Gotham, startup your engines.

The city’s tech scene appears poised to come out of the shadows after years of fighting for the limelight enjoyed by New York’s core industries such as finance, media, advertising and fashion.

“I will go out on a limb and say that NYC right now is the most innovative place on the planet. If I had to bet I would bet the next black swan [startup] will come from there,” said Rafe Furst, a Silicon Valley-bred entrepreneur.

The companies featured here are amNewYork’s picks for the top 10 tech startups, compiled with the help of ChubbyBrain, an information services firm.

Gilt Groupe

Founded: 2007

Venture raised in ’09: $43 million

This fashion retail Web site sells designer goods at sample-sale prices.

“It’s a fundamentally different way of selling merchandise that has a lot advantages for brands and consumers,” said co-founder Kevin Ryan.

Gilt’s members have to be invited, adding to an air of exclusivity to the site, where deals are deep, such as a pair of Testoni shoes at $500 instead of $2,000. Also innovative: The site schedules its sales — everyday at noon new ones begin for 36 hours.

Why they’re in New York: Gilt counts 400,000 New Yorkers among its membership of 2 million. Ryan was on the ground floor of the ad firm DoubleClick when Google paid $3.1 billion for it in 2005. He’s among the city’s most successful entrepreneurs.

“New York is the only place you want to set this company up because the brands are here,” Ryan said.

Measure of success: The company went from $25 million in revenue in 2008 to $107 million last year. Ryan predicted $500 million in 2010. With that kind of growth the company has gone from eight employees to 380, and it is making a big push into Tokyo.

Foursquare

Founded: 2009

Venture raised in ’09: $1.35 million

Creators of the pioneering social-network startup Dodgeball are back with another venture named for a schoolyard game.

Foursquare members are plugged into a network of users who share their whereabouts and interests in a given city.

“It’s a fantastic tool for exploring really dense areas like New York,” said co-founder Dennis Crowley.

Members can access tips and reviews from other members, and GPS technology allows them to explore their immediate surroundings. There’s even a game element as people earn points, badges and titles. For instance, members who frequent an establishment the most become the “mayor” of that locale.

Why they’re in New York: Crowley said one of the city’s top draws is its economic diversity, as opposed to the cliquish Silicon Valley, where everyone is in the business of startups.

“There’s a lot more mixing of people in different industries in New York and it just breeds a different kind of person,” he said.

Measure of success: Foursquare’s growth has been “absurd,” Crowley said. The company launched in March and is up to 275,000 members. Membership rose almost 70 percent last month. “The next Twitter,” is one common phrase hurled at the company.

Animoto

Founded: 2006

Venture raised in ’09: $4.4 million

“We make awesome easy,” said co-founder Stevie Clifton.

Animoto does this with its automated video generating platform, in which users, pros and amateurs, upload their content — music, images — and then press create video.

“Beautiful productions at the click of a button,” Clifton said.

Why they’re in New York: “I’m not sure Animoto could have started anywhere else,” Clifton said. The company’s founders either lived here or wanted to live here, he said.

Measure of success: The company is going strong and breached the million-user mark late last year, and now it has 1.2 million registered users. Sixty to 70 percent of its revenue comes from pro accounts that cost $250 a month. For less-serious editors, the site offers basic services free.

Hunch

Founded: 2009

Venture raised in ’09: $2 million

This startup wants to be your “smart friend,” the one you go to for advice when you’re in the market for a car, stereo, computer or whatever.

Users can turn to Hunch.com for that kind of support whether pondering what religion best suits them or what tea to drink. The site can make 100,000 recommendations across 5,000 topic areas, according to co-founder Chris Dixon.

It works by leading users through a list of questions, and then generating a recommendation based on their responses. The number of questions it answers grows as users contribute to the site.

“It’s a system that gets smarter as more people use it and contribute to it,” Dixon said.

Why they’re in New York: “Besides New York City being the greatest city in the world, several Hunch co-founders were already here or were interested in living here,” Dixon said. “Add to that an incredible talent pool and a vibrant and growing tech scene, and you’ve got a great combination for startup success.”

