When most people think of entrepreneurship, images of Silicon Valley tech startups, battling it out to be the next unicorn, come to mind. What they might not consider are the growing startups in the Windy City — a food, healthcare and manufacturing hub with some of the top business schools in the country.
These Chicago institutions have pointed to a trend in entrepreneurial interest in their undergraduate and graduate business students.
According to Forbes, the Chicago start-up scene is “on fire.” Pitchbook, a private equity and venture capital database, recently ranked top MBA programs whose graduates produced venture-backed companies. Northwestern University’s Kellogg School of Management ranked fifth on the list, while University of Chicago’s Booth School of Business ranked eighth. Furthermore, Princeton Review ranked Booth as having the third best graduate program in entrepreneurship.
“Entrepreneurship is the number one concentration at Booth,” said Micheline Pergande, senior associate director of marketing at Booth’s Polsky Center for Entrepreneurship and Innovation.
In 2015, 63 percent of full-time and part-time Booth students graduated with a concentration in entrepreneurship, compared with 46 percent of its students ten years prior, based on data provided by Pergande.
Recognized as the #1 university accelerator program in the country by the Seed Accelerator Rankings Project (SARP), Booth’s Edward L. Kaplan, ‘71 New Venture Challenge is a business launch program run by its Polsky Center for Entrepreneurship and Innovation. Since 1996, 800 startups have sprung from the challenge — over 100 are still operating and growing today. NVC companies have also successfully generated more than $400 million in funding and more than $3 billion in mergers and exits, Pergande noted.
Likewise, total enrollment in entrepreneurship courses at Kellogg surged 140 percent to 1,255 students in 2014, from 523 students in 2011, according to data provided by Taryn Tawoda, assistant director of external communications at Kellogg.
The number of new entrepreneurship courses at the Evanston-based business school more than tripled to 28 courses in the 2014 academic year, from nine courses in 2011. To teach these courses, which include topics on design thinking and venture capital, 23 new faculty members have been brought on since 2012.
Over the past few years, both institutions have developed new programs and initiatives geared toward entrepreneurship and innovation. The University of Chicago opened the Chicago Innovation Exchange in October 2014, which provides a space for business incubation, collaboration and new venture development for the school’s faculty, students, staff and local community entrepreneurs. In 2012, Kellogg launched the Kellogg Innovation and Entrepreneurship Initiative, which aims to help students turn their ideas into real businesses.
The Illinois Institute of Technology’s Stuart School of Business recently created the Master of Technological Entrepreneurship, a new graduate program in the soft launch phase. The school is currently accepting applications for Fall 2016.
According to Nik Rokop, industry assistant professor of entrepreneurship and chair of the Illinois Tech Entrepreneurship Academy Council, IIT has also seen an increase in student enrollment for entrepreneurship courses across various disciplines. During their undergraduate careers, students are required to take one course in the Interprofessional Projects Program. Also known as IPRO, the program aims to bring together students from different academic majors to find business solutions to real-life problems.
“[Our entrepreneurship courses] have enrollment ranging from 650 to 750 students per semester this year,” Rokop wrote in an e-mail. “In addition, we are aware of approximately 50 startups that have launched through Illinois Tech since 2009, with approximately 46 of those led by students.”
Meanwhile, Loyola University’s Quinlan School of Business was ranked 17th for its undergraduate entrepreneurship program by U.S. News and World Report in 2014.
“Quinlan has had steady enrollment in entrepreneurship programs at the undergraduate and graduate level,” said Anne Divita Kopacz, communication director for Loyola’s Quinlan School of Business.
DePaul University’s Kellstadt Graduate School of Business was ranked 15th on a list of more than 300 graduate schools surveyed by Princeton Review for the Best Schools for Entrepreneurship in 2016. DePaul University declined to provide data for this story.
The following is a snapshot of companies founded by entrepreneurs who launched their businesses either after or while enrolled in these programs.
Page Vault (Kellogg School of Management)
Jeff Eschbach has taken the screenshot to the next level.
While a part-time MBA student at Kellogg, Eschbach founded Page Vault Inc. in 2012. Its cloud-based software enables law firms to capture entire, scrollable Web page content to yield unaltered PDF files. These files include the associated metadata of the webpage, such as the server’s IP address and creation date.
As opposed to copied and pasted information in a Word document, the results are legal grade, cannot be tampered with and can be used as evidence in court cases.
“As a technologist, I thought I could come up with a way to not only capture something like that from the Web, but be able to prove what it really looked like on a certain date,” Eschbach said. “Academia wasn’t a great market. So while at Kellogg, I took some time to sort out different markets, and long story short, we found out the legal space was a fantastic fit.”
