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Karis: Chicago’s Outcome Health just went from bootstrapped to unicorn.

The maker of digital touchscreen wallboards for doctor’s offices has raised a $500M+ round of funding at a $5B valuation. The company, previously known as ContextMedia, got backing from Goldman Sachs, Alphabet’s CapitalG, Pritzker Group VC, and others. It’s the first time Outcome has ever taken venture capital in its 11 year history.

This one’s a big deal, folks.

Jim: It’s a major milestone for Outcome, but it’s also a huge deal for Chicago’s tech ecosystem. The city has another tech unicorn, and as Illinois Tech Association Executive Chairman Fred Hoch told me, Outcome is now a “tentpole company” for Chicago’s technology ecosystem.

As much energy as there’s been around Chicago’s tech scene, the city lacks some of the “tentpoles” or pillar companies that hire hundreds and hundreds of engineers and make the city a destination for technologists.

Outcome helps change that narrative, Pritzker Group VC investor Adam Koopersmith told me. Groupon and Grubhub proved you can build a $1B business in Chicago. Now the goal is to prove the city can support tech companies 10x as big, he said.

“Our next step as an ecosystem is supporting companies that can reach the $10B+ level, a level rarely scene outside of Silicon Valley,” Koopersmith said in an email. “With companies such as Uptake, SMS Assist, and Outcome Health – 3 companies disrupting huge markets with stellar management teams – we think (hope) that next level is within reach by the end of the decade.”

Here’s a rundown of the things to know from Outcome’s half-a-billion-dollar fundraise:

  • It’s the biggest round of funding for a Chicago tech company since Groupon’s $950M round in 2011.
  • Outcome is now the 6th “unicorn” tech company in Chicago, joining Uptake, SMS Assist, Mu Sigma, ExteNet Systems and Avant.
  • CEO and co-founder Rishi Shah jokingly referred to the funding as Outcome’s “seed round.”
  • Outcome did $130M in revenue last year, more than double the $60M it did in 2015, according to the Wall Street Journal. Outcome gets a majority of its revenue from ads—mostly drug makers—and 99% of doctors don’t pay to use Outcome’s tablets.
  • While the company hasn’t taken outside funding, it did take a loan out for $325M to pay for its acquisition of competitor AccentHealth, according to the WSJ.
  • Shah had an 80% stake in Outcome going into the fundraise, which makes his net worth $3.6B, according to Forbes. Co-founder Shradha Agarwal has a 20% stake in the company.
  • The ability to dominate marketshare is one reason investors wanted in on Outcome. The company is currently in 20% of doctor’s offices across the US, and it thinks it can be in 70% by 2020.
  • The deal will guarantee investors a 20% per-year return “under certain scenarios,” and Outcome can also “pay a nine-figure sum from the investment proceeds to shareholders as a dividend,” WSJ says.
  • Is an IPO around the corner? Not so fast. Shah says a public offering could still be a few years away, as the company will have an easier time expanding into offices outside the US as a private company, he said.

Karis: Want another reason to buy into Outcome’s deal as a win for Chicago tech? The war chest will allow them to buy up other companies and invest in startups that can improve their platform. Outcome is poised to be the acquirer, not the acquiree, and that’s something that could have long-lasting effects for Chicago’s startup scene. [More here]

Karis: A smart doorbell from a startup founded by ex-Motorola engineers is aiming to raise $25K on Indiegogo. Xchime is a app-connected, video doorbell that allows you to answer the door from anywhere on your smartphone.

Jim: Marketing software company Signal just moved to a 27K sq ft space at 222 N. LaSalle. They’re subleasing most of a floor from Avant, according to Crain’s.

Karis: We’re just catching up with the latest lawsuit that centers around Illinois’s biometric data privacy law, BIPA. A former Mariano’s employee is suing Roundy’s, an Illinois and Wiscosin-based chain of supermarkets owned by Kroger, for storing employee fingerprints without getting written permission from employees or informing employees how long biometric data would be stored, according to a class action lawsuit filed earlier this month.

Northwestern’s Institute for Sustainability and Energy wasn’t too happy to hear that President Trump is expected to pull out of the Paris climate deal:

This is a scary move for the 84% of Americans who are concerned about global warming, as well as for anyone working in clean energy and green tech (a growing industry in Chicago). Back in February Amy Francetic, SVP of Chicago-based Invenergy and cofounder of the Clean Energy Trust told us that global consensus around climate change was key to prevent further damage to our planet.

“The thing that would be really bad in my mind is to really discount all the science that has driven, what I would say is, near-global consensus on the root causes on climate change and what’s necessary to address that,” Francetic said.

Venture capitalist Adam Koopersmith on Pritzker Group’s “outsized investment in Outcome Health“:

“Clinical innovations and improved drugs/devices will only get us so far. We at PGVC believe that healthcare must revolve around the patient in order to be successful. Taking advantage of downtime in a waiting room to educate a patient on his/her medical condition or utilizing interactive 3D models in the exam room can greatly empower a patient to take better care of themselves, which is the best way to lower costs and drive better outcomes.”

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NEW MONEY

Karis: Inprentus, a maker of high precision diffraction grating products, just raised a $1.5M series A round led by Flyover Capital, with participation from Serra Ventures and various private individuals. They’ll use the funding to triple capacity of their proprietary ruling engines at a new 12K sq ft manufacturing facility in Champaign, Illinois, the startup said in a release.

Karis: Apparently a retail outlet in NYC is trying to make “co-retailing” a thing. FYI “co-retailing” is a mall. You can’t just add co- in front of something previously shared and make it something new. Do I co-commute because I take the bus? Are restaurants co-dining facilities? Does this mean I co-DNA with my family?

Jim: How about co-streaming? It’s like Netflix, but in a big room with a bunch of other people watching on a huge screen! We can even sell people popcorn and soda!

Karis: Cool to read Bicycling Magazine‘s recent ode to the 606 (even if it did omit some of the path’s socio-political complexities, as the Chicagoist points out). This line struck me:

“Experiencing the Bloomingdale Trail has made me want more out of cities. I don’t want to spend all of my mental energy dodging cars. I want to have corridors (or heck, whole carless streets) that let me intersect with art, poetry, and other humans face to face. I want topographical variations that make the eye move. I want the air to taste good (read: lots of plants).”

What a beautiful way to view innovation and design: an improved means to connect and find calm (as well as boost efficiency for city bikers and joggers traveling through the West Side). Chicago has some big ideas when it comes to urban design projects. I’d love for that to be a big part of the city’s innovation identity.

Jim: The city can definitely feel claustrophobic. I’m 100% in favor of more breathable space.

From Jim’s story on Outcome Health‘s $500M raise:

“This $500 million doesn’t come on a whim. It comes from a lot of hard work and a lot of strategy over a decade.”

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