Measure of success: It topped more than 1.2 million users before it reached six months old, and is compiling a useful database on consumer behavior.

OLX

Founded: 2006

Venture raised in ’09: $5 million

Co-founder Fabrice Grinda is blunt about how inspiration struck him — or didn’t.

“I didn’t have brilliant ideas so I decided to steal other people’s brilliant ideas and take them to places around the world where they weren’t done before,” he said.

That’s how he came up with OLX, an online classified site akin to Craigslist.

Why they’re in New York: Grinda said there’s an argument to be made that the company should be closer to Silicon Valley, but hey … he loves New York.

Measure of success: Grinda would be happy with being the No. 2 such site in the U.S., while it’s No. 1 in the rest of the world, 90 countries and 40 languages.

Yext

Founded: 2006

Venture raised in ’09: $25 million

Yext bills itself as the next Yellow Pages, but it’s more like the Yellow Pages on speed dial. Yext partners with small businesses to advertise them across the Web and charges the companies only for business it directs their way — what co-founder Howard Lerman called “pay per action.”

Businesses such as auto repair shops or hair salons pay Yext for relevant phone calls based on whether potential customers say keywords such as “oil change” or “highlights.” Customers call on a monitored Yext-enabled number listed in the ad.

Why they’re in New York: A Big Apple base gives Yext access to the advertising capital of the world. There’s also a certain pride in trying to make it here. “People said we were crazy for trying to build a tech company in New York,” Lerman said.

Measure of success: Yext is a $20 million a year revenue company right now, with eyes for more.

AppNexus

Founded: 2007

Venture raised in ’09: $5 million

AppNexus is a platform for advertisers to use Internet ad exchanges, which are basically markets for eyeballs on the Web.

Advertisers bid against each other in real time for the ability to direct a message at a single Web surfer. The trades take 50 milliseconds to complete.

“The Wall Street version of the Internet is going to explode, where people can buy and sell ads like stocks,” said Michael Rubenstein, AppNexus’ president.

Why they’re in New York: “New York is most known commercially for Wall Street and Madison Avenue. If you thought of a company that merges the two, advertising and trading, where better to start that company?” Rubenstein said.

Measure of success: AppNexus is investing in its infrastructure to handle a surge in trading. It handles up to a billion such trades a day and expects that to grow twentyfold.

Pontiflex

Founded: 2008

Venture raised in ’09: $6.25 million

This startup says it’s the first “cost per lead” marketplace in the world, meaning advertisers pay it only when potential customers sign up through ads that Pontiflex helps place online.

It’s part of the growing accountability in advertising movement at the city’s core.

“We allow advertisers to run ads on the Internet where they only have to pay when people sign up as opposed to click on it,” said co-founder Zephrin Lasker.

Why they’re in New York: Aside from a base in Dumbo with easy access to Madison Avenue, Lasker said the city can act like a boot camp for startups. It forces you to step up your game.

Measure of success: Pontiflex has deals with about 800 publishers and almost 150 advertisers, and expects to triple its revenue, which it would not disclose, this year.

RecycleBank

Founded: 2004

Venture raised in ’09: $28.25 million

This green Internet tech startup partners with cities, including Chicago, Los Angeles and Houston, to track how much residents recycle.

“I was looking for something socially responsible to dedicate my professional skills to,” co-founder Ron Gonen said of the company that has grown into a global entity.

The company equips recycle bins and garbage trucks with RFD chips to monitor waste, and it calculates the ecological savings. Residents can track their recycling efforts online, and they are rewarded with up to $400 a year in points that can be redeemed for goods through business partners, such as Whole Foods, CVS and a number of local businesses.

RecycleBank earns 50 percent of the savings cities accrue.

Why they’re in New York: The company has offices worldwide, but is based here. That’s because Gonen started the company as an MBA student at Columbia, which was also a seed investor in the startup.

