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Groupon IPO could give rise to Silicon Prairie in Chicago

Bridges raised along the Chicago River to let sailboats through to Lake Michigan.

Bob Moon: When the daily deal site Groupon goes public soon, its founders are likely to become billionaires. And here's why that's causing excitement in Chicago: Local startups are hoping some of that money will trickle back down to them.

From Chicago, here's WBEZ's Ashley Gross.


Ashley Gross: Tech entrepreneur Ashish Rangnekar unlocks a door in Groupon's sprawling headquarters in downtown Chicago. He's leading me to the office of Watermelon Express, his test-prep software company.

Ashish Rangnekar: And then we are here.

In this building, Watermelon Express is like a tiny barnacle stuck to the side of the Groupon battleship. It's an example of how Groupon is trying to help small companies like this one get their legs.

Rangnekar: I would not want to be in any other city but Chicago right now.

Last year, Rangnekar met Groupon's founders Eric Lefkofsky and Brad Keywell. They liked his idea so much, they decided to invest in it and give him office space. Rangnekar was one of 10 local entrepreneurs the Groupon founders backed with their $100 million venture capital fund Lightbank. Groupon's IPO will almost certainly turn Lefkofsky, Keywell and other Groupon executives into billionaires.

And people in Chicago hope they'll plow even more money into local start-ups. That could help Chicago become less of a flyover city when it comes to tech. The Midwest has long trailed Silicon Valley, New York and New England in venture capital deals. Steve Kaplan teaches entrepreneurship at the University of Chicago Booth School of Business.

Steve Kaplan: We really haven't had a big winner where the winner has had people who are technology savvy, who want to put money back in. So it's a big deal.

But despite all the excitement, few people expect Chicago to edge out Silicon Valley anytime soon. Bump Technologies makes apps for smartphones and got its start in Chicago. But chief executive David Lieb says the company concluded there weren't enough engineers and software developers here. So they set up headquarters in Mountain View, Calif.

David Lieb: For us, you know, we knew we had to hire a bunch of people and being here in the Valley is really where all that technical talent is.

But Chicagoans are hoping Groupon's success will change that and seed the growth of what some here are calling Silicon Prairie.

In Chicago, I'm Ashley Gross for Marketplace.

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Chicago won't emulate Silicon Valley's success for for a variety of reasons. One is that in order to attract talent you have to be a desirable place to live most of the year. If you haven't lived through a brutal Chicago winter then you don't know what's coming. And you have to have a city that truly embraces the creative class. Just Wicker Park ain't gonna cut it. Then there are universities ... Other than U of I and maybe Northwestern or IIT, no top-notch engineering schools in the state like Stanford or Berkeley ... And graduates of those local schools seek greener pastures elsewhere.

And when I think of Groupon I think more marketing than technology. Tech companies (Motorola comes to mind) are dying in the area.

I would like to remind everyone that there is more to Illinois than Chicago. Exciting things are happening south of I80.

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