I think you should check http://loopj.com/jquery-tokeninput/. If you have many checkboxes, I think it is not good to show all checkboxes. However, Tokeninput can let users to check multiple checkboxes as tagging. Therefore, you do not have to worry about how many selections in a database. Downside is that users will not know all choices they can select. You may have to use Tokeninput with tag cloud to show all selections.
If a user can select an industry, and there are much space to display many checkboxes, I like option1. The search filter of Youtube is a good example for how to represent checkboxes in another form.
Users can select an industry and see all choice he has, but for the second option, a user have to scroll down to view and check checkboxes. You can imagine that a drop-down list which has many items is undesirable. For example, a drop-down list for countries