Associates, and Hyde Park Angels.

Late-Stage Investors

No individual firm stands out in late-stage investment, with each of the following firms making no more

than 2 late stage investments. The largest late-stage investments include Groupon, Mu Sigma,

and Elevance Renewable Sciences.

Exit Activity

Notable exits since 2011 include:

Grubhub's IPO in 2014, when they were valued above $2B

Cars.com acquisition by Gannett for $1.8B

Gogo Wifi's IPO in 2013, when they were valued above $1.4B

Braintree's acquisition by ebay in 2013 for $800M

Groupon's huge IPO in 2011, which valued them about $17B

While M&A represents the majority of acquisitions, 2013 saw a high of 9 IPOs, which included

Chicago-based companies like Potbelly and Levy Acquisition Corp. Wintrust Financial was the overall

most acquisitive company, while Groupon was tech's biggest acquirer.

Lightbank and Pritzker, along with being the most active investors also have the most exits from their

portfolios. Some of their acquired portfolio companies include Hyperquest, DraftDay, and Betterfly.

Following closely behind are Hyde Park Angels and New Enterprise Associates, which each have 5

acquired companies.