Chicago Public Radio analyzes losing Bump to Silicon Valley as a demonstration of the lack of VC and incubator support here:
David Lieb and his friend Jake Mintz hatched [Bump] at the University of Chicago Booth School of Business when they discovered in that flurry of the first few weeks of school that they really, really hated manually typing all their new friends’ contact information into their phones.
So, along with their friend Andy Huibers, they figured out a way to “bump” two phones together to transmit that contact info. And their new smartphone application was born on March 27th, 2009. Things moved fast from there - they won the school’s New Venture Challenge business plan competition and in the summer of 2009, just like Gold Rush era miners of yore, they packed up and headed to California.
They didn’t go with the intention of staying. ... [And] just because they got [a $3m VC infusion] there didn’t mean they had to stay. They could have come back to Chicago. But they didn’t. They opened their headquarters in Mountain View, California, and now have 15 employees there and are “aggressively hiring.”
Lieb says the main reason was because Huibers lived in California already. But there was another reason that speaks to Silicon Valley’s dominance.
"We knew we needed to hire a bunch of people, and being here in the Valley is really where all that technical talent is," Lieb said in an interview.
Chicago has lots of talent as well, and it has amenities that the suburbs of San Jose simply can't offer. But I also have found some limitations on the Chicago startup scene, and that many startups here have to be self-funded for the reasons Ashley Gross mentions in her story. (I'll publish my paper later this week.)