Measure of success: The company had deals with 10 cities in 2008, and now partners with 50 cities around the world, reaching 600,000 households with 1.5 million more coming online shortly. Gonen was optimistic RecycleBank would add New York City to the list this year.

bit.ly

Founded: 2008

Venture raised in ’09: $2 million

Sharing links to content from your favorite Web sites can be cumbersome when there’s a long string of words, backslashes and coding. Bit.ly solves that URL mess by shortening the links.

The service can be used by regular Joe Web-surfer who wants concise links for Twitter posts, or it can be used by media pros who want to gauge how their content is circulating online, and if they’ve gone viral.

“By creating bit.ly links, users are able to view real-time traffic to their content, and track statistics and trends,” said Andrew Cohen, general manager at bit.ly.

Why they’re in New York: Cohen had a simple reason for what sets the city apart: New Yorkers.

Measure of success: “It’s become one of the largest sharing platforms on the real time Web,” Cohen said. It’s gone from 11 million clicks a month in July 2008 to 2.4 billion last month. The company is working on a number of revenue generating possibilities, including an ad-driven video-sharing site, bitly.tv, that features the Web’s top viewed content.

***

The criteria

The companies here are amNewYork’s top 10 picks for city-based startups — in no particular order — based on the amount of money they raised in 2009 and the volume of social media activity the startups generated last year.  The data was crunched by ChubbyBrain.

New York City’s Top 10 Technology Startups -

Given persistent levels of misinformation and confusion about venture capital data, we encourage you to review our methodology and definitions to better understand the numbers presented in our Q4 2009 venture capital activity data and commentary.

Oh what a difference a year makes. 

In Q4 2008, we tracked $5.9B of venture funding, but against the backdrop of economic & equity market tumult, many pundits were predicting this number was indicative of the demise of the venture capital asset class.  Q4 2009 sees funding levels of $5.5B and despite a decline versus the year ago quarter, the psychology and sentiment underlying the number couldn’t be more different.  Yes, optimism, albeit of the cautious variety, seems to have found its way back. Q4 2009 saw VC activity hit $5.5B spread across 687 deals according to ChubbyBrain’s venture capital database.  ChubbyBrain is an information services company tracking high growth private companies and investors.  687 deals is the most activity in a single quarter in the last five quarters.

On a sequential basis, the news was generally good.  There was modest growth in the number of deals as they grew from 678 to 687 in Q4 2009.  On a dollars invested basis, the quarter was down versus Q3 but this was primarily due to a handful of very large deals in Q3 which served to drive up the totals significantly coupled with decreased investment in Q4 2009 in capital-intensive areas like green tech.

Q4 2009 highlights include:

Finishing Strong: Unlike Q3 which saw a spike in activity in September, this quarter was generally more consistent month to month.  The quarter ended strong with December seeing the most deals as investors seemingly hurried to get deals done before year-end.  With recent promising news about venture exits via M&A, will the momentum carry into 2010?

Green Goes Lean:  As mentioned, green investments which are usually a significant contributor to the overall venture totals given their capital intensity fell significantly versus Q3 with investment funding dropping 38% even though deal count stayed steady.

Blazing Internet:  Investment into the internet sector jumped 40% vs. the prior quarter on 17% more deals. 

Early Stage Still Growing:  For the last two quarters, we’ve noted that early stage investment has been healthy despite many speculating that early stage would suffer as VCs pulled back on investing.  Q4 2009 continued to show early stage investment strength with 21% of dollars and 37% of deals being into early stage companies versus 13% of funding and 29% of deals going to early stage in Q3 2009. 

California Slips a Bit:  From the master of the obvious file, the Golden State dominated yet again racking up 48% of the total funding and 44% of the total deals.  But, funding going to California did drop 21% vs. the prior quarter. Rounding out the top five in terms of VC dollars were Massachusetts, New York, Texas and New Jersey.

