Ability Network Exit a Win For WI Investors Outside Metro Hubs

7/25/14Follow @XconomyWI

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coming out of [Wisconsin Alumni Research Foundation] technology that goes to University Research Park [in Madison], or what you might see in the Twin Cities with the medical device opportunity.

But I do think there might be advantages. The cost of living is lower. For recruiting, it’s a nice place to live. It’s a good environment, good schools. So that part is a positive. But the resources are more spread out. So they might not have the same things at UW-Eau Claire—or you might need to go to Stout, or you might need to go to River Falls—that you might find on one campus in Madison. But when it really comes down to it, I don’t know how limiting that really is.

What I’m not totally sure of yet is the overall entrepreneurial spirit of the region. I think that it’s becoming more [strong]. …In the past…you had a lot of what I’ll call offices or manufacturing centers for companies started elsewhere. The question is, when you start a company as an entrepreneur, if the company doesn’t survive, do you go back to another job or do you start something new? Seeing things like JAMF move it in the direction of, “there’s an entrepreneurial spirit here that is going to make good things happen.” [Editor’s note: Technically, JAMF headquarters are in Minneapolis, but the majority of its employees remain in Eau Claire, where the company was born.]

X: There’s been a lot of buzz over the past year about new funds cropping up in Wisconsin, including 4490 Ventures in Madison, CSA Partners in Milwaukee, BrightStar Wisconsin Foundation, and the state-backed Badger Fund of Funds. 4490, BrightStar, and the fund-of-funds have explicitly indicated they’ll invest statewide. But it’s quite likely the majority of deals will still happen in Madison and Milwaukee. How optimistic are you that other parts of the state, including the Chippewa Valley, will reap any benefits from these new funds?

PM: I guess we’ll wait and see and find out. There are some opportunities statewide that I think fit. I hope that they see those and participate in those types of deals. But you’re correct, just the sheer volume of deals, lends it toward most of those investments are probably going to be in the major population centers.

I think any time that you have more money coming into the system, it’s generally a good thing. I also think we’re going to see the M&A process heating up some. When you start to see more mergers and acquisitions, that means more exits. There have been fewer exits in the last few years coming out of the recession. That makes the early investor more patient and less likely to invest in new stuff. When exits happen, that lubricates the process in the future.

My hope is, as the angel investor group spokesman, we don’t go too far to where there’s bigger money in VC, but [where] we lose sight of some of this early-stage stuff. There’s a lot more companies getting funding, and they need it when they get to that next level. We don’t want all the funds to just go to the VC area because when that happens, there’s usually fewer deals with more money.

There’s nothing that will dry up that supply of businesses quicker if early-stage investors don’t get the most rewards for taking the most risk.

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

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