Summary:
1871 incubator is leaving the Merchandise Mart due to financial losses.
Founded in 2012, it has supported over 600 startups and created 15,000 jobs.
In 2022, reported a $3.2 million deficit with declining revenues.
Future plans include going remote while seeking a new location.
Chicago's 1871 Incubator Departure
1871, a prominent tech incubator in Chicago, is set to vacate its long-time location at the Merchandise Mart in May, following years of financial difficulties. This decision was announced by CEO Betsy Ziegler in a memo, highlighting the post-COVID challenges the organization has faced.
Financial Overview
Founded in 2012 by Illinois Governor JB Pritzker, 1871 initially thrived in a 50,000-square-foot space, later expanding to 140,000 square feet. The incubator has supported over 600 startups, raised $4 billion in venture capital, and created 15,000 jobs. However, recent tax returns reveal a troubling trend:
- In 2022, 1871 reported a $3.2 million deficit with revenues at $6.2 million against expenses of $9.4 million.
- The organization has seen a decline in income from tenants, memberships, and grants.
Future Plans
Although Ziegler did not disclose specific future plans, she indicated that 1871 would likely transition to a remote work model while searching for a new location. This move reflects a larger trend of businesses reevaluating their need for physical office space in a post-pandemic world, with downtown office vacancies reaching 23.2% in late 2022.
The Merchandise Mart and other River North buildings along the Chicago River on July 7, 2022. Credit: Colin Boyle/Block Club Chicago
Conclusion
The decision to leave the Merchandise Mart underscores the challenges faced by incubators and startups in adapting to the evolving economic landscape post-COVID. Representatives from the Merchandise Mart have not commented on the impending departure of 1871, which is seen as a significant shift in the local startup ecosystem.
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