Speed Dating: Wisconsin’s Experiment to Connect Startups, Big Boys
Entrepreneurs can raise all the venture capital they want, but they know that in the long run, they don’t have a business without dollars flowing in from customers.
For startups aiming to crack the big company market with B2B products and services, it can be challenging just to score a meeting with potential corporate customers, let alone nurture a relationship to the point of a signed sales agreement.
“Major companies and emerging companies don’t always travel in the same orbits,” says Tom Still, president of the Wisconsin Technology Council. “Even if they’re in the same general business sector, they quite often don’t have an opportunity to get together to explore what both sides can offer.”
That’s why the Tech Council organized its first “Tech Summit” April 7 at the GE Healthcare Institute in Waukesha, WI. For one day, executives and staff from 16 corporations and 54 small companies and promising startups blasted through nearly 200 15-minute meetings—like speed dating for business. The “Internet of Things” was a key theme of the day, with emerging companies in healthcare, IT, and power electronics among the participants.
Company representatives met in conference rooms and at tables set up in the institute’s various auditoriums, although it wasn’t quite like the stereotypical speed dating scenario, says Liz Eversoll, founder and CEO of Solomo Technology. (There were no bells that chimed to signal the rotation to the next meeting, for example.)
Eversoll, a seasoned entrepreneur and IT executive, says this was a more comfortable setting than pitching to a room of investors—a situation many entrepreneurs face—because she had the chance to ask the big companies specific questions about their business and possible synergies between the two sides. That made it more effective than the typical pitch session, in her opinion.
“Those were all new companies we had not talked to yet,” says Eversoll, whose Madison, WI-based company has developed smart location software to connect retailers, hotels, and other businesses with consumers. “Everyone there was very receptive. If they weren’t the right contact [at their company], they were willing to put you in touch with the right contact. We’re just starting now to follow those threads.”
No sparks flew fast or bright enough for actual deals to be struck at the summit. But seeds were planted, says Eversoll, who had four “quality” meetings with potential business partners.
And in a follow-up survey, 13 of the 16 large companies said they plan to have more conversations with at least 10 percent of the small firms they met with, Still says. The hope is that those conversations will eventually result in product purchase agreements, direct investments, or possible acquisitions by the large companies.
The Tech Summit followed a similar event in December, “OnRamp,” co-organized by Wisconsin startup accelerator Gener8tor and hosted at the Milwaukee Journal Sentinel’s office. That free program put seven local corporations—ranging from Assurant Health to the Milwaukee Bucks—and 36 startups across the table from each other. All of the large companies have since had additional conversations or signed purchase orders with at least one of the startups, and another such event is in the works, says Gener8tor co-founder Joe Kirgues.
For the Tech Council’s speed-dating event several months later, it folded the concept into a larger business conference that involved more companies and featured speeches by local executives and academic leaders. The selected small companies paid a $249 registration fee to participate (or a discounted price if they’re members of the Tech Council’s Wisconsin Innovation Network), Still says.
And it proved to be relatively easy for both OnRamp and the Tech Summit to attract big companies, organizers say. “As soon as corporations were asked to participate in an event like this, it was pretty easy to get some folks excited to participate,” Gener8tor’s Kirgues says.
More large companies are starting to pay attention to the nascent but growing tech startup community in Wisconsin, explains Don Layden, a Milwaukee investor and an operating partner with Baird Capital’s venture capital group. And those companies are looking to buy startups’ products and services, make direct investments and acquisitions, or even just scout for young talent.
Among the big companies at the Tech Summit were locally based Johnson Controls, along with local staff from firms like IBM, Intel, and AT&T. One eager participant was Milwaukee-based Rockwell Automation, a global supplier of industrial automation products. Rockwell already has business partnerships with more than 100 companies, primarily smaller firms that have innovative technology that fills gaps or augments Rockwell’s suite of products and services, says chief technology officer Sujeet Chand. Often these relationships start through an introduction by a Rockwell customer to another one of its vendors. But Chand sees value in prompting those types of conversations through a focused, one-day event.
“The Tech Summit is another way of getting to know emerging companies who may not already be in our space,” Chand says. He and three Rockwell staff in business development and technology met with 12 companies that day, and he says time flew by as they chatted with the emerging companies’ leaders about how their technology might intersect with what Rockwell does.
And the meetings clearly help the emerging companies, he adds.
“Sometimes organic connections are difficult to establish with larger companies,” says Chand, a Wisconsin Technology Council board member and co-chair of the Tech Summit. Startups often “don’t know who the contact is [at a large company], don’t know where to approach. There are so many people in a large company. Typically, if you go to the CEO or senior vice president level, you’re not going to get anywhere.”
Building these relationships has value that goes far beyond any individual deals, say both the organizers of the Tech Summit and the participants. “For startups, customers are king, and if we can get them in our own backyard, then that benefits everyone,” explains Solomo CEO Eversoll. “It will make [Wisconsin’s] established companies more effective, more competitive with new products. It will help our startups grow more quickly. All of that will help with economic development.”
And making such connections is especially needed in Wisconsin, where these sorts of exchanges seem to happen less frequently than in more heavily populated areas on the coasts that have more developed startup ecosystems, local entrepreneurs and investors say. Part of the problem in Wisconsin is some larger companies have less experience interacting with startups, and they also are more wary of taking a risk on new technology from early-stage companies, says Eversoll.
“We’re just a little more conservative than other areas of the country,” she says. “Existing established companies don’t know how to participate” in the startup ecosystem in Wisconsin, she adds. “They’re just starting to fund R&D and innovation groups to start looking at new technology.”
Once started, though, the trend is likely to continue. “We’re in an era in which major companies are not confined to looking for innovation within their own companies,” explains Still. One company in the area that’s actively betting on Wisconsin’s startup scene is Madison-based American Family Insurance, according to several observers. American Family has a venture capital arm that has invested in several startups that graduated Gener8tor’s program, Kirgues says, and the company is also the first customer for Understory, a weather data and analytics startup that has moved from Madison to Boston and changed its name from Subsidence. (American Family VC officials declined to comment for this story.)
The Tech Summit and OnRamp are the latest efforts by stakeholders to give this trend an extra nudge. Other initiatives over the past few years include Innovation in Milwaukee, or MiKE, which partly aims to connect big companies in southeastern Wisconsin with local entrepreneurs and creative types. Still says his organization intends to hold more of these events. And in hindsight, the outreach from the entrepreneurial world to big corporations should have started sooner, says Gener8tor’s Kirgues: “The harder question is why did it take the leaders of the technology community so long to ask?”
So will business speed dating—and any consummated deals that result—really pay off for the emerging companies, their corporate customers and partners, and the region’s economy? There’s no definitive answer yet. “It’s a model that needs to be proven,” Chand says. “My gut feeling is yes, it’s valuable and I feel larger firms based in Wisconsin should reach out and help the emerging companies connect to their customer base, if they’re relevant.”
And for the large companies, there are benefits from helping to build the local startup community, Chand says. He sees it as partly a play to fight the “brain drain” problem of talented young people often fleeing Wisconsin for the coasts.
“If we can stimulate more startup companies here and create a vibrant startup community in Wisconsin, that’s going to attract more talent here,” Chand says.