This post is by Jeff Carter from Points and Figures
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Yesterday, Google announced that it was opening a new finance hub in Chicago. This is good news and it might be surprising to people. In the mainstream conversation, Chicago is often overlooked as a finance hub. However, it is but it’s not a hub for consumer finance. It is a hub for industrial finance.
Yesterday, I walked across the river to another office building and had a conversation with someone setting up an industrial finance business. They have an ATS and they are trying to figure out ways to deploy it to bring transparency to a market that needs it. It’s not a really popular market that you will read about in the news or see quotes blared across television. But, it’s a real market with real dollars and needs the structure that markets need to operate.
The CME, CBOT and OCC are based here. That has given rise to whole huge base of human capital of people that really understand industrial markets. They “get” the nuts and bolts. You can have a different conversation in Chicago than you can in other cities that just don’t have that depth of human capital. The Big 4 have massive presence in the city and that has spawned a lot of people that really understand the way industrial finance works.
Interestingly, the Gies College of Business at University of Illinois in Champaign has a tremendous Finance department combined with one of the best accounting schools in the nation. Of course, Chicago Booth is well known for finance. They both provide a steady stream of high quality talent that feeds the ecosystem.
This is one competitive edge our fund has over all others. We get direct access to very high quality deal flow and have a consistent stream of companies in our backyard doing some pretty cool things. 3 of our 5 portfolio companies so far are based here. I don’t think those companies could be built in ecosystems that didn’t understand industrial finance and were consumer focused. Just finding the talent to work for them and get that talent up to speed would be challenging.
It doesn’t get a lot of play because it is not sexy cocktail conversation to talk about. No one sits on the edge of their chair while you discuss how you are modernizing capital flows or increasing market transparency. I am glad Google decided to put their new finance hub in Chicago and when you examine it closely you can see why they made the decision they made.