Empire State of Mind:  With a drop to fourth place in Q3 2009 behind Texas, New York came back and solidly reasserted itself into the top three VC states with $285M spread across 41 deals.  New York edged out Massachusetts in internet investments, but Massachusetts with its robust healthcare investment community continued to be solidly in second place behind California in total VC funding.

New Jersey Jets to Top Five: On the back of several later stage pharma deals, the Garden State jumped into the top 5 crowding out normal challengers Washington, Pennsylvania and North Carolina.

Healthy Living:  Unlike greentech, the capital intensive healthcare sector saw the most investment dollars of any individual sector representing 33% of total funding.  Investments into internet companies followed with 27% of investment.  Technology-oriented sectors (internet, mobile & telecom, software and computer hardware software) collectively accounted for nearly 50% of total funding.

Q4 2009 Venture Capital activity hits $5.5B. 2009 Crosses $20B Mark. Internet and early-stage activity quite strong. -

This analysis which looked at the top 100 software company IPOs shows that even some of the most, if not the most successful software companies (read: Microsoft & Oracle) took longer than 5-6 years to hit the $50 million mark. 

Some of the contrarian takeaways are highlighted below:

• Only 28% of the most successful public software companies reached $50 million in annual sales in 6 years or less. 
• 50% of these companies took 9 or more years to reach $50m in revenue.
• Microsoft took 8 years to reach $50 million in sales; Oracle took 10. 

To bring you interesting data-driven perspectives on the innovation economy, we will occassionally share relevant analytics created by others with you.  The above come from an analysis by Christian Chabot of Tableau Software. 

If you have seen an interesting data-driven perspective into the innovation economy and think we should feature it, please email us at team(at)chubbybrain.com

Amidst the ads, books and late night TV commercials promising inside information about little known government programs and free money, there actually is money out there for your business.  In fact, in Q3 2009, ChubbyBrain which tracks venture capital, angel investment and several other types of investment in private companies tracked $2.3B going to 65 young companies from various governmental or government-affiliated entities.  These government programs and government sponsored public private partnerships offer funding via loans, grants and equity investments into promising young companies and technologies.

In Q3 2009, the average deal was $36.2M but this aggregate number is misleading because of several large fundings by the Department of Energy which distort the number.  The more interesting highlight for early stage entrepreneurs is seen in the chart below.  As can be seen, the great majority of investments are under $5M with the median across the 65 deals standing at $1.1M. 

 Before getting too excited about this governmental funding source, it’s worth considering it in relation to venture capital investment in Q3 2009.  ChubbyBrain tracked $6.1B in venture capital investment over 680 deals in the quarter so keeping things in perspective, it is clear that venture investment dwarfs these governmental funding sources.  But for an entrepreneur looking for capital to grow, these governmental funding sources may be worth considering in addition to the angel investment or venture capital funding sources that they may be pursuing. (Note: Download the 44 page Fast Company-ChubbyBrain Q3 2009 Venture Capital activity report for a quantitative view into VC activity in the quarter)

Now let’s take a closer look at government funding to startups in Q3 2009.

First, the 65 deals ChubbyBrain tracked in the quarter were spread across twelve sectors with seven sectors accounting for over 80% of the deals as shown below.  The Energy and Healthcare sectors led amongst sectors accounting for almost 50% of the deals.

In terms of where the government funding is going, it was spread across ventures in 21 different states.  Interestingly, California and Massachusetts which are the top two destinations for venture investment also saw a large number of government funding deals representing 13% and 11% of such fundings (based on number of deals), respectively.  Interestingly, however, Ohio took the top spot with 14% of deals.  Rounding out the top five were Texas and South Carolina.  Interestingly, despite the top 5 states for government funding having California, Massachusetts and Texas which are perennial venture capital hubs, the government funding does show activity in states which are not amongst the usual suspects for venture investment including the aforementioned Ohio and South Carolina and also states like Maine and Michigan. 

What may be most interesting to entrepreneurs is that unlike angel investors or venture capitalists who take a stake in the company, almost 70% of the government financings were in the form of grants to the startup companies. 

