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Venture capital firm New Enterprise Associates opens Chicago office

Mayor Rahm Emanuel talks with Dan Kielp (left)  Jacob Gable Sprout Social press conference highlighting venture capital Chicago tech

Mayor Rahm Emanuel talks with Dan Kielp (left) and Jacob Gable of Sprout Social, at a press conference highlighting venture capital and the Chicago tech industry. | Al Podgorski~Chicago Sun-Times

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Updated: November 19, 2012 3:09PM



New Enterprise Associates Inc., a venture capital firm that invests in technology startups, is increasing its support for Chicago companies and setting up shop here to stay close to an active culture of entrepreneurs.

The firm, which grew up on the East and West coasts, said Wednesday it will establish a Chicago office at 600 W. Chicago, the headquarters of one company in its portfolio, Groupon Inc.

New Enterprise also said it will lead a $35 million round of fundraising for Chicago-based Braintree, a payments system for online and mobile commerce.

The announcements came at a Wednesday press conference with Mayor Rahm Emanuel, who showcased the news as evidence that Chicago is becoming more attractive as a base for technology companies. “In the past, they could afford not to be in Chicago,” the mayor said of New Enterprise. “Now they need boots on the ground in Chicago.”

Emanuel said he hopes New Enterprise’s decision will induce other venture capital firms to move here as well.

Peter Barris, managing general partner for New Enterprise, said that for most of its 35 years, the firm had few dealings in Chicago. He said that has changed in the last two years, with the firm having committed $380 million to Chicago companies.

“Chicago was something of a flyover and its pains me to say that because I’m a hometown boy,” Barris said.

The news conference was held at the Near West Side offices of Sprout Social, a New Enterprise investment that helps businesses profit from social media. Rachael Klemanski, vice president of operations, said about 50 people work at the site.

Investor J.B. Pritzker, tapped by Emanuel to co-chair a group assigned to attract tech companies to Chicago, said entrepreneurs are learning they can thrive here and find skilled labor. There’s one tech startup every two days in the Chicago area, he said, calling it “a pace near that of New York City.”

Barris’ company was an early investor in Groupon, which has stumbled badly since its initial public offering last November amid accounting problems and management shuffles. Investors have questioned whether the online daily deals business is sustainable.

“Groupon is not going to fail,” said Barris, a member of the company’s board. Investors had unrealistic expectations for Groupon, which “continues to make strides in revamping its strategy in a way that’s very exciting,” he said.

New Enterprise has not sold any stake in Groupon, he noted.

Groupon overshadows many other companies that have posted substantial growth in the region, including GrubHub and Sittercity, Pritzker said.

Braintree said that with the New Enterprise-led round of funding, it has raised $70 million as it takes on Paypal. Bill Ready, chief executive of Braintree, said he wants to “do for payments and e-commerce what Apple did for mobile,” provide the best platform for developers and consumers.

Clients include restaurant reservation system OpenTable and fashion seller Fab.



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