In the first two installments of this series, we introduced four of Wisconsin’s newest venture funds and angel investor networks and their managers. These emerging investors see a bright future for venture capital and startups in Wisconsin, and they’re making that future a reality by collaborating with each other and educating more new investors.
Wisconsin isn’t Silicon Valley—and that’s good
“Wisconsin has a lot to offer. We have water, we have a great education system, we’ve got great transportation, our weather’s pretty nice,” says Mark FitzGerald, partner in Marquette’s ComMUnity Venture Capital. “We’re more conservative—we measure twice and cut once instead of just throwing stuff against the wall and hoping it sticks. Sure, it’s harder to raise money because we’re going to ask more questions. But I think the chances of success, if you can raise money in Wisconsin, are pretty good.”
That success is possible due to the many sources of funding and other support startups can find throughout the state.
“At this point I’m very bullish on the future of Green Bay from a startup ecosystem perspective,” says Matthew Kee, manager of the Greater Green Bay Chamber’s Tundra Angels investment network. “We have TitletownTech right down the street from us with a $25 million venture fund. They’re doing amazing things and bringing in companies from across the country.”
In Milwaukee, Gateway Capital Partners managing partner Dana Guthrie, points to programs like The Blueprint accelerator, the Milwaukee Tech Hub Coalition and the Milky Way Tech Hub, as well as the strength of the region’s universities.
“I think Milwaukee has all these great ingredients to be a hotspot for entrepreneurship. And that’s an opportunity for investors,” she says. “We have some of the best universities in the nation here. Milwaukee School of Engineering has the ninth highest-ranked undergraduate engineering program in the nation; UW-Milwaukee has one of the top 100 business schools.”
Meanwhile, Madison is gaining national attention as a growing hub for tech startups, with events like Forward Fest providing ample opportunities to network. Accelerator programs like Gener8tor, 1915 Studios in Neenah and the first WiSys VentureHome in Eau Claire are providing mentorship for startups across the state.
Collaboration is essential for success
As more new funds and angel investor groups emerge, collaboration rather than competition is increasingly defining Wisconsin’s venture capital ecosystem.
“I think that there is a lot of camaraderie in the venture capital field here, especially among the newer funds,” says Richelle Martin, managing director of the Winnow Fund. “When I started two years ago, I was the first woman in Wisconsin to have started a venture capital fund on her own. I joke with Dana that now we’ve doubled the number of women-founded funds in the state in just two years.”
That collaboration isn’t just among investors themselves. In addition to connecting with other angel groups in Milwaukee and Madison, Kee considers connecting startups with other resources, potential partners and customers an important part of what Tundra Angels does, even if the company isn’t a good fit with any of the group’s investors.
“It’s a win-win for companies and for the state,” he says. “There’s a younger group of investors like Dana, Richelle and myself that are seeing collaboration as really the big opportunity. It’s an underutilized value that the investment community brings to founders. It’s something that I’ve been really excited about doing.”
Reaching new investors is key
Along with collaboration, another thing these managers are passionate about is widening the makeup of Wisconsin’s investment community.
Kee has made a point of reaching out to younger successful entrepreneurs and investors for Tundra Angels. Most of the network’s members are in their 40s, and roughly half are new to angel investing. So a key part of the Tundra Angels program is investor education.
Gateway Capital is focusing on Milwaukee’s underrepresented groups on both sides of the investment equation. That means focusing on startups in underserved communities and outside the usual high-profile tech ecosystem, and reaching out to what she calls “nontraditional investors.”
“What I mean by that is people who maybe are of high net worth but not experienced in this asset class—people who are heavily involved in, for example, philanthropy. If they had a way of learning more about these types of investment opportunities, I think that could have a positive impact on the region,” she says.
For Martin, finding and training the next generation of venture capital fund managers is one way of filling in the early-stage funding gap.
“Every time an early-stage fund is successful, that fund then goes on to raise more money for fund two, writing bigger checks to bigger companies. So as funds grow, they start moving away from early-stage investments because you can’t write a $2 million check to a one-year-old company. The success that funds experience at that early-stage investment level is the reason that this gap just continues to exist.”
She notes that venture capital funds are often founded by established investors or founders who have already found success and aren’t necessarily looking to make fund management a second career.
As someone who fits that description, FitzGerald agrees: “I started a company in 1986. I sold it in 1999 and retired at 40. I started investing as an angel investor; I got involved in several startups in the area as an angel investor. I was fortunate to have the opportunity and the resources to take the time and put the energy toward creating ComMUnity Venture Capital and making it work. But ultimately, for it to be truly successful, I want to have a professional manager for the fund.”
Next up in the series, we ask managers what they look for when hearing pitches and evaluating startups. Read more about the funds and managers we’ve profiled so far, and stay tuned for more profiles of Wisconsin’s emerging investors and promising startups.