Startups looking for money would be well-served to look at governmental funding vehicles in addition to the more traditional angel and venture capital investment sources.  With federal stimulus money and other efforts by local and state governments to spur entrepreneurship and economic development, activity by such sources may continue to show healthy levels of activity.

Venture capitalists typically invest locally.  That shouldn’t come as a shock to entrepreneurs who’ve spent some time trying to understand the VC universe.  The logic essentially goes that having startups they invest in nearby makes it easier for both parties to interact, get guidance, brainstorm, etc.

So if an entrepreneur believes that getting venture capital is incumbent to his startup’s success and location is important to venture firms, it’s probably worth spending some time thinking about where your startup will call home.  A look at the Q3 2009 venture capital funding statistics compiled by ChubbyBrain offers a data-driven view into venture investment by geography which may help entrepreneurs with another data point as they consider the age old question of location, location, location.  (For a data-driven perspective into the world of venture capital, download the free 44 page Fast Company - ChubbyBrain Q3 VC Activity Report)   

First, let’s start with the easy solution.  Set up in California, specifically Silicon Valley. 

Yes - no data is really required to support this but recent venture capital activity data from ChubbyBrain makes the case clearly for the left coast.  In Q3 2009, ChubbyBrain noted a climb of overall venture investment to $6.1B.  California represented $3.43B of this - over 50%.  Versus Q2 2009, California saw a 51% jump in dollars invested and a 40% jump in deals.  Essentially, California extended its dominance of venture capital in the third quarter of 2009.  The regional graph below shows amount of funding and number of deals by various US regions, and California is denoted as its own region.  The dominance of the state is clear.

And the reality is that the deal dominance is well-diversified based on sector.  California is not a one-trick pony that dominates just the internet sector or just the energy sector.  It is a multi-headed monster that showed healthy investment activity across all main sectors of venture investment in Q3 2009 as the graph below illustrates.

 Although a seemingly easy solution based on the data, California may not be ideal for everyone.  So what’s next?  Let’s explore regionally at a high-level.

New England primarily driven by a strong Massachusetts-based venture community is another home for startups.  In Q3 2009, the area saw 98 deals with over $700M invested with  Massachusetts representing over 80% of the total.  The region’s data shows investment across a wide variety of sectors but Healthcare and Internet dominated in the quarter with over 60% of deals as shown below.  New England underscores the need to not just look at aggregate deal statistics but look at which sectors see the most dollars by not just region but by state. 

The South-Atlantic which consists of states like Georgia, the Carolinas and Florida, did quite well in Q3 from a venture investment perspective ringing up over $540M of funding across 63 deals.  While there are a variety of sectors seeing investment, the region sees a larger share of healthcare deals versus other sectors with almost 40% of deals in the region being for healthcare companies.  This may mean good things for healthcare oriented entrepreneurs but the data suggests that budding green tech entrepreneurs may not see the South Atlantic as the most ideal destination for their venture.

The next big region worth looking at is the Mid-Atlantic which includes NY, NJ and Pennsylvania.  While healthy levels of investment in the region are apparent in Q3 2009 with 72 investments garnering over $420M, it is the region with the smallest average deal size.  This is largely driven by the fact that the region is driven by investment in NY which sees a much larger portion of investment going to internet oriented businesses which require less investment capital in relation to their brethren in healthcare or energy for instance.  The region also underscores the heterogeneity of investment from state to state.  NY as the Q3 data shows is very friendly to internet startups but might not be the first stop for a healthcare venture.  Pennsylvania on the other hand offers a seemingly good home for healthcare ventures based on Q3 2009 activity.

And finally, if you are an entrepreneur in the middle of the country and you really want venture investment, the reality is that there is not a lot out going on in your neck of the woods (see first graph again).  In these areas, ChubbyBrain has seen efforts underway by local governments, various governmental public-private partnerships, angel investors and the small venture community that exists to spur investment in ventures, but these laudable efforts will take time and their ultimate efficacy is unknown. 

