Startups are forming in Illinois at an accelerated pace, and most of them are planning to hire new employees this year, according to a survey of local entrepreneurs released Monday.
The survey results represented the second installment of the monthly Illinois Innovation Index, an initiative started by four local organizations to collect comprehensive data on entrepreneurial economic activity.
The Chicagoland Entrepreneurial Center worked with a variety of local groups, including the Illinois Technology Association and Startup Illinois, to distribute the survey to these organizations' members via email between June and August.
Of the 136 self-identified entrepreneurs who completed the survey, 77 said their company was founded between 2006 and 2010. This represented a significant increase from the period between 2000 and 2005, when 12 companies were founded. In 2011 alone, 30 startups have been formed. These companies represented a variety of industries, from consumer websites to clean tech to financial services.
Matthew Summy, president of the Illinois Science and Technology Coalition, said that while the first survey is far from being "scientific or statistically valid," he believes it is a good starting point.
"It's going to be fantastic when we have year-on-year data," Summy said. "We'd love to grow the list of participating organizations and based on their responses, we know there are opportunities for policy interventions, funding interventions and other things to help."
The survey revealed that nearly 65 percent of respondents said they would add employees in 2011, with the majority of those new jobs based in Chicago. And while 71 percent of the companies surveyed expected to generate revenues of less than $500,000 this year, 21 businesses said they expect to generate more than $1 million in revenue this year. Only nine companies said they hit the $1 million level in 2010.
"This tells us that there's executive talent" at startups, Summy said. "They're able to secure some customers."
As for funding, 92 respondents said they're on the hunt for capital. More than three-quarters of this group put themselves in the pre-seed, seed or early stages, meaning they're in product development, preparing for a commercial launch or seeking funds to jump-start sales.
Summy said the email survey contained space for free-form comments. One common theme in those responses was that startups are seeking affordable office spaces and flexible leases.
"One of the reasons you do a survey like this is we look for places with a gap in service where we can have a policy intervention," Summy said. "(When) demand for space outstrips supply, there's a market-driven opportunity for someone else to step in."
Winning app: Elizabeth Park had never coded any software or built a mobile application before entering Apps for Metro Chicago, an ongoing contest for developers to make new uses of data sets provided by city, county and state agencies. But she wanted to make an app that would connect low-income Chicagoans with resources such as food pantries, community medical clinics and shelter.
On Monday, Park's Android app, iFinditChicago, won first place in Apps for Metro Chicago's second round. The prize was $5,000 and automatic entry into the contest's Grand Challenge finale, which will take place in December. Park, who hired a developer and designer to build iFinditChicago, also won a special award from the state.
"For me, this project brought up a lot of misperceptions that Chicagoans have about the poor," said Park, who works in nonprofit marketing.
One major misperception, Park said, is that low-income people don't own smartphones. She pointed out that carriers such as Cricket Communications offer Android devices on no-contract plans and that for many residents, a mobile device is the primary way they connect to the Internet.
The iFinditChicago app helps users search for Women Infant Children Health Clinics, farmers markets that accept food stamps and other places. Park said social service organizations and social workers can also use the app to help clients.
Park's future plans for iFinditChicago include spreading the word about its availability and adding more listings to the app.
"Chicago is great because you have big problems, but you also have big solutions," Park said.
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