The stock market is down 30%, inflation’s running hot, and partisan politics is everywhere. Where should Wisconsin make investments for the future?
Unlike with the public markets, startup investments take an average of seven years to provide a return, according to the National Venture Capital Association. So, decisions made today will have a big impact down the road.
Today’s startup values mirror today’s public market — down 30%. So, now is the time for Wisconsin to prime the pump for future success.
Money and value are not the key to startup success, of course. Success is driven by the entrepreneur, by people like Judy Faulkner at Epic or Bill Linton at Promega. Both became entrepreneurs in the 1970s — a time of stagflation. When jobs are plentiful, not as many people want to start a company, raise capital every 18 months, and work long hours. When unemployment rises, money is tight, and it’s harder to find a great job in Wisconsin, why not become an entrepreneur? Now is an excellent time to invest in an entrepreneur.
In 2015 and 2016, Wisconsin was rated by the Ewing Marion Kaufmann Foundation as the worst startup environment in the U.S. Wisconsin, with bipartisan support (30–3 Senate and 89–2 in the Assembly), committed $25 million to the Wisconsin startup investment ecosystem if the program was a mix of public and private investors. It was a sound decision: Prime the venture capital pump, don’t be the venture capital pump.
In 2017, the Badger Fund invested the state’s $25 million venture capital commitment into five new Wisconsin-based venture capital funds, all managed by first time venture fund managers who in total raised a private capital match of $49 million. Today, the state’s investment is 100% deployed.
Combined, the Wisconsin-based Badger Funds are making more than one investment a month in Wisconsin-based startups, according to data on the Wisconsin Department of Administration (DOA) website. Wisconsin is no longer rated dead last.
The private sector has provided a match of $5 of private capital for every Badger Fund dollar. In other words, the state is priming the pump with its $25 million investment that resulted in $125 million private investment dollars. All of that money created 40-plus companies with an average salary of $91,519.
The time is right. The team is no longer first-time venture fund managers — it is experienced. Managing five geographically diverse venture funds, the team is ready to invest in Wisconsin entrepreneurs. These funds include:
- The Idea Fund of La Crosse (seed-stage startup companies). The fund is led by Managing Director Jonathon Horne, a La Crosse native, and President Libby Spirer. ideafundvc.com
- Winnebago Seed Fund based in Neenah (seed-stage startups). The fund is managed
by David Trotter, a native of the Fox Valley with investment management experience. winnebagoseedfund.com - The Madison-based Winnow Fund (seed-stage companies related to Wisconsin universities). Winnow Fund is managed by Richelle Martin, a Wisconsin native with experience in commercializing university intellectual property. winnowfund.com
- Gateway Capital Fund in Milwaukee (seed-stage startup companies). The fund is managed by Dana Guthrie, a Milwaukee resident with a background in engineering and angel investment. Gwaycapital.com
- Rock River Capital Partners (growth-stage startup companies). Also based in Madison, this fund is managed by Wisconsin natives Andy Walker and Christopher Eckstrom. Walker has experience managing startup companies, and Eckstrom has expertise in institutional investment management. rockrivercapital.com
To build a strong future, Wisconsin should step up to the plate and double down on our home-grown team. It should make another $25 million commitment to Wisconsin entrepreneurs. The time is right! The team is ready.
Ken Johnson is a partner with the Badger Fund and managing director and founder of Kegonsa Capital Partners.