Before founding the company, Eschbach spent most of his career in Silicon Valley and in various intrapreneurship roles at major technology companies like Intel Corp. and Motorola Solutions Inc.
Although Eschbach enjoyed his corporate roles, his dream for Page Vault propelled him to change paths. “As much as I loved the corporate world, it was having a vision for Page Vault that I really believed in,” he said. “I talked to enough folks who were smart out there, Northwestern especially, and folks said ‘yeah, this is something that’s got legs. It could really happen.’”
Eschbach, 43, graduated from Kellogg with an MBA in entrepreneurship and tech strategy in 2014. He was recognized as the Student of the Year for Kellogg Innovation & Entrepreneurship and as a Pritkzer Group Venture Fellow that year.
During Eschbach’s graduate studies, the university unveiled its Innovation and Entrepreneurship Initiative in 2012. He said this program’s curriculum helped shape his future as Page Vault’s CEO.
“The new program was dedicated to getting students out of the building to talk to potential clients, learn from them, put together a business model canvas to learn about the product market fit, and all the other things in the ecosystem,” he reflected. “The actual curriculum got me from an idea to a company that’s up and running.”
To fund the idea, Page Vault raised two different rounds. Before Eschbach and his partners built the product, they received $200,000 from a “Friends and Family” round, supported by those who believed in the vision and trusted that the owners would succeed.
After the Page Vault software was developed, the young company raised $1.5 million during a Series Seed round in 2014. At this point, Page Vault grew from two non-salaried people to over 10 employees.
“We were pulling together a sales process and a tech development team, testing marketing strategy, finance . . . and when you put all those different moving pieces together, you have a functioning company,” Eschbach said, adding that Page Vault will participate in an advanced seed round this year.
To attract employees, Eschbach offers a mix of base salary, commission incentives and stock incentives, depending on the role. “Everyone has a base salary, some senior people get stock options, and customer-facing people may have commission,” he said.
In March of last year, Patrick Schweihs, 32, joined the business-to-business tech company as vice president of customer solutions. The 2010 law school graduate, who has worked with patents, trademarks and counterfeiting, said he loves working at startups with small teams and enjoys being involved in all aspects of a business.
According to Schweihs, the startup community easily adapts to movements in the market as opposed to larger businesses. As a result, startup ventures tend to “fuel larger companies through acquisitions.”
“If you take a look at acquisitions in the startup space, you’ll find that often times larger companies are unable to work very fast and take risks,” he said. “So they’ll acquire startups who are able to roll the dice and do things very quickly without the overhead and oversight of the red tape.”
Eschbach said budding entrepreneurs should be confident in carrying out ideas. He also emphasized the importance of choosing like-minded coworkers.
“Sometimes I see entrepreneurs being more wantrepreneurs, and they’re thinking about it, they’re like, ‘Gosh, I don’t know if I’m going to do it,’. . . but just make it happen,” Eschbach said. “You’ll learn so much, you’ll find out a ton about yourself and your ideas. . . Second thing is you have to have great people around you . . . the folks who believe in your vision, who can back you up and support you, because it’s a hard thing to do alone.”
Tovala (Booth School of Business)
David Rabie, 29, enrolled at the University of Chicago’s Booth School of Business with a dream of starting his own food technology company.
“I wanted to be my own boss,” Rabie said. “My dad has been an entrepreneur his whole life, and I always wanted to be an entrepreneur growing up. It’s what I always saw and believed I would do.”
“If you’re determined and if you don’t give up… that’s the number one predictor of success at a startup.”
— David Rabie, CEO
While in school, he craved fresh and healthy meals. Yet, his busy schedule and inadequate kitchen appliances prevented him from cooking the meals he desired.
Rabie’s incessant vexation from this unmet need, coupled with his Booth education, fueled the MBA candidate to action. Rabie formed Maestro Food Co., and with his team developed Tovala, a smart countertop oven that alternates between bake, boil, steam and convection heat. A barcode featured on the appliance first scans delivered, clean meals prepared by Michelin-starred chefs, uses cloud communication to authenticate a recipe, and then tells the machine what to do.
Rabie said Booth played a large role in bringing his business to life, from the teammates he met to the business classes that allowed him to further develop his idea. “We participated in the New Venture Challenge in 2015, which really gave us a lot of momentum post graduation,” Rabie explained in a phone interview.
“[The NVC] gave us structure and deadlines, which are always really powerful. It forced us to put together a real plan for how this business could function,” Rabie said. “Furthermore, it forced us to pitch the vision and make the vision as compelling as possible. So we built the prototype where we could demonstrate meals, sought out partnerships where we could demonstrate credibility, and those were all either because of the New Venture Challenge or due to the New Venture Challenge.”
