Fox Valley region must take more risks to grow entrepreneurship, panel says

When it comes to raising money in the Fox Valley region, getting investors to take risks on young companies is no easy task.

For the region to compete with Madison, Milwaukee, and other entrepreneurial hubs across the country, that hesitation needs to change, according to a panel that spoke Thursday at a meeting of the Wisconsin Technology Council’s Innovation Network in Appleton.

“I was talking to someone the other day who is trying to raise venture capital up here, and the person said, ‘You’ve got a big problem, because you’re in the business where four or five out of 10 deals crater,’” said Paul Jones, founder of the Forum for Innovation, or FiNN, and a principal in Angels on the Water and Ventures on the Water. “‘And you’re in an environment where most business people think if one deal out of 10 is going to crater, that’s too risky.’”

This caution stems from historical and cultural factors, he says.

“We live in a very conservative business part of the state, where a lot of wealthy people, and frankly a lot of great companies, are living off the entrepreneurial risk taken 100 years ago to build the paper industry and the other industries in northeast Wisconsin manufacturing,” Jones said.

He says companies in the Fox Valley area can rise above these environmental challenges by being flexible, keeping a small crew and “rolling with the punches.” For the region overall to become more receptive to growing companies, a bigger shift in the business community’s attitude is needed, he says.

“Culturally, it needs to be that when you leave Kimberly Clark or something, people don’t ask what happened, they ask ‘What took you so long?’ Jones said. “It’s got to be a place where people appreciate taking risk.”

Appleton Mayor Tim Hanna echoed Jones’ sentiment.

“For so many years, Wisconsin has been pretty conservative when it comes to investment and startups,” Hanna said. “We have to find a way to do that better without losing some of those conservative principles, and still find a way to take a little more risk, because quite frankly, the new economy is demanding that we do that.”

One company is familiar with how difficult it can be to get off the ground. OrgPix has gone through several iterations and many rounds of angel investment. The Appleton-based company captures and stores visual memories, allowing people to share pictures from weddings, sporting events or any important event, all in real-time.

When it was known as Liveyearbook in 2010, the company won the Governor’s Business Plan Contest, and went on to raise $4 million in the next three years.

Even with that support, the company was unable to get the ball rolling, and was forced to revamp in 2014. Since then, it has continued to raise funds under CEO and founder Dan Nickchen with a $200,000 angel investment in 2016, finishing its series AA round. Series AA usually include angel investments of less than $1 million, while a typical series A venture round will be for larger amounts.

“We raised $500,000; we just closed on that in December,” Nickchen said at the meeting. “I don’t even know if we will have a series A, because we don’t really need it with the momentum we are starting to create.”

While OrgPix has had six-figure amounts of capital incrementally invested over its lifetime, VibeTech, a NASA spin-off company based in the Fox Valley, had slow-and-steady growth, with total investments so far reaching over $2 million.

VibeTech was started in 2002 with the idea of applying technological methods of therapy, which were used at the time for treating astronauts with low-bone density or people living in nursing homes or assisted living facilities.

The company’s rehabilitative technology can help less-than-active people regain strength, range of motion and muscle tone. Most of its funding came from grants and awards, as well as some revenue generated from consulting.

“We’re providing products that span that continuum of care from the hospital to the nursing home, all the way to the home,” said Jeff Leismer, CEO and founder of VibeTech, at the meeting. “Right now we’ve got four issued patents and nine additional pending patents in the U.S. and abroad, so we’ve done a good job.”

According to Jones, companies like these have the best chance at succeeding.

“They share one characteristic which you really can’t tell going in, but which is really important–they never say die,” Jones said. “They’ve found ways to stay in the game despite setbacks, despite, frankly, how difficult it is to raise capital in northeast Wisconsin for these kinds of ventures.”

Despite all challenges, Jones says momentum will build as more companies are recognized and the network of connected entrepreneurs grows.

“The first step is to make companies like this work–create some entrepreneurs, develop some wealth, and frankly, get those people that hopefully can make lots of money and they’ll be investing as angels in deals, and hopefully funds, up here in the future,” Jones said.

–By Alex Moe