While going region by region is possible with ChubbyBrain data, the point is hopefully clear.  Based on the sector that your startup plays in can have real implications for where you set up your business if venture funding is important.  Having investors in close proximity who know and invest in your space is not only helpful for capital but also likely indicates that there is an ecosystem of other providers and players relevant to your business in the area as well, e.g., service providers, partners, etc.   Ultimately, if you believe in fishing where the fish are, the data suggests that there are certain places you may want to be if you want to snag elusive investment capital from venture investors.

Today we’ll examine Vermont.  A state with low incubator activity, Vermont has only 1 incubator, much less than the national average of 8.3 incubators per state.  Additionally, the green mountain state has 17 companies in incubation, which is less than national average of 110 companies per state.  Of the 17 tenant companies, only 7 were considered scalable and thus added to our database.  (Note: Our focus at ChubbyBrain is primarily on scalable companies. Thus, consulting, retail, and service companies that may be in these incubators are not included in our database or the remainder of this analysis).  This gives Vermont a scalability ratio of 47%, close to the national average of 44%.

Vermont’s only incubator is the Vermont Center for Emerging Technologies (VCET).  VCET offers early-stage businesses in Vermont traditional incubator services such as office and lab space, administrative support, and business consultations.

As illustrated in Graph A, Healthcare and Technology companies are the primary types of start-ups that use incubator services in Vermont.  They each make up 37% of scalable Vermont companies.  Within the Healthcare sector, the majority of the companies are focused in the Medical Devices and Pharmaceuticals industries.  Within the Technology sector, the majority of the companies are focused in the Software and Hardware Equipment industries.

Since VCET, the state’s only incubator, is located in Burlington, this city holds all the incubated companies for Vermont.

Secctor Breakdown

Graph A

Today we’ll analyze Maryland.  With 163 companies in incubation across 14 different incubators, Maryland beats the national averages of 110 companies and 8.3 incubators per state.  However, of the 163 tenants companies, only 59, or roughly 36%, were considered scalable and thus added to our database.  (Note: Our focus at ChubbyBrain is primarily on scalable companies. Thus, consulting, retail, and service companies that may be in these incubators are not included in our database or the remainder of this analysis).  Maryland’s scalability ratio of 36% is much lower than the national average of 44%, suggesting that Maryland incubators support a good amount of smaller, “mom-and-pop” retail and service shops, too.

Maryland’s largest incubator was the Emerging Technology Center (ETC), a Baltimore-based incubator housing almost a third of all scalable Maryland incubator companies.  Focused on tech-driven and biotechnology start-ups, ETC has been recognized by numerous groups for its tenant companies’ achievements, including by the US Department of Agriculture and the National Business Incubator Association.  Another notable incubator includes bwtech@UMBC Incubator & Accelerator, which holds 27% of Maryland’s scalable incubator companies and is located at the University of Maryland with close access to an abundant amount of university resources and talent.  A breakdown of the state’s incubators is shown below in Graph A.

Healthcare start-ups were the most dominant tenants in Maryland incubators, representing 42% of all scalable incubator companies in Maryland.  As Graph C illustrates, Healthcare companies consisted of a fairly even distribution of businesses focused in the Pharmaceutical, Drug Discovery and Development, Biotechnology, and Medical Devices industries.  After Healthcare, companies in the Technology, Internet, and Industrial sectors followed as most popular, as illustrated in Graph B.

Not surprisingly, Maryland’s capital Baltimore City held the largest number of incubator companies in the state, containing over 60% of companies.  Details of a city-wide breakdown are shown below in Graph D.

Largest Incubators

Graph A

Sector Breakdown

Graph B

Top Sector: Broken Down by Industry

Graph C

Geographic Breakdown

Graph D

Now we’ll be periodically turning to individual states to take a deeper look at their incubators and portfolio companies.

Today, we’ll be taking a look at Georgia, home of 9 incubators. Of the 142 companies housed currently or in the past within these incubators, 82 were scalable and hence added to ChubbyBrain.  (Note: Our focus on ChubbyBrain is primarily on scalable companies so consulting, retail or service companies that may be in these incubators are not included in our database or the remainder of this analysis). This means Georgia’s scalable percentage stands at 57.7% which is much higher than the average of 44% nationally.

The incubators are broken down by the percentage of total incubating companies in Graph A. As the graph shows, the largest Georgia incubator is the Advanced Technology Development Center (ATDC) which stands as 9^th largest in the country. The ATDC holds almost 50% of Georgia’s scalable companies. ATDC is followed by the Georgia BioBusiness Center hosting around a quarter of the companies looked at. Together the companies ATDC and Georgia BioBusiness Center host 75% of the companies looked at in Georgia.

As can be seen by Graph B, the top 2 sectors in Georgia appeared to be Healthcare and Technology followed by almost equal Internet and Business Products and Services. A breakdown of the top three sectors by industry is shown for Healthcare, Technology, and the Internet. In accordance to the national trend, Healthcare appears as the top sectors medical devices & equipment and pharmaceutical/drugs being the top industries within. Evidently, software appeared to be the top Industry (followed by services) when the Technology Sector was broken down. (Graph D). Unlike the previous, Graph E shows services as the top industry followed by software in the Georgia internet sector.

Not surprisingly, Graph F shows that most incubator companies in Georgia were located in Atlanta and Athens. Atlanta is by far Georgia’s’ largest city and so by sheer population alone, Atlanta should have a large number of incubating startups.

Largest Incubators

Graph A

Sector Breakdown

Graph B

Top Sectors: Broken Down by Industry

Graph C

Graph D

Graph E

Geographic Breakdown

Graph F

Now we’ll be periodically turning to individual states to take a deeper look at their incubators and portfolio companies.

We are starting with Illinois which has a robust business incubator community containing 274 companies much higher than the national average of 110, even though we identified only 6 incubators in the state, much lower than the average of 8.3.  Of the 274 companies housed currently or in the past within these incubators, 165 were scalable and hence added to ChubbyBrain.  (Note: Our focus on ChubbyBrain is primarily on scalable companies so consulting, retail or service companies that may be in these incubators are not included in our database or the remainder of this analysis).  This means Illinois’ scalable percentage stands at 60.2% which is  much higher than the average of 44% nationally.

The incubators are broken down by the percentage of scalable incubating companies in Graph A. As the graph shows, the largest Illinois incubator is the Research Park at the University of Illinois, with 40% of Illinois incubator companies.  With over 41,000 students, 3,000 faculty, and nearly $500 million spent on research annually, it makes sense that a large number of startups would emerge from the University of Illinois. Also, like many university incubators, the research park grants companies discounted access to expensive scientific equipment not normally available to startups.  This benefit entices even more startups to incubate at the research park. The research park is followed by the Korean Business Development Center - Chicago with 21% of Illinois incubator companies.

The sector breakdown for Illinois business incubators shows a fairly even split between the Technology, Healthcare, and Industrial sectors, as shown in Graph B.  The top sector in Illinois incubators was Technology.  As can be seen in Graph C, most companies in this sector are working on Software and Hardware. The next largest sector was the Healthcare sector, which is broken down in Graph D.  Companies working on healthcare in Illinois strongly favored the pharmaceuticals and biotechnology industries. The third largest sector was the Industrial sector.  This sector was largely dominated by the equipment and basic materials industries as shown in Graph E.

Not surprisingly, Graph F shows that most incubator companies in Illinois were located in Chicago and Champaign. This makes sense. Chicago is by far Illinois’ largest city and so by sheer population alone, Chicago should have a large number of incubating startups. Champaign is the location of the University of Illinois, the largest business incubator in Illinois and thus it follows that it too would have a large number of startups emerging from it.

Largest Incubators

Graph A

Sector Breakdown

Graph B

Top Sectors: Broken Down by Industry

Graph C

Graph D

Graph E

Geographic Breakdown

Graph F