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:
- The plural of anecdote is not data.
- As in biotech, the tech community could debate whether these companies are truly tech.
- 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.
- Heurikon – Heurikon Corp was founded in 1972 and made customized microcomputers. (The Heurikon site has some newsletters from the early ‘90s – fun to see old school tech.) By 1989, the company had $20M in annual sales and 140 employees. In 1992, the company was bought and became Artesyn Technologies, which was acquired by Emerson Network Power in 2006. The Madison operations were shut down in 2009.
- Office Solutions – Founded in 1983, the company had one of the top 10 best selling word processing programs for PCs. The company had an estimated $4.3M in revenues and 60 employees in 1987 and was sold to Software Publishing Corp in 1988.
- Sonic Foundry – Launched in 1991 with a focus on PC software for digital audio and video. In 1998, the company went public. In 2000, Sonic Foundry acquired STV Communications (cash and stock $67M) and International Image Services (cash, debt and stock $24M). Three years later, the company sold assets to Sony (cash $18M and certain liabilities) and Carsey-Werner (undisclosed) and narrowed focus to enterprise video management solutions (Mediasite).
- Guild.com – Launched in 1999, was the website component of a publishing company for artists founded in 1985. Guild.com $52M in venture funding between 1999 and 2006. The company was acquired by Ashford.com in 2001 and renamed Artful Home in 2004.
- Wingra Technologies – Founded in 1992, this Madison-based software company acquired by Quest Software (now part of Dell) in 2005.
- Berbee Information Networks – Between 1993 and sale of the tech services company to CDW in 2006 for $175M, Berbee grew to $300M in revenue and 800 employees.
- ShopBop – Online boutique that started in 2000 and was acquired by Amazon in 2006. Operations primarily located in Madison.
- Jellyfish – Reverse auction online shopping website launched in 2006 and acquired by Microsoft in 2007 for $50M. The site was shut down in 2009.
- Raven Software – Video game developer (e.g. Call of Duty) that was founded 1990 and acquired by Activision in 2007. Still operating in Madison.
- Name Protect – Digital brand management company sold to Corporation Service Co in 2007.
- Inacom Information Systems – IT solutions provider founded in 1984 that was acquired by Core BTS in 2009 as part of their Midwest expansion. The Madison site was the largest and provided marketing, HR to the rest of Core BTS.
- Weather Central – Developed the first ever computerized weather graphic system and continues to develop products that include local alerting systems . Founded in 1974 and majority stake acquired by E.L. Rothschild in 2011.
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:
- Networked Insights – Provides a social media listening platform for agencies and brands. Raised over $30M since launching in 2006.
- Alice.com – Online shopping for household essentials. Raised over $18M since founding in 2009.
- Shoutlet – Enterprise social-management software company. Raised $24M since starting in 2004.
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