BrightStar looking to increase its startup investments

MILWAUKEE — Todd Sobotka says the startup accelerator where he works as portfolio manager plans to increase its investments in early stage companies this year.

BrightStar, a 501(c)(3) non-profit, invests an average of $100,000 per company, Sobotka said at a WIN-Milwaukee meeting Thursday. He said the organization aims to increase investments to an average of $200,000, and supply more companies with capital.

“We’ve done six already, I’d like to see us do 20 this year,” Sobotka said. “I’m happy to say that half of those are women-led companies.”

Sobotka calls BrightStar a “venture-philanthropy” organization, courting donors with ties to the Badger state for charitable contributions and co-investing in early stage companies alongside angel investors and other accelerators. He said the organization keeps overhead costs low by providing supplementary capital, but plans to take the lead in the future.

An increase in investment dollars could help improve the economic strength of the state, Sobotka said. Although Wisconsin is home to a strong university system and a high number of patents, he pointed to rankings that list the state towards the bottom in the nation for new businesses.

“We have an incredible environment; people want to live here,” Sobotka said. “What we’re missing is capital.”

According to Betsy Rowbottom, that “valley of death” almost made her close her business, The Good Jobs, in 2012. She credits the training and funds her company received through Gener8tor for the growth of her company, and said additional funding from BrightStar helped her hire three new employees.

“It was very difficult to find resources,” Rowbottom said. “Depending on where you are, if you’re a startup and you’re looking for funding, it’s definitely becoming more available.”

Finding seed capital is particularly difficult for businesses seeking small amounts of funding to develop a proof of concept. Rowbottom said many funding sources, including Gener8tor, are moving away from small investments.

“It is harder to raise money at that level,” Rowbottom said. “You’re kind of in the friends and family box.”

Conversely, Sobotka said BrightStar does not provide additional investment to already well-funded or profitable companies. He said the organization is focused on growing businesses with strong ties to the state, calling early stage companies a leading source of job growth.

Rowbottom’s commitment to her Milwaukee roots helped her company secure funding through BrightStar. She said she has turned down urgings to move out of state, preferring to set an example of success for other Wisconsin startups.

“My partner and I have no interest in moving to Chicago, we want to raise the money here, we want to build the business here.” Rowbottom said. “We want The Good Jobs to be successful … but piggybacked directly on that is the ability to be an example of a thriving startup in our community, because if there’s no examples of it, then it doesn’t exist.”

— By Samantha Nash

WisBusiness.com