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Five stories from this week

A new quantum fund, the nation's strictest AI law, Chicago's missing first checks, a deeper pension hole, and how frontier AI labs actually hire.

All Chicago, all worth your attention.

DCEO launched the X-Labs Fast Fund on July 8, a $3M capital pool aimed at NSF X-Labs teams working on quantum technology.

If a team wins the federal Phase 0 X-Labs award and writes Illinois into their application, they can get state funding within months, on top of whatever NSF gives them.

It's not just cash. Chicago's quantum players, Chicago Quantum Exchange, P33, Polsky Center, and mHUB, are kicking in another $250K plus immediate access to lab space, cryogenic equipment, and the Illinois Quantum and Microelectronics Park's testing infrastructure.

That IQMP campus is a 128-acre buildout that's already landed IBM, PsiQuantum as anchor tenant, Infleqtion, Pasqal, Diraq, and Quantum Machines, backed by a $500M state investment. Illinois has also put $200M behind the Chicago Quantum Exchange and holds four of the ten NSF National Research Centers under the National Quantum Initiative, including two DOE centers run through Argonne and Fermilab.

The state's argument to founders is basically infrastructure over incentives. You're not just getting a check, you're getting cryostats and a national lab down the street.

Pritzker signed SB 315, the Artificial Intelligence Safety Measures Act, into law on July 6. He called it "the best AI safety and accountability bill in the entire nation."

Illinois is the third state to regulate frontier AI, after California's SB 53 and NYC’s RAISE Act, both signed in late 2025. What makes Illinois different is the audit requirement. It's the first state to mandate an independent third-party audit every single year, not just once when a company crosses the size threshold.

The law applies to "large frontier developers," companies pulling in $500M+ in annual revenue and training models past a specific compute threshold, which effectively covers OpenAI, Anthropic, Google DeepMind, Meta, and xAI. Both OpenAI and Anthropic publicly supported the bill.

None of this hits overnight. The requirements phase in starting January 1, 2028, giving developers time to build out audit infrastructure before penalties kick in. Once live, covered companies will need to publish a public risk framework, get audited annually, and keep the unredacted report on file for the life of the model plus five years.

Critical safety incidents have to be reported to the Illinois Attorney General within 72 hours, or 24 hours if there's imminent risk of death or serious injury. There's also a whistleblower layer protecting employees who flag violations internally or to the state.

California, NYC, and Illinois together account for roughly 40% of the US AI market.

Co-authored by Landon Campbell and Christopher Deutsch of the Lofty Angels Summit

Chicago has plenty of wealth. What it's missing is people willing to write the first check.

Chris Deutsch of Lofty Ventures calls this the inception gap. Not Series A money. Not growth capital. The first $10,000 or $25,000 that turns an idea into a company.

The Bay solved this a long time ago. Exits stacked on exits created a culture of angels. Chicago is still building that flywheel.

We have one of the highest concentrations of Fortune 500s in the country, but our wealth is often more conservative. We build for profitability, not just growth, which is both a strength and a weakness.

Writing high risk early checks is not in the muscle memory of most Chicagoans.But it can be.

Chris’s solution is to teach founders how to angel invest before they exit. He calls them founders-turned-angels, or FTAs, and 30 of Lofty’s 180 portfolio founders are already writing checks into each other’s startups.

The alternative is a story Chris has watched play out too many times: a founder exits big, writes six-figure angel checks with no framework or experience, loses the capital, and retreats to writing LP checks only.

Lofty is open-sourcing angel education at the Lofty Angels Summit, returning to Bank of America’s downtown building on August 10th.

Headliners include StockX co-founder Josh Luber, thinkorswim and tastytrade co-founder Tom Sosnoff, Reid Hoffman’s longtime collaborator and Blitzscaling co-author Chris Yeh, and Jellyvision CEO and prominent Chicago angel investor Amanda Lannert. The day closes with a rooftop afterparty featuring a DJ set from artist Com Truise.

If you’re a founder, investor, operator, executive, or angel curious Chicagoan who wants to help build the next generation of startups here, this summit was built for you.

Register here with coupon code LOFTYLANDON for 10% off

Chicago owed $36.4B to its four pension funds at the end of 2025, up $500M from the year before and nearly 11% higher than in 2020.

The police and fire funds are the worst off, sitting at just 25.5% and 25.2% funded, well below the roughly 70% average for big city pension systems. Most of the jump traces to a new state law tying Chicago police and fire pensions to benefits paid everywhere else in Illinois. That single change added $300M in liability.

Debt is still down from the 2023 peak of $37.2 billion, and the city has paid $689M more than legally required into the funds since then. Chicago is paying down the hole faster than required and still watching it grow. That tells you how deep it actually is.

Now layer the operating budget on top. Chicago is halfway through its fiscal year, and Mayor Johnson's team is already flagging a $130M shortfall in the 2026 budget, driven by revenue underperformance rather than any one-time surprise. Mayor Johnson blames this on his proposed head tax not making it through.

Chicago is short on cash right now and staring at a growing bill it hasn't figured out how to pay later. That leaves the city walking into 2027 with a projected $1.16B deficit and a record $3B pension payment already due. Chicago keeps finding new ways to be short on money and short on the votes to fix it.

The companies building at the frontier of AI don't staff the way most startups do.

They don't post a job, wait 90 days, and extend an offer to whoever clears the bar. They build around specific capability gaps, pull in specialized talent for defined problems, and stay deliberately lean between them. The team composition changes as the work changes.

Most startups can't recruit the way Anthropic or DeepMind does. But the underlying logic is available to any founder willing to apply it.

The principle is simple: know which problems on your roadmap require someone who has solved exactly that problem before, staff those roles with experienced people who can move immediately, and don't build permanent headcount around work that’s 6 months from being a different problem. Early-stage companies get into trouble when they hire for the company they want to be rather than the work in front of them.

Geography stopped being a real constraint for this kind of talent. The startups moving fastest on AI right now are pulling in engineers who have shipped production AI, people who have seen what breaks at scale and how the fastest teams actually operate.

That experience is nearly impossible to develop in-house from scratch, and it no longer requires being in the same city. For example, a team of remote, project-based Turing engineers built a custom data sanitization service for a contract management startup. The new system unlocked a transaction fee model that grew the client's revenue by 12% in the first quarter.

Turing works with startups that want to staff this way. The talent in their network has worked at or alongside the organizations defining what's possible in AI right now, and they're available without the overhead of a full-time hire. 

If you're building something technical and want to talk through what this model could look like for your team, contact Prad Parthiban at [email protected].

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