WisBusiness: State’s venture conference links start-ups, money

By Brian E. Clark

MADISON – Start-up companies come and go, that’s the law of the marketplace.

But over the past two decades, the Wisconsin Life Sciences and Venture Conference has provided a critical link between fledgling hi-tech and bioscience firms and capital, according to a report prepared by economist David Ward.

Though Ward, president of NorthStar Economics, could not document economic financial impact of the conference or the number of jobs it has created, he said he believes it is fostering the “right environment to help launch New Economy” companies.

“I can’t say the economic effect has been $1 billion or $2 billion, but it has been significant,” said Ward, who called his report a “unique slice of economic history.”

Each year, according to UW-Madison officials, more than $720 million is spent on research at the campus. Elsewhere around the state, the Medical College of Wisconsin in Milwaukee spends more than $125 million on research, while the Marshfield Clinic does nearly $80 million in scientific studies.

Ward, who spoke Tuesday at a Wisconsin Innovation Network Foundation luncheon, said four of the 196 companies that presented at the conference have gone public. While that figure might seem low, Ward said he was not surprised by the figure.

“A lot of venture capital dried up after the dot com bust,” he noted.

Moreover, passage of the Sarbanes-Oxley Public Company Accounting Reform Act in 2002 changed the regulatory climate and made IPOs less attractive, he said.

He identified the four Wisconsin firms that made presentations to so-called “angel investors” and venture capital firms at the conferences and eventually went public as Third Wave Technologies and Sonic Foundry – both of Madison – plus Valley School Supply of Appleton and Merge Technologies of Milwaukee.

On the downside, he said nearly half of the companies that presented from 1985 to 1992 have dissolved. He called this figure the “net death rate.”

Since 1993, only 19 percent have ceased to exist, and 8 percent of those (12 firms) were bought out.

Also in the past decade, Ward said there has been an increasing amount of technology transfer between the Wisconsin Alumni Research Foundation and hi-tech and biotechnology companies. In that period, more than two dozen of the presenters had WARF licenses.

He said he expected that trend to continue and accelerate. Many of the new firms, he said, have located in the University Research Park on Madison’s west side.

Ward also said there has been a rising number of companies that are incorporated out-of-state that are presenting at the conferences. In the last decade, 44 percent have been – at least on paper – from outside Wisconsin. And more than 20 percent of the all the companies presenting were operated with venture capital.

Jim Leonhart of the Wisconsin Biotechnology Association said the conference is a key part of creating new companies in Wisconsin.

“I just hope that life science companies will be a greater part of the mix and a bigger part of the new economy.”

The next Wisconsin Life Sciences and Venture Conference will be held Nov. 16-17 at Monona Terrace and will include a technology showcase of research around the state.