By Brian E. Clark
WisBusiness.com
Two announcements this week bode well for the Dane County and Wisconsin biotech communities.
One is the news that an Illinois life sciences company will be moving to Madison. The other is that a fledgling venture capital fund – backed by
Boston financiers – will be investing in startup life sciences and information technology companies in Wisconsin and other Midwestern states.
“This is important because it indicates we are reaching something of a critical mass here,” said Tom Still, president of the Wisconsin Technology Council.
“We have created the conditions that attractive not only to investors, but to established companies that want to be here,” he said. “And the important thing about the new VC fund is that is Boston money, which shows we are becoming attractive to investors from the coasts.”
Jim Leonhart, head of the Wisconsin Biotechnology and Medical Device
Association agreed.
“This is great for Dane County and our state because it shows more
outsiders are recognizing the opportunities here,” he said. “If we can get
investors to back a couple of start-ups a year, that’s huge. We’d love to
grow another Promega, which has more than 700 employees and annual
revenues of $137 million.”
The Illinois firm moving here later this year is Caden Biosciences, which
is now based in Evanston. Officials from the company said they have raised
$5.85 million in financing through the sale of preferred stock.
Baird Venture Partners, a venture capital affiliate of Robert W. Baird &
Co. led the series A preferred stock financing round. Madison’s Venture
Investors, the State of Wisconsin Investment Board and IllinoisVentures
L.L.C. also were part of the deal.
Caden Biosciences not only is moving, but has changed its name from Cue
Biotech, Inc. The firm focuses on developing screening products for the
development of new drugs.
Peter Shagory, a partner at Baird Venture
Partners, said it relocating to Madison to take advantage of the region’s
concentration of scientific and operational talent.
Shagory will join Caden’s board of directors, along with Venture Investors
partner Paul Weiss. Bill Checovich, who most recently led operations for
Invitrogen’s business unit in Madison, was named the company’s new
president and chief operating officer.
The new fund focusing on the Badger State is Avolte Venture Partners
Midwest. It plans to invest $1 million to $3 million per company,
averaging two to three deals per year, said Mike McNally, a managing
partner of the fund. It is a sector fund of the Peak Ridge Capital Group
based in Boston. McNally, who has worked in Madison, is chief executive
officer of Peak Ridge. The fund will be capped at around $50 million.
Still said he believes Wisconsin-based funds will welcome the arrival of
Avolte.
“Often raising money for venture capital deals is more about collaboration
than competition,” he said. “Perhaps this means that we are slowly
shedding our ‘fly-over’ label and that investors from beyond our state and
region will be putting money into start-up companies here.”
Still said outsiders are seeing the potential for deals.
“They know we have great intellectual property coming out of UW-Madison,
that the business climate is improving, that other investors have put
their money here and that the size and victor or our technology sector is
impressive.”
Still noted that when Mark Heesen of the National Venture Capital
Association spoke at the Wisconsin Entrepreneurs’ Conference in June, he
said the Badger State was getting more out-of-state interest.
In the most recent 12 quarters, Heesen said more than half of the venture
capital investments in Wisconsin came from outside the state.
Some 15
percent were from the New York Metro area, 11 percent form the South
Central part of the United States. 10 percent from Silicon Valley, 8
percent from New England and 7 percent from Texas.
“And the flip side of this is Cadence, because the investors decided to
move a company from a major metropolitan area because this is a better
place for it to be,” he said.
