Madison Tech: Opportunity to Recycle?

An interesting question that came up at the Spring Tech Kickoff last week: what tech success stories have there been in Madison? It is immediately clear that good financial returns for tech investors are important for continued enthusiasm for investment. However, another large factor in success stories is how/whether experienced management is recycled in the local community. Sparked by a post from life science VC Bruce Booth, I’ve written about this topic from the biotech perspective and am interested to hear from the tech community how it impacts them.

Since there isn’t an easily accessible collection of market data for tech in Madison, I’ve assembled some vignettes below. The caveats:

  1. The plural of anecdote is not data.
  2. As in biotech, the tech community could debate whether these companies are truly tech.
  3. I excluded all bio/health related tech – even Epic, arguably the largest tech success in Madison. Epic had $1.2 billion in revenue 2011 and employs over 6,000 people in the Madison area. (See this previous post for some background of health tech in Madison.)

This post is fairly long so I’ll but the take away here and let you browse the vignettes at your leisure. There have been some lasting tech success stories in Madison – for investors, customers, and employees. Knowing the history of the community should allow better leveraging of the people and funds (think Recycle, Reuse) to propel the next stage of growth of the community.

(I got some good suggestions for Milwaukee tech success stories and you’ll find those here.)

Madison Tech Company Exits

While I don’t know much about the financial dynamics of the following transactions, I tried to identify acquisitions of tech companies in Madison as a proxy for financial success.

Sampling of Madison Tech Companies with Product Revenues

While there are a number of tech services and staffing companies that dominate the local lists of large employers, there are tech businesses with revenue that generally fly under the radar. Here are a couple of examples:

  • BIM – Started in 2003 and moved from NYC to Madison in 2005. Provides technical solutions for local media. Has offices in Cedar Rapids, Los Angeles and Austin.
  • Singlewire Software – Spin off of Berbee in 2009. Develops voice applications with mass notification capabilities.
  • ScheduleSoft – Workforce scheduling software company founded in 1996. Target industries include food (customer: Nestle) and consumer products (customer: Georgia Pacific).

Equity Investments in Madison Tech

Capital Entrepreneurs, a Madison-based group focused on building the entrepreneurial ecosystem, does a survey of members at the end of the year. While the group is open to all sectors, the vast majority of members are tech entrepreneurs. About thirty members responded to the CE 2012 end of year survey. These companies raised $10.6M in funding, primarily modestly sized investments from a broad distribution of companies (personal communication). While year to year comparisons are challenging for self reported data, the 2011 survey results showed $23.7M of funding to CE members. However, $20M in 2011 came from a large institutional round.

Building Tech in Madison with Large Venture Capital Dollars

Looking through the available data since 2005, there are a handful of tech companies that have brought in large amounts of venture capital. Often the initial rounds have involved corporate and/or angel investors. The tech companies with large VC dollars in include:

Some of the other recent VC investments have come from a New York based firm, Great Oaks Venture Capital, which has invested in Murfie, StudyBlue (Madison & San Francisco offices), Mobile Igniter and EatStreet.

Madison Tech on the National Scene

Over the last two years, four Madison tech companies have participated in TechStars, a technology focused accelerator program. Three of the four remain in Madison. I’ve mentioned previously the power of the connections that these companies get beyond the cash for being selected.

  • 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, Texas 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 (TechStars Cloud, Texas 2013) – Premier prototyping and interface-building tool for jQuery Mobile

5 comments on “Madison Tech: Opportunity to Recycle?

  1. wiscoDude
    April 1, 2013 at 2:11 pm #

    Ryan Finley started an online survey company in Madison back in 1999 while he was at Sonic Foundry. He moved out to Portland a few years later, but SurveyMonkey was, at one point, a Madison software startup.

    • Laura S
      April 1, 2013 at 2:35 pm #

      Thanks for the addition! I wonder what we would learn from a comparison of tech companies that stay vs. relocate.

      • wiscoDude
        April 1, 2013 at 8:10 pm #

        I think we’d find that some of the most promising startups go to where their Angels/VCs can connect them with other resources. And for firms such as Zencoder, that meant moving to SF. For Ryan, it was simply a lifestyle choice to live somewhere other than Wisconsin for once.

  2. Max Lynch (@maxlynch)
    April 2, 2013 at 5:10 am #

    Hey Laura – just a small correction, Codiqa is a product or my company Drifty. We had to come up with an umbrella brand when I randomly decided we needed a second product 🙂

    We are really excited to stay in the city. We employ three full time people right now and will be expanding to hopefully 6 by the end of the year, and we are doing it on real revenue. The city is full of smart people who love Madison and Midwestern living. Perfect place for an introvert that loves solitude, like myself 🙂

    We haven’t taken any investment besides TechStars, so to that end I don’t know much about the future of tech investments in this state.

    Instead, I’m slowly taking on a mission to turn developers in Madison into smart business people. I feel it’s a natural way to help all the side projects and hackathon winners build real companies that grow in Madison. That’s how we built our company, and we created a few jobs even!

    This blog post has become a bit of an obsession for us at Drifty, and it explains my thoughts better than I:


  1. Engineering Capital Flow: Thoughts on Wisconsin & Beyond | The Next Element - April 1, 2013

    […] Tech (and biotech) in Madison has created good returns for investors as well as good employment opportunities. (Milwaukee tech has a good history as well.) However, the companies tend to be grown over longer stretches of time with a mixture of equity and revenue, in large part because of the lack of large equity capital sources in the state. Looking at Wisconsin VC investments over the last eight years, I found four companies with large (at least a $4M round) VC investments, representing $75M of total capital (including angel and corporate dollars). There are likely less than a dozen smaller companies with VC dollars, with the majority coming from an early stage New York based firm, Great Oaks Venture Capital. […]

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