Why did the University of Illinois system decide to house its excellent computer science program in Urbana-Champaign instead of Chicago?

UIUC has a long history of Computer Science work, well before people worried about getting VC for their start-ups while in school. See UIUC CS history here: http://cs.illinois.edu/about-us/cs-history Compare that to UIC: We are a department both old and new. The University of Illinois at  Chicago was founded in 1965, and as Computer Science grew as a field,  Computer Science faculty were housed in the Department of Information  Engineering, which in 1982 became the Department of Electrical  Engineering and Computer Science. In July 2001, Computer Science became a  department in its own right. Also, UIUC is the flagship school in the UofI system, and the best ranked of the three in many areas. This builds momentum as it draws highly regarded professors, who in turn do groundbreaking research, which attracts more outstanding faculty... Finally, although Urbana/Champaign is not as VC focused as Boston or the valley, there is still plenty of interest in projects that come out of the university, and the university works to encourage that. The city also features a large technology and software industry mostly  focusing on research and development of new technologies. The Research  Park, located in southern Champaign and backed by http://en.wikipedia.org/wiki/University_of_Illinois_at_Urbana-Champaign, is home to many companies including http://en.wikipedia.org/wiki/Riverbed_Technology, iCyt (a biotechnology company), http://en.wikipedia.org/wiki/Citrix_Systems, the http://en.wikipedia.org/wiki/Illinois_Natural_History_Survey, the Illinois State Geological Survey, the Illinois State Water Survey, http://en.wikipedia.org/wiki/Yahoo%21, the http://en.wikipedia.org/wiki/National_Center_for_Supercomputing_Applications, http://en.wikipedia.org/wiki/Science_Applications_International_Corporation, http://en.wikipedia.org/wiki/State_Farm_Research_Center,http://en.wikipedia.org/wiki/Champaign,_Illinois#cite_note-16 http://en.wikipedia.org/w/index.php?title=Riverglass&action=edit&redlink=1 Inc. and http://en.wikipedia.org/w/index.php?title=Tekion&action=edit&redlink=1 (a fuel cell company). Numerous other software and technology companies also have offices in Champaign including http://en.wikipedia.org/wiki/AMD, http://en.wikipedia.org/wiki/Intel, http://en.wikipedia.org/wiki/IBM, http://en.wikipedia.org/wiki/Amdocs, http://en.wikipedia.org/wiki/Infobright, Instarecon, http://en.wikipedia.org/wiki/Phonak, Power World, Caterpillar Simulation Center, and http://en.wikipedia.org/wiki/Volition,_Inc.. The largest high technology employer is http://en.wikipedia.org/wiki/Wolfram_Research, with more than 400 employees in Champaign.http://en.wikipedia.org/wiki/Champaign,_Illinois#cite_note-17 The http://en.wikipedia.org/wiki/United_States_Army_Corps_of_Engineers maintains the Construction Engineering Research Laboratory (CERL) in Champaign. - http://en.wikipedia.org/wiki/Champaign,_Illinois#Economy The Research Park at the University of Illinois at Urbana-Champaign is  the most visible result of a significant shift in the history of the  University of Illinois: the incorporation of economic development and  innovation into its core mission. - http://researchpark.illinois.edu/about/history See also: http://otm.illinois.edu/start-ups

While I was there uiuc wasn't regarded yet.  Out of my graduating class many of the graduates went on to places like Netscape , aol , USRobotics, etc and have been CEO or founders of firms funded by vc industry.   I don't think being away from a large city has hurt the outcome of many past nor future generations of innovators.

A different angle - people choose to attend UIUC in the CS department because they want to learn or improve their coding abilities. From theory, design, architecture, etc, UIUC is the place to hone your CS skills in order to be able to work for leading firms, not necessarily the place to make a start-up and get funding. Then again, if you are there and that's what you end up doing, Chicago is a VERY short drive away and VERY easy to take few meetings during the day and then return back to CU in the evening. If you have a great idea, UIUC could be a place to get a few people together to build the idea cheaply, then you can take it anywhere to get funding. Good ideas can come from anywhere, you don't need to have an office next to the guy with the money. In fact - the guys with the money will be leaving their offices to look for you!!!