After winning first place and $70,000 from the NVC, Rabie and his team secured $500,000 in a pre-seed round of financing with participation from numerous Midwest investors, including Origin Ventures, Valor Equity Partners, New Stack Ventures and angel investors like Mike Tebbe and Patrick Cadariu.
“Initially, we hired a product development firm to build a very rough prototype that we could use to convince people that this was possible,” Rabie said. “Then I brought Bryan Wilcox and Peter Fiflis on board, and a couple other folks with really, really technical experience and knowledge. They were able to bring the current machine to life.”
The company, recently renamed Tovala from Maestro, continues to gain immense interest. In its Kickstarter campaign launched Tuesday at 8 a.m., the company beat its $100,000 goal in less than 24 hours. As of late Wednesday afternoon, Tovala had secured over $154,000 from 585 backers. The campaign has 28 days to go.
Moreover, Rabie said Tovala is running a referral program in which every backer that refers another earns a free meal, and whoever refers the most people will get a year of free meals.
Tovala also announced Tuesday that it is backed by Silicon Valley’s Y Combinator, a company that funds startups.
Today, Tovala has 10 employees, most of whom have previously worked in ventures or have left corporate jobs for the startup world.
“Coming from the corporate world, the work you do at a startup is enveloping in a great way. . . But you need to make sure to take time for yourself.”
— Alex Solomon, marketing director
Alex Solomon, 30, marketing director at the company, recently left his corporate career to work at Tovala. When asked how he deals with the risk of joining a startup, he said his coping mechanism is a simple one: he thinks about the risks of not joining.
“I felt frustrated by the projects I was working on in my corporate job because I didn’t have as much control as I would’ve liked,” said the University of Pennsylvania graduate. “The fact that I work for a company with a mission I believe in and actually make a big impact, that’s enough for me to make sure I’m on a path I’m really excited about, rather than one that’s just safe.”
To bring Solomon on board, Rabie offered him a stock incentive. “The incentive is pretty standard within the industry,” he said, “with a set percentage of company stock vesting over a four-year period, beginning at the one year cliff when those stocks first become redeemable.”
Rabie and Solomon offered key tips and tricks for those interested in founding their own venture.
According to Rabie, finding the right partner is “probably the most difficult and the most important thing anyone has to do when starting a business.”
The CEO admitted finding a colleague with the right mentality and skill set was one of his biggest challenges. “I am very fortunate that I found someone who is a total needle in a haystack,” he said. “Bryan’s also an entrepreneur, but has an extremely sharp technical skill set. We’re completely aligned on where we want the company to go, what our personal values are, and what kind of culture we want to build within the company.”
In addition, Solomon said, balance is key. “Balance between different things at the job, making sure you get everything done in the right way, at the right time, and the right amount of intensity put into it,” he advised. “Coming from the corporate world, the work you do at a startup like this is enveloping in a great way. You want to dive so deep into it . . . but you need to make sure to take time for yourself.”
MATTER (Kellogg School of Management)
Steven Collens always knew he wanted to do something that mattered.
After graduating from Kellogg in 2001, Collens, now 44, held a variety of corporate jobs at large companies like Goldman Sachs Group Inc., Abbott Laboratories and Pritzker Group. An entrepreneurial thinker from the outset, he worked at 1871 for several years and co-founded his first company, Constant Wellness LLC, in 2006.
Yet Collens’s search for meaning persisted. In 2014, during what he said was “a particularly interesting time for healthcare innovation,” he teamed up with a group of four healthcare entrepreneurs who had recently moved to the Midwest from San Francisco. The group recognized the health care expertise that exists in Chicago and the city’s untapped potential for technological and healthcare innovation. They decided it was time to develop a community in this space.
“From that situation, the original kernel of an idea emerged,” said Collens . . . and in 2014, MATTER, a non-profit healthcare-technology incubator and community hub, was born.
Less than two years later, MATTER has doubled its size, burgeoning from 60 to over 100 healthcare IT, medical devices, diagnostics and biopharmaceuticals member companies. In 2015, MATTER was one of four health and medicine winners in ChicagoInno’s 50 on Fire awards event.
Collens said MATTER has the features of both an incubator and accelerator. Accelerators provide mentorship and office space to companies with externally developed ideas in exchange for limited equity. “We work with software, medical device, biotech, and diagnostics companies,” he explained. “We have a broad curriculum that we built for the companies, and we have different types of mentoring programs.”
He added that the company prioritizes engaging the community, with plenty of classrooms and an event space that seats 200 people.
While enrolled at Kellogg during the 2000 tech boom, Collens watched a number of students leave school to start their own businesses.
“People went for their summer associates and summer internship positions and then never came back to school,” he said. He added that when this boom crashed, “everybody wanted to go into banking and consulting . . . more stable businesses.”
According to the founder and CEO, MATTER needed around $6 million to fund the business initially. He explained that the team received $4 million from the state — a $2.5 million grant and a $1.5 million loan.
Collens said MATTER received additional financing from its building’s landlord and those interested in building the healthcare community — including Jeff Aronin, a pharmaceutical entrepreneur who is now on MATTER’s board of directors, Michael Sacks and J.B. Pritzker. Takeda Pharmaceuticals Co., AbbVie Inc., Astellas Pharma Inc. and Horizon Pharma PLC also invested before the company opened its doors.
“We were telling them that this was going to help them with innovation, it was going to be a center for new technologies that they’d be interested in . . . and a great place to help them grow their businesses,” Collens said, adding that without these organizations taking a risk, MATTER would not have been able to launch its business.
Although he was ultimately successful, convincing these people and organizations to take a risk was one of Collens’s biggest struggles.
“We wanted to open a 25,000-square-foot space, but who and what landlord in their right mind would rent this space to an organization that didn’t exist yet and had no revenue, no track record, no money in the bank? … I could go on for 17 hours about the challenges of opening,” Collens said. “The assets in the region are large companies, big health systems, insurance companies … and trying to approach them as a sort of fledgling entity was really challenging.”
During one of MATTER’s recent Tales from the Trenches speaker events, Collens’s ability to foster a community in this space was clear. The company’s office was bustling with healthcare-minded individuals, networking and chatting while eating Freshii bowls and sipping wine and beer courtesy of MATTER. The talk, which followed the networking, was standing room only.
Chris’ Awesome Guacamole (IIT)
Making guacamole has been a long-time passion for Chris Salgado, a private investigator by day. When he’s not working long hours at an international firm, he’s chopping and mixing ingredients to make guacamole for his business, Chris’Awesome Guacamole Inc.
Salgado has been featured on NPR’s “The Sporkful” and was a finalist in New York City’s Guactacular in 2013, a competition for guacamole enthusiasts.
A 2010 graduate of the Illinois Institute of Technology, Salgado said he always wanted to be a business owner and wanted to leave a legacy for his 5-year-old son Lawson. “I’m a pioneer in my family. I’m the first one to graduate college,” Salgado said. “I really want to push the envelope and make it as successful for him as possible.
Salgado took part in two Interprofessional Projects Program classes while at IIT. He said he was the lead on one of his projects where he managed approximately 15 students. “While it didn’t drive me to become an entrepreneur — as I’ve had that desire within me well before then, it did assist me in honing my management skills and working with people of varying skill sets,” he said.
Salgado’s professional background has “nothing to do with food.” Prior to working as a private investigator for over 13 years, the family man served in the U.S. Army and the Marine Corps. He said he has been making the the healthy guacamole recipe for his family and friends for more than 15 years, prompting his wife to encourage him to pursue a new venture.
“We out of nowhere just started advertising my guacamole as something more than just a hobby,” he said. “In a short amount of time, it’s gained a lot of momentum… When my friends come up to me, I tell them what I’m doing recently… and they’re like, ‘Guacamole, what?’ But here it is, and it’s living large, and I’m trying to keep up with it.”
Made with 25 natural ingredients and catered to health-conscious consumers who look for fresh, local food, Chris’ Awesome Guacamole is a vegan-friendly and gluten-free product. Salgado’s premium guacamole is offered in three sizes: $3 for 4 ounces, $5 for 8 ounces, and $10 for 16 ounces.
As a sole provider for his family, Salgado said he sometimes feels pressure from supporting both his family and business. “I have Lawson and another guy on the way, so it’s not easy. It’s rough,” he explained. “And there are always funding issues, financial issues, but you roll with it. . . You do that or you roll over and just give up, and I’m not someone who gives up.”
Salgado often receives help making guacamole from his wife, Tammi. Balancing his full-time job with his guacamole business can be taxing, yet he perseveres with a can-do attitude.
“Unfortunately, there have been several instances where I’ve felt like I had to give up because I have to work my day job and pay the bills. But I’m able to finagle some things because I create my own schedule,” Salgado said. “It’s a constant balance that I’ve had to keep.”
Despite the difficulty that comes with balancing his job and passion, Salgado said he values the independence that comes with starting a company.
“You don’t have to worry about somebody looking over your shoulder,” he said. “The best thing about it is . . . the sense of accomplishment that you gain from opening up your own business and seeing it grow. Seeing yourself land employees. Seeing yourself land accounts. Seeing yourself look at the customers right in front of you, enjoying your guacamole or whatever it is . . . just knowing that you rocked it. . . That’s the ultimate satisfaction in my opinion.”