Ninety-six stories high in Chicago’s Sears Tower, NewEllis Ventures founders Ed Condon and Frank Cheswick look out over a great expanse of land and see a wealth of opportunities – highly skilled workers and a well-educated populace who can help develop tomorrow’s successful enterprises.
As such, NewEllis is set on taking advantage of Chicago’s capable work force, Cheswick said. The percentage of Chicago-area residents that have advanced degrees is 23.3%, compared to the national average, which is 17.7%. Prestigious universities such as the University of Chicago, the University of Notre Dame and Northwestern University are all close to the Windy City, and NewEllis hopes to help venture capital firms engage the minds of young entrepreneurs at those schools, and jump-start Chicago’s start-up market. To that end, the firm is raising a $100 million fund-of-funds. Fund-raising efforts began in August, simultaneously with the firm’s launch.
Cheswick declined to reveal how much the fund had raised to date, however, citing the advice of the firm’s legal counsel.
The Earlier, The Better
NewEllis’ founders believe that venture capital firms often see deals too early, and reject entrepreneurs who could ultimately benefit from money provided by seed funds. For starters, then, the firm’s new fund-of-funds is intended to provide the networking opportunities necessary to direct deal flow to firms that specialize in seed investing.
“We want to be the traffic cop,” Cheswick said.
Furthermore, seed investments must be “nurtured with an eyedropper,” he said. Many times, that’s a requirement that early-stage venture capital firms often cannot fulfill, so NewEllis is attempting to fill that void. As a result, the firm plans to invest in seed funds with less than $50 million under management.
The firm also plans to dedicate 75% of the fund-of-funds to seed investing. The remainder will be used to back early-stage technology companies.
“Chicago can no longer rely on steel mills or be the hog butcher of the world,” Cheswick said . “For [the city] to survive as an economy, you have to change. Small companies are the real vibrancy. Large companies have had to shrink to be more efficient.”
Larissa Masny can be contacted at Larissa.Masny@tfn.com.