Hoping to turn Chicago into the technology epicenter of the Midwest, the founders of bulk and discount buying site Groupon have launched a fund called Lightbank to provide seed funding to startups locating in or near the city. Right now, the plan is to give out $10 million every year for the next decade.
Eric Lefkofsky and Brad Keywell, the entrepreneurs behind Groupon, plan to invest between $100,000 and $1 million in young companies, while also providing mentoring services, networking opportunities and other resources to help them grow. Both of them hail from the Midwest and would like to see the region retain more of the tech talent that regularly flees to Silicon Valley post graduation.
So far, it’s unclear exactly what Lightbank will be looking for. Its stylish site calls for applications from early-stage startups serving “large addressable markets” in “high growth industries.” It’s also scouting for disruptive technologies that fit nicely into simple business plans.
Lefkofsky and Keywell seem to have a pretty good eye. Between them, they’ve founded five companies and raised up to $167 million in capital to generate $1.5 billion in returns. Their average investment took less than five years to pay off. Groupon itself has done pretty well, with more than 3 million subscribers and $35 million in capital from New Enterprise Associates and Accel Partners.
Both entrepreneurs have since moved on — Lefkofsky to Chicago private equity and consulting firm Blue Media, and Keywell to private equity and consulting firm Meadow Lake Management. In the past, they have founded MediaBank, InnerWorkings and Echo Global Logistics.
As professional as the duo is, Lightbank has a fun, frolicky tone to it, clearly targeting the quintessential fresh-faced startup exec. Applicants can be expected to be challenged to a ping-pong tournament, for instance, and are encouraged to apply so that they no longer have to tell their friends that they’re unemployed.
The application for funding, built directly into the site, exemplifies the simplicity of the concept. Candidates are asked for their idea, who they are, why Lightbank should be interested and how they plan to make money.