Investing in Long Distance Relationships in Wisconsin

In my previous post about 2012 investment capital in Wisconsin, I asserted and supported the following two statements:

  • Wisconsin has a good environment and the capital to seed and grow companies.
  • The state lacks the in-state capital to take companies through the full funding cycle.

In this post, I’m moving to the potential takeaways from the numbers. 

  • Access to the large capital sources requires long distance relationships.

In my opinion, one of the often overlooked features of economic development efforts to bring in talent and dollars from other areas is that these activities are relationship based. When taking a risk on the return on investment of their time and/or money, people need to at least be familiar with the person on the other side or better yet trust them. 

Get Out! (And Come Back)

In tech and health tech, one way to develop these connections is participation in one of the accelerator programs, such as TechStars, YCombinator or Rock Health. In addition to the cash and time invested, these programs are long enough to develop connections with the other companies, the mentors and even potential funders. Over the last 18 months, five Madison based companies have participated in these programs.

  • TechStars – Tech startup accelerator
    • Spill (Boston 2011) – Spill allows people to anonymously share the good and bad moments of your life online. (Spill is now located in San Francisco.)
    • Vidmaker (TechStars Cloud, San Antonio 2012) – Makes it simple to store, manage, edit and collaborate on videos online
    • Murfie (Boston 2012) – provides members with unparalleled access to and real ownership of their music collection in both physical and digital formats
    • Codiqa (Texas 2013) – Premier prototyping and interface-building tool for jQuery Mobile
  • Rock Health – Seed accelerator for digital health startups
    • Moxe Health (San Francisco 2012) – Working to improve access to care for the underserved while lowering costs by reinforcing the use of appropriate, primary care

Make the Community Sticky

An opportunity that can come from these experiences is to bring these funding sources to Wisconsin and introduce them to other opportunities in the area. Looking through the venture capital investment data, I ran across an investment in Murfie by Great Oaks Venture Capital out of New York City. The fund has also invested in StudyBlue (Madison & San Francisco offices) and Mobile Igniter (Madison).

If We Build It They Will Come?

We’ve been capturing the value of innovation by building companies with viable products and revenue streams. To get capital to flow into a place like Wisconsin, we need to increase the breadth and depth of the networks between local entrepreneurs (founders and management) and funders from other geographies. While I am hugely supportive of home grown talent and providing good returns to local investors, using these successes to attract resources from other communities is a necessary step reduce entrepreneurial friction in Wisconsin.

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Trackbacks/Pingbacks

  1. 2012 Wisconsin Investment Capital Roundup | The Next Element - January 21, 2013

    […] Since this part of the topic gets to some of the softer side of investing, I covered this topic in a separate post. […]

  2. None Better than One? (A Brief Note on VC in Smaller Hubs) | The Next Element - May 20, 2015

    […] has vetted a team, technology, and product (and passed). A couple of years ago, I suggested that management needs to invest in long distance relationships to solve the capital problem, and I still believe that is the case. Stronger relationships with […]

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