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The Merchandise Mart in River North is the home to 1871, a non-profit that provides workspace and mentoring for tech start-ups.

Chicago faces uphill battle for tech success

by Camille Izlar and John Burfisher
Oct 11, 2012

When the going gets good, Chicago tech companies head for the West Coast. Mayor Rahm Emanuel wants to change that. He recently appealed to engineers at the University of Illinois at Urbana-Champaign to consider Chicago as a place to build their careers. And Chicago technology incubators such as Lightbank and 1871 also are trying to reverse the migration by providing workspace and investment.

The list of tech companies that started in Illinois and then moved on is long: YouTube, Firefox, Bump and PayPal. But there are signs that may be changing.

Seyi Fodobe, founder of tech startup Power2Switch, says he is happy in Chicago. "We got all our seed investment from Chicago and continue to get support from our investors,” said Fodobe, the company’s “chief electricity officer.” Power2Switch helps customers change electricity providers to save money on electric bills.

Other entrepreneurs say that there are more obstacles in Chicago than a shortage of funding. One of them is finding a deep pool of talent. Often website and program designers as well as coders find the work here less than exciting.

“Tech jobs in Chicago often relate to the corporate climate of healthcare and banking. A lot of designers are willing to take a pay cut to do more fresh and exciting work,” said Luke Pacholski, a designer at Vibes Media, a mobile marketing company located downtown.

Cortlin Handly, senior manager at Jobspring Partners, a recruiting company that focuses on connecting tech talent with companies, says the solution is not necessarily in pulling in new talent from other locations but grooming the pool that already exists.

“Yes, there is a lack of tech talent in Chicago. There is a lack of the perfect candidates that companies target. But there is not a lack of people intelligent enough to work hard and learn,” Handly said.

Danny Gedgafov, an engineer at Glenture, is a recent graduate from the University of Illinois at Chicago. He decided to stay local because his company treats him well and it was a great place to build his resume. But he thinks Chicago might not necessarily be a growth market for tech companies and he plans to eventually move West

Despite its disadvantages, Chicago has had some notable successes. Last month executives from 21 Chicago-based tech companies committed to creating 2,000 jobs here by 2013. They included Groupon Inc., the Internet coupon giant; GrubHub, the online restaurant delivery site, and BrightTag, a digital marketing firm.

Recruiter Handly says the key to keeping tech employees in Chicago is keeping the environment stimulating.

“Technology is always moving. Developers need to be challenged. This will decrease flight risk and provide growth for your company,” he said.

Pacholski said even more important is keeping funding flowing. “You only have limited runway before your money runs out. If you don’t have that really good guy, it won’t look as good.”