Chamber Hopes Pitches Could Boost Silicon Valley-Madison VC Deals

7/2/14Follow @XconomyWI

When Brian Jensen walked into the room filled with Silicon Valley venture capitalists, the co-founder and CEO of Madison, WI-based startup Fishidy thought there might be some eye-rolling. After all, “here’s some Wisconsin guy coming into Silicon Valley talking about fishing and his fishing app,” Jensen said.

Instead, the entrepreneur felt like the VCs came away impressed with his company, which built a mapping tool and social network for anglers.

“They appreciated seeing a company like mine because it’s not a typical deal they see,” Jensen said.

He’s one of several Madison entrepreneurs who traveled to the San Francisco Bay Area last week to meet with investors from the buzzing epicenter of the tech industry. They came away with some encouraging words, introductions to possible business partners, and greater hopes of building a pipeline for investments between Silicon Valley and the Midwest.

The Greater Madison Chamber of Commerce organized the trip, which put Madison-area startups Catalyze, EatStreet, Fishidy, MdotLabs, and Propeller Health across the table from representatives of several Silicon Valley VC firms, including August Capital, Emergence Capital Partners, Foundation Capital, Kleiner Perkins Caufield & Byers, Mohr Davidow Ventures, and Streamlined Ventures.

The chamber handpicked four of the startups, while Fishidy landed its spot by winning a pitch competition at the chamber’s business expo. The five companies represent a cross-section of Madison’s startup community, from mobile apps to healthtech to adtech.

None of the startups have reeled in investments based on the trip, but chamber president Zach Brandon is happy with the response from the VCs, whom he said were complimentary of the young companies.

“We feel great about all of it,” he said. “We effectively told the story of the region. We created interest. We provided value to the companies that we took.”

All five startups have previously raised money from institutional investors, including recent rounds by EatStreet and Fishidy. But Propeller Health was the only one that had raised significant dollars from California investors, so Brandon saw the trip as a chance to get Madison startups outside their primarily Midwest investment bubble.

“I suspect that the majority of the companies we took … over time, would’ve been able to get these one-off meetings themselves,” Brandon said. “But what we were able to do by aggregating them all together is tell the collective story of, ‘This isn’t just an anomaly.’ If an investor talks to a company and says, ‘oh, you’re from Wisconsin,’ it might take dozens or hundreds of times to recognize a trend. What we were able to do was connect the dots.”

Fishidy has re-opened its Series A funding round to tack on an additional $500,000, but Jensen isn’t sure if the Silicon Valley investors will put money in because the startup is on a two- to three-week timeline.

“It’s too early to tell,” Jensen said. But “I do think there was a lot of Series B possibility.”

The meeting planted seeds for EatStreet that could bear fruit in potential later funding rounds or future business deals, co-founder and CEO Matt Howard said. His company recently raised a $6 million Series B round for its online restaurant ordering platform, has grown to more than 50 staff, and announced a partnership with Yelp mere hours before the meeting with the Silicon Valley investors.

Right now, scoring more business partnerships like the Yelp deal is a higher priority for EatStreet than raising venture capital, Howard said. To that end, he has already set up two phone calls this week with potential partners thanks to connections made by the Silicon Valley VCs.

“I don’t know if [the trip] will necessarily lead to an investment down the road, but it’s already led to key introductions for my company,” Howard said.

Brandon said the chamber decided not to bring earlier-stage companies because that wouldn’t have matched the investment strategies of most of the VCs present. But if the chamber organizes another trip like this, it could set up separate meetings for early-stage and later-stage Madison startups, he said.

Ultimately, the trip highlighted “just a sampling” of the “diversity and the depth” of Madison startups, Brandon said. Now, he’d like to convince some of the California VCs to travel to Madison (which was partly how this whole thing started).

“We’re happy to continue to bring deals to them, but we also want them to come see it first-hand,” Brandon said. Part of his pitch was Wisconsin’s tax credits, including a popular break for angel investments, and the new state-backed fund of funds.

One of the challenges for boosting the flow of California dollars to Madison startups, Jensen said, is there’s no direct flight from the Wisconsin capital to the San Francisco Bay Area. (That’s a problem I highlighted recently, although the growing Madison airport could add a direct West Coast flight in the next couple of years.)

“I think that the location aspect is the only thing that’s holding us back,” Jensen said. “But I think eventually that barrier will be broken down.”

Jeff Engel is the editor of Xconomy Wisconsin. Email: jengel@xconomy.com Follow @XconomyWI

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