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How Chicago is changing who raises early-stage venture capital

For those of us who cover the venture capital industry, two narratives are ubiquitous: There’s the story of how much capital has been invested of late; you’ve seen the data — 2020 and 2021 set nearly every record around the world for private-market investment.

The other story that pops up, again and again, is the one noting slim or negative progress in venture capitalists investing in more diverse founders. The pervasive nature of the latter story makes it all the more exasperating to report on. The data neatly showcase this massive problem; why haven’t things changed?


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But there’s some cause for cautious optimism. The Exchange has been collecting data on the Midwest venture capital scene lately, with a special focus on the Chicago area. Thanks to data from M25, a venture capital firm with a Midwest geographic focus, Crunchbase data collected by Chicago-based P33, and interviews with a number of local investors and founders, a tale emerges that it is possible to change the ratio when it comes to venture investment.

Easy? No. Possible? Yes. And worth doing? Definitely.

To better understand what’s going on in Chicago and the larger Midwest, we spoke with Desiree Vargas Wrigley, the executive director of TechRise, a P33 project; Stella Ashaolu, the founder and CEO of WeSolv and the co-founder of Fifth Star Funds; and Kristen Sonday, a co-founder at Paladin and a partner at LongJump.

Let’s start with M25 data on how they are finding it possible to invest in more diverse founders in their region, and then narrow our lens to how Chicago’s numbers are shifting. Then, we’ll bring in notes from active players that are working to keep the industry changing.

State of the Chicago (Midwest) union

M25 invests around the Midwest but is based in Chicago. The firm released an update to its regular diversity report series recently, which piqued our curiosity. Why? Because the firm doesn’t just report investments — it provides a look into how those investments came to be.