The amount of startup activity in Wisconsin over the past few years, particularly forming new funding sources and supporting tech startups, has venture capitalists from Milwaukee and Chicago cautiously bullish about the state’s entrepreneurial ecosystem.
That was the consensus from a Thursday panel discussion between VCs hosted by the Wisconsin Technology Council’s Wisconsin Innovation Network in Wauwatosa, a suburb of Milwaukee.
“What’s happened over the last two years has been fantastic in the city [of Milwaukee] and in the state,” said Dan Einhorn, a general partner with Wauwatosa-based Capital Midwest Fund.
Capital Midwest formed in 2008 and is on its second fund, which has so far made investments in 10 companies from its $40 million pot.
Einhorn admitted his answer wouldn’t have been so rosy two years ago. But in that time, he’s watched the emergence of incubators and co-working spaces like 96square in downtown Milwaukee; accelerator programs like gener8tor, which has operations in Milwaukee and Madison; and new sources of capital.
Einhorn, who also has served as a judge at the Early Stage Symposium in Madison, said the quality of the technology and the presentations has gotten progressively better.
Dan Palay is similarly optimistic about Wisconsin’s entrepreneurial scene, but he struck a more cautious tone. Palay is a member with Tactics II Ventures, north of Chicago, whose investments include Madison-based Cellular Dynamics International.
Wisconsin’s “startup landscape looks completely different” now, Palay said, with more diverse early stage companies in areas like tech and health information technology expanding beyond the state’s historic strength in commercialization of scientific research from universities and medical institutions. But it still requires due diligence from the people with the money, he said.
“A rapid ramp-up creates a lot of excitement … but there’s also more stuff to wade through,” Palay said. “Just because there’s a lot of [startups in Wisconsin] doesn’t mean they’re all going to be good. You shouldn’t be throwing money everywhere.”
Although there appears to be more activity by the startup support system in Wisconsin—like accelerators and investors—the number of startups being created is still relatively low. The state ranked third-worst nationwide for entrepreneurial activity per capita in 2012, according to a report by the Ewing Marion Kauffman Foundation.
Venture capitalist and politician Chris Abele expressed optimism for Wisconsin’s startup community, but also stressed patience. Abele dedicated $10 million of his own money to establish CSA Partners last May, as reported by the Milwaukee Journal Sentinel.
Abele, who also is Milwaukee County executive, had a challenge for the candidates vying for Wisconsin governor in 2014: What do you plan to do for the startup community?
“I want to see candidates address that and address it early,” Abele said.