Wisconsin no longer fly-over country, panel says

A slow-but-sure growth in Wisconsin’s investment climate means the state is no longer fly-over country.

This was one perspective from a panel of Wisconsin investors who spoke yesterday at the Wisconsin Entrepreneurs’ Conference, a special two-day event put on by the Wisconsin Technology Council highlighting the state’s entrepreneurial strengths. The conference continues today at Union South in Madison.

“Culture has changed,” said George Arida, managing director of Madison-based 30Ventures. “I think that 17 years ago when I came here it was starting to change, but I think it was still a little bit of academia versus industry.”

Now, he said, that sense of competition has transitioned to one of collaboration, as various programs exist to bridge the gap between these two worlds. One such program, WARF’s Discovery to Product, helps turn academic research and inventions into marketable businesses.

“There are real regional strengths in Wisconsin,” Arida said. “We’ve seen a lot of success in biotech here in the state; it’s really grown,” pointing to Madison-based radiation therapy company Tomotherapy as just one example.

“It’s exciting to see that and be a part of it, and it’s just grown from there,” he said.

The recent Kauffman ranking placing Wisconsin at the bottom of the pile for startups was brought up frequently at the conference, though some speakers had their own take on the state’s entrepreneurial health.

“Historically, it’s been thought that you can’t build a large engineering team in the Midwest, or you can’t get certain things you get on the coasts — besides your money being hard to come by — and I think that’s becoming less and less true every day,” said Craig Shedler, venture partner for Northwestern Mutual Future Ventures.

Though he hasn’t yet found a Wisconsin company to invest in, he’s looking forward to doing so and is actively searching. He pointed to capital efficiency as a major advantage of starting up in Wisconsin.

“What our company spent on rent and engineering talent — the costs of running a business on a coast are just much higher,” Shedler added.

Brian Kaas, managing director for CUNA Mutual’s CMFG Ventures, says he sees increasing interest in Wisconsin on the part of coastal venture capital funds.

“It’s no longer a fly-over state,” he said. “There’s more and more attention being drawn to what’s going on in Wisconsin.”

But the state still has to face serious challenges surrounding fundraising before it can catch up to some other tech hubs around the country, according to Arida.

“I’ve seen some really nice companies that I think are very investable, very deserving of follow-on capital, but there’s not enough of it. The good news is that we’ve seen a big upsurge in seed activity,” Arida said, adding there is still a need for more.

Tech Council President Tom Still points to the Badger Fund of Funds, which supports other venture funds through state investment, as a point of strength for Wisconsin. It recently launched the Idea Fund of La Crosse, which has raised $12 million so far.

The Badger Fund has committed to make a matching investment of 40 percent of any money the new fund raises.

“Ultimately, with the money our goal is to find 10-12 startup companies headquartered anywhere in the state,” said Idea Fund of La Crosse Managing Director Jonathan Horne. “And the investment strategy is to come in early, when a company is still developing, say, it’s first product.”

–By